With the traditionally hot summer housing market coming up, I thought I’d share some insights I recently gained from listening to Patrick Stone, Founder and Executive Director of Williston Financial Group providing title insurance and real estate settlement services. He delivers a housing forecast to the Hasson Company every year and I believe he does it better than anyone else. Perhaps it’s because he’s like me—he doesn’t always tell us what we want to hear but rather he tells us how it is backing up what he has to say with numbers and trends. Here are some of his insights as they pertain to the person looking to buy or sell a home in Lake Oswego.
WHAT NOT TO WORRY ABOUT
Housing market crash. Economic growth is generally a good thing, but those of us who lived through the housing bubble burst of 2007-2009, worry that behind economic good news lurks a potential disaster. Not to worry in the midst of our current economic forecast. This time around housing isn’t what’s driving the economy and while that means we’re not seeing outlandish appreciation, it also means we aren’t due for a jolting correction.
Whether or not your home will keep appreciating. The truth is that we have been seeing a general decline in home appreciation since 2016 when appreciation averaged 12%. In 2017, the average went down to 8% followed by 5.5% in 2018 and a projected 3-3.5% this year and next. But if you look at the long view and go back to 1986, we’ve averaged north of 5-6% annual appreciation and that has always led to a healthy market—a good balance between homeowners making a profit on their investment and homebuyers finding homes they can afford. So your home may not keep appreciating at those double digit rates homeowners loved and homebuyers hated a few years ago, but it will keep increasing in value in what I consider to be a healthy range for the market overall.
WHAT TO WORRY ABOUT (OR AT LEAST KEEP YOUR EYE ON):
Rising interest rates. There are lots of factors that play into this equation so it’s important to watch our growth rate for one. Too robust an economy can cause the feds to worry about inflation and resort to the tool of their trade to curb it—raising interest rates. What may keep them from doing that right now is that the rest of the world is in a slowdown. Higher interest rates would make it harder for other countries to borrow from us, making their economies even more sluggish. In this global economy that isn’t considered a good thing so the feds have to take that into consideration as well. Stone estimates that mortgage rates will increase but just slightly, topping out below 5% by the end of 2019.
Growing deficit. This is another factor that plays into interest rates. Even though tax cuts were celebrated they don’t pay for themselves. The feds could raise interest rates to generate more money for the federal government. Higher interest on their bonds puts more dollars in the federal coffers but can hurt the consumer so it’s a tightrope walk consumers and homebuyers in particular should pay attention to.
THINGS TO LOOK FORWARD TO:
The incursion of the millennials into the housing market. College debt, travel priorities, delayed settling down have kept millennials living in apartments, living with their parents or living on the road until now. Homebuyers in the 25-35 age range have typically fueled the housing market so as they begin to show up the demand for housing will go up. First time homebuyers are expected to be 37.5% of all buyers in 2019, an increase of 2% and reach 40% in 2020, pushing up the lower end of the housing market which in turn will push up the higher end. This will fuel a housing shortage through 2022 which is good news for Lake Oswego homeowners already with a mortgage in their name.
More improvements to the quality of life in Lake Oswego. The value of your home is influenced by many things from square footage to the community in which you live. If you live in Lake Oswego, the community is one of your home’s greatest assets and your tax dollars, council members, school board members, city employees, business owners, fellow residents and volunteers are always hard at work doing their best to enhance its value. From the state-of-the-art new Lakeridge Junior High under construction to the stewardship work parties each weekend at local parks to the cultural diversity talks sponsored by the Respond to Racism group, there is evidence everywhere you look that Lake Oswego is not a static asset. It will continue to appreciate because the people who live here are willing to invest their time, resources and talents into making it a great place to live.
If you’re thinking of moving to or within Lake Oswego, give me a call and let me put my over 30 years’ experience as a Realtor to work for you. You can also check out my website. I look forward to hearing from you! And if you just need more reasons to move to Lake Oswego, subscribe to my blog by clicking on the “Sign me up” button in the top right-hand column.