After decades of boom and bust cycles, slow and steady can be good for everyone. Here’s what I mean.
Home prices in Portland and Lake Oswego in particular are still going up but at a much slower and sustainable pace making homes more affordable for buyers. Sellers are having to adapt, relying more heavily on comparative market analyses from professional Realtors than on their personal ideas of what their homes are worth. While this may seem like bad news for sellers, if they are planning to move up or move on, the same market conditions work to their advantage.
These circumstances make it an excellent time for buyers to move into Lake Oswego where traditionally higher priced homes may have been out of their reach.
Other factors are also at work making the next five to six months a good time to make your move.
I believe interest rates will come down if not ½, then ¼ of a point in the next 90 days. All you have to do is look at the 10-year treasury note–it has no legs. It’s back where it was a year ago after climbing up 60 basis points and couldn’t hold it at all. The current average rate of 4.4% would look pretty good to buyers in 1981 who took out loans at almost 19% or even to those in 2000 with rates of 8.05%. We’ve enjoyed historically low interest rates under 6% since 2008, and while they’re not at the 3.31% we saw in 2012 they’re still much better than in years past.
That’s not to deny that even an increase of 1 percentage point can affect the price a homeowner can afford to pay for a home, which may keep a check on how fast home prices can increase.
A rebounding stock market will abate people’s fear factor, spilling over into the housing market as well. Why do I say “rebounding?” A couple of factors are at play. Historically stocks perform well in the third year of a presidential term. And while the current gridlock in Congress is frustrating to us voters, more often than not it has been good for the stock market. Psychological factors come into play as much as financial so an upbeat outlook bodes well on all fronts.
Housing supply is another condition that affects the market. I predict that the supply will remain steady for the next 12 months—about a 2 ½ to 4 months inventory of homes. It will be closer to 4 months in Lake Oswego where home prices are higher. This is a range that still tends to favor sellers but I am seeing more price adjustments being made on higher end homes. The Oregonian recently reported that in November, a third of active Portland home listings dropped their price. Again, this reflects the need to involve a professional Realtor when listing your home to ensure that prices reflect market conditions, not seller expectations.
If you’d like a personal assessment of how current market conditions are affecting the value of your home or the type of home you can afford to purchase, please give me a call at 503.939.98901 and/or check out my website. I’ve been helping people move in, move up and move beyond Lake Oswego for over 30 years. I’d love to put my experience to work for you.