ANOTHER “BUBBLE” EXTENSION THIS SPRING
Once again, after a slower 3rd and 4th quarter in 2019, sales spring boarded in December and activity is brisk in January.
The activity is clearly driven by remarkably low interest rates, as low as 2.95% on 10-year loans, and 3.75% on 30-year loans. Another primary contributor is a stock market that continues to soar and make people cash rich on paper. When this will end, no one knows. Most of us in the real estate industry, along with the pundits on television, have been discussing the next dip in the economy for a couple of years, but it has yet to come.
In Portland, what is astonishing, is that after an apparent slowing of appreciation, if not even a total leveling off, it appears that this spring we will see prices rise again. With the recent drop in interest rates, combined with cash rich buyers, the remaining inventory from last summer has now been snatched up and suddenly we have a big supply issue at a time when demand is peaking.
Our phones are ringing as sellers are getting ready to list in 2020, but it is those who list now, who are likely to successfully capture the entire buyer market without competition. As we head into spring, inventory and competition will rise, and similar to the past few years, the market will likely be a bit slower in the 3rd quarter.
For buyers, although we had limited need for our advisory documents on how to compete in a multiple offer situation last summer, and there was finally some inventory to consider along with the power to negotiate, that was then, and this is now. It’s time to boot up and get your pre-approval letters, make sure your cash is liquid, and get out to see every home that hits the market as listings are sparse this time of the year. This tip is to ensure that when “the one” hits the market you are not only financially prepared, but you are confident in the price you will be willing to pay in a competitive situation.
All in all, this year once again appears to be like the last four years – solid. That said, we have all seen it before and know it can change on a dime. As of today, we have multiple geo-political events: Iran tension, impeachment hearings, and the election that could instantly change consumer sentiment. On the economic front, we have a stock market that is defying the odds and interest rates that are seemingly subsidized. If any of these factors change, our market will likely shift quickly to the benefit of buyers.
If you are considering a change in the coming year or two, now is always a good time to evaluate your real estate position and we at ELEETE would enjoy the opportunity to sit down with you and have an annual review.