That’s right! Before we break out the Champagne in a congratulatory solute to real estate investment success, as of August 2013, the bottom line crossed into even territory for most homeowners who purchased prior to 2005. Believe it or not, real estate market value in Lane County and much of Western Oregon receded to 2004 levels.
It’s a math thing! Real estate pricing and subsequent sales are driven by demand. And, today demand is driven by low interest rates and low inventory. According to Orange County, Ca. based Zillow, the average property in Eugene; Lane County, Oregon has increased by 13.5% over closed sales recorded in August 2012.
While that’s good news, home prices in the area fell between 24 and 50% from top of market, depending on the neighborhood and impact of short sales and R.E.O. saturation. Many homeowners that purchased at or near the top of the 07, 08 markets have a way to go before breaking even.
I’m asked several times a week to predict the future of the real estate market. I, like most Realtors, will tell you that while I don’t have a crystal ball, I do believe that the market has gained enough uptick momentum to take us well into 2014. As to 2014 and beyond, it’s anybody’s guess and he’s not saying!
Should I buy, hold or Sell?
As a Real Estate Investor the profit is made at the time of purchase, not at the time of the sale. While that may read a little strangely, when buying a property for speculation, the decision to purchase or to pass should be made based on the current market, not the unknown future retail value of the property.
Ask yourself this question…Is the property an extreme or fair value on today’s market? Is the investment self-supporting or sustainable based on your current net sheet?
Should I sell this year or wait for next year, hoping the retail value of my home will increase? Fair question, let's talk about it!
The same premise holds true as the investment rule. Not knowing the financial future of a market that fluctuates with the consumer’s interpretation of the world news, a homeowner should consider the current market value of the property, the momentum of the local market, the availability of financing and their personal plans for the near future.
Do you wish to hold and maintain the property for another year or two? Does your estimated increase in market value exceed the unknowns of the mortgage industry, world, national, state and local economy? It’s a crap shoot requiring some qualified financial analysis, an educated opinion if you will. Believe it or not a qualified Real Estate Professional can be of value when deciding rather to Buy, hold or sell.
As we round into the 4th quarter of 2013, few will argue that 2013 hasn’t been a great year for residential real estate market recovery. But, were not there yet and folks across the nation (some in your neighborhood) remain ‘upside down.’ Simply stated, their mortgage and, or H.E.L.O.C. exceeds the current market value of their home. Unable to re-finance and unable to sell without bringing funds to the table, these 13 million or so homeowners will continue to default out of self -preservation.
And thus, the balancing act will continue as the dreaded ‘shadow market’ trickles into the housing inventory, retarding a full charged housing market recovery.
Zillow estimates Lane County, Ore. Home prices to increase by 2.7% in 2014. If that prediction proves to be accurate, retail home value in the region will meet and greet the previous highs of 2007 sometime in 2016.
Parks McCants is a licensed Real Estate Broker in Oregon, and has been buying and selling residential and commercial property since last century.