For today’s market update I took some questions from the man in the street. Read on and find out just what you and Jennifer Aniston have in common!
Is it true it’s going to take ten years for the real estate market to turn around?
While I haven’t lived through every boom or bust cycle, I have studied the situation enough to know this will not be the case.
Consider this. Area real estate took a major hit in the late 1970s and early 1980s, only to rebound five years later followed by a 25 year climb. Look at what’s happened to your stock portfolio since 2007. Most of us haven’t fully recovered from our losses but we are getting there. Bull markets average 54 months in length and we are in the 29th so I’m betting we’ll be in a better place 25 months from today.
That same rebound should hold true in the real estate market. In my last newsletter I predicted a slow return to the January 2010 median price of $395,000 after hitting a market low of $330,000 in February of 2011. Statistics out this month show we have climbed back to a $361,000 median price.
The average sales price shows us moving in that same positive direction. From a low of $386,000 in the Lake Oswego/West Linn area in February of 2011, this past month shows an increase to $458,000.
It’s important to remember that we trail the rest of the country in the timing of this recession and subsequent recovery. California towns similar to ours were hit first and are now actually increasing in value. We will follow slowly in their footsteps.
I saw two pending sale signs on houses today when I was taking a walk. Does that mean things are starting to turn around?
: Well priced homes are selling. There are many buyers on the sidelines watching and waiting. Their interior mechanism goes off when they enter a house that is well cared for and has an attractive price to go with it.
Example: I recently sold a home on Greentree Avenue in Lake Oswego. Initially the sellers wanted to list it at a higher price than I advised which we did, resulting in looks but no offers. After the market reality set in, they asked me, “Ok, Kevin, what is it going to take to sell our home? We need to move on.” A week after we brought the listing price closer to what the market will bear, they received a full price offer and the sale closed four weeks later. I like to think a Realtor’s experience has always made real estate transactions go smoother, but in today’s conditions, the perspective I can offer is even more valuable in terms of realistic market value and the best way to position your home.
The real estate mantra of “location, location, location,” now has an echo that says, “pricing, pricing, pricing.” I can show a client an attractive home listed at $300,000 which he walks out of unimpressed. Show him that house again after a major price reduction down to $250,000 and he’ll think it’s the best house he has ever seen. In today’s market, pricing is the difference between selling or not selling your home. If you don’t believe me, ask Jennifer Aniston. She reportedly just sold her home listed at $42 million for between $37-$38 million. It happens even to the richest of us! Of course she bought it in 2006 for $13.5 million, so chances are that even with the price reduction, she made some profit on the deal.
Until next time...