We’ve been having this conversation with our team, our clients, and others that a shift in the market is anticipated very soon. Well, it has now begun! So, what is a ‘shift in the market’ you might ask? Shifts can be positive or negative swing in the demand, value, and price of real estate in a hyper-local market or nationally like we saw in 2007/2008. Real Estate is cyclical, we always have these ‘highs’ and ‘lows’ but the severity is dependent on the world stage, local economies, and money cycles.
Our market and the national market had started rebounding from “the crash” starting in 2011. Since then, there has been a steady increase in home values upwards of 16%+ annually in our county. Depending on the area, some homes have even doubled in value since 2011. Consider Eagle Point, since 2011 the median home value has doubled in five years. Does that sound normal? Too much, too fast? We think so too…
Starting in 2016, home values have started to plateau and many gaining very little in value between last July and this July. Across Jackson County, we have seen an average of 4-5% increase. That still sounds good, right? Sure does! It’s actually sounds like a more normal gain annually. But it has been our experience that the plateau will likely turn into a little bit of a value dip as we cool off from those substantial gains in the last five year.
Some properties in our area haven’t fully recovered from the crash…it’s heart breaking, we know, but a fact we refuse to conceal from our sellers. Here are some more facts:
- People are staying in their homes longer. Homeowners used to sell every 4 or 5 years, now home owners stay in their homes upwards of 10 years before selling, which has lead to a low inventory of homes for sale.
- Low inventory levels mean home values haven’t dipped in our market recently. Plus, your best chance of selling your home quickly is price competitively. Carefully consider your agent’s market analysis because buyers have access to some of the same information on home values, thanks to the world-wide-web.
- Shifts are a result of supply, demand, and the subsequent price. Because of that, appraisers are getting leery of over-valuing homes just because of supply and demand, thus the cool-off that is happening now.
- Historically, Oregon has followed our neighbor California in market shifts. California has slowed down and cooled off A LOT in 2016. Latest numbers show 35% decrease in units sold and volume this year in Cali, while prices keep climbing.
- Across the nation, pending home sales are slowing down as well as the number of mortgage applications have gone down despite even lower interest rates.
- During a market shift, keep tabs on your neighborhood. What homes have sold? How long did it take? What was the list price vs. sales price? How many price reductions were engaged to get an offer? We can help you do that efficiently! We can set you up with auto-notifications of new listings, sales, and other details so you can keep an eye on the shift in your neighborhood.
- Shifts are not homogenous, not ever neighborhood or price range will experience the same shift.
- Finally, home values have rose almost to pre-crash levels but income has remained fairly stagnant, which means first time buyers may have a more difficult time with housing affordability. This may lead lenders to get more creative with their financing options, another reason why the shift is beginning to push us to our plateau.
The East Coast and California usually lead the charge in the normal Real Estate Cycles. If we can assume that this will be true again during this cycle, the market shift is definitely here. We’ve heard an analogy of a layer cake and Real Estate: inventory, financing, appraisals, demand, affordability, rates, jobs, loan programs, and others are all layers. Any shift in one of those layers has an effect on the whole cake. Let’s keep an eye on it! Gather information on your home, land, or investment property and keep in touch! Does it make sense to get ahead of the shift and get a CMA now or wait out and see what happens? It may be helpful to get an accurate CMA just to use as comparison over the next few years…see if we are right! Give us a ring – 541-690-8416 or email us at Alice@HeadleyDixon.com or Don@HeadleyDixon.com.
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