2013 Real Estate Market – “Year in Review”

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Jackson County has had an incredible year in the Real Estate Market. Home prices in most metropolitan areas of the United States grew significantly in 2103, with the national median price rising at its fastest annual rate in eight years. The good news is Jackson County has exceeded the national average with median price (meaning half  the homes sold over this number and half sold under) of a home increasing by almost 20% in 2013*. This increase is due in part to home prices increasing and in part to the make-up of those homes that sold.  For example, In Jacksonville the median price has increased by 77% mainly due to more than three times as many homes selling over $500,000 in 2013 than sold in 2012. All in all 2013 marked the first year of significant recovery with double digit growth and the return of the high end housing market.

Home sales for 2013 compared to 2012: 

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Bottom Line: Home prices have increased, selling closer to list price and moving quicker. High end home sales are back for the first time in seven years!

What does this mean for Sellers?

It depends if you need a loan or not. If you want to sell your home and buy a new home with cash then time is on your side as prices will continue to increase. However, if you want to sell your home and buy a new home requiring a loan, time isn’t on your side. Your home price will increase with time but interest rates will also increase so you may be better off selling sooner than later.

What does this mean for Buyers?

Buy now! We are at the point where both home prices and interest rates are climbing. So right now the timing is as good as it will get and time isn’t on your side.

What does this mean for Investors? 

As home prices and interest rates both climb capitalization rates will decrease. The supply of homes has been limited with little to no building in the last seven years. Rental rates have climbed and will continue on this path. Cost of borrowing monies and purchasing a home is also climbing. Right now is as good as it will get for investors.

What does this mean for Renters?

As stated above the supply of rental homes has had little to no increase in the last seven years while the demand for rental homes has increased. The growing population combined with the decreasing percent of ownership has increased demand for rental homes. We foresee rents continuing to increase and the majority of tenants will actually pay less in a monthly mortgage then they are paying now for rent. So again, now is the time to buy!

2014 Forecast: Home prices will continue increasing 

Three factors will determine how the housing market fairs in 2014 and if home prices continue to climb;

  • Continue Quantitative Easing: The Federal Government has done a great job using “Quantitative easing” to create a cheap supply of money, giving us historically low interest rates which in turn have stabilized the economy and improved the housing market. Quantitative easing must continue until we achieve a healthier economy with high employment and higher wages. The soon to be Federal Reserve Chairwomen, Janet Yellen, has gone on record stating she will continue to stimulate the economy at current levels.
  • Slow foreclosures: We have seen a drastic decrease in the number of bank-owned properties. Banks have written off the majority of bad home loans but have taken little to no action on thousands of home loans that are currently in default. As prices increase time is on the banks side and they can increase their efforts to refinance loans in default instead of pursuing foreclose process.  It’s critical that the banks continue their slow pace of foreclosing and not flood the market with excess inventory.
  • Ease lending requirements: The last few years we have seen strict lending requirements that require higher credit scores, no discrepancies in credit history, and higher income. The approval process that has become grueling with endless documentation.  Some of these new requirements are positive but in many cases we have overcompensated and standards need to be loosened.  Unfortunately, we don’t see these standards changing in 2014 but they will need to be addressed to increase the numbers of homes sold in the future and   achieve a full housing recovery.

If in 2014 we experience the same rate of recovery as 2013 we will soon be well on our way to a fully recovery in the real estate market in Southern Oregon.

*Stats taken from Southern Oregon Multiple Listing Service. Because this article was written November 15th the stats are from the beginning of both years but ending on Nov 15th so they are for a 10.5 month period. 

Ten Reasons Why Real Estate is a Superior Investment

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Ten Reasons Why Real Estate is a Superior Investment 

by Graham Farran

Do you have enough money saved for retirement? Financial planners usually use the “25 Times Rule” to determine how much a portfolio should be worth for someone to safely retire. If you need $50,000 a year to live on when you retire, then, using the “25 Times Rule” you should have $1,250,000 in stocks, bonds and mutual funds. Then, at retirement, financial planners begin liquidating these assets using a “4-Percent Rule,” which simply means they liquidate 4 percent of the portfolio each year until it is down to zero after 25 years. If you retire at 65, you better hope you don’t live past 90 or you’ll be broke.

Compared to investors who rely on the stock market to accumulate assets for their retirement, real estate investments take a different approach. If you accumulate $2,800,000 in income-producing real estate it will pay $50,000 a year in income and continue to appreciate in value over the years, not only covering you indefinitely but also leaving you something to pass on to your children.

Here’s the interesting part, it only takes $700,000 in investment capital to accumulate $2,800,000 in real estate assets. By comparison, it takes about $900,000 in stock investments to achieve a $50,000 per year annual income, assuming that during 30 years of investing both types of investments yield a 4 percent return.

Real Estate has many advantages over investing in stocks, bonds or mutual funds. Real estate offers predictable cash flow; it appreciates in value, thus keeping up with inflation; it provides a higher return because of positive leverage; and it offers equity growth through debt reduction. During retirement, real estate is a self-sustaining asset while stocks are a self-liquidating asset. Which would you prefer, a self-sustaining asset or a self-liquidating asset?

Ten reasons to invest in real estate:

  • Real estate has a predictable cash flow

Cash flow is the net spendable income derived from the investment after all operating expenses and mortgage payments have been made. A good real estate investment should provide you with 6% or greater cash flow.

  • Real estate appreciates in value

Since 1968, appreciation levels for real estate have been 6 percent per year, including during the downturn in the economy beginning in 2007, according to the National Association of Realtors.

  • Real estate can be leveraged

The most important advantage of real estate investing is LEVERAGE! It is the use of borrowed capital to increase the potential return of an investment. In real estate transactions, leverage occurs when a mortgage is used to reduce the amount of investor capital required to purchase a property. The annual return on a $200,000 property with a $20,000 net cash flow purchased with cash is 10 percent. If 75% of the money required to purchase the property is borrowed, even factoring in the cost of making the mortgage payment, the annual return more than doubles to 22 percent (assuming a loan of $150,000 is amortized over 30 years at 5 percent interest).

Once you have built up an equity position in an investment property, you can leverage that investment for cash in one of two ways: Secure a second loan against the increased equity or refinance the original loan amount plus the increase equity.

  • Real estate provides equity buildup

Most real estate is purchased with a small down payment with the balance of the money being provided through debt financing from a lender. Over time, the principal amount of the mortgage is paid down, slowly at first, and then more rapidly toward the end of the amortization period. This principal reduction builds equity.

  • Real estate is improvable

One of the most unique and attractive advantages of real estate is that it is improvable. Because real estate is a tangible asset made of wood, brick, concrete, and glass you can improve the value of any property with some “elbow grease” and “sweat equity.”  Whether the repairs are structural or cosmetic, do it yourself or hire someone, the principle is the same.

  • Real estate coincides with retirement

When real estate is purchased, the cash flow is lower and the principal reduction on the mortgage is less. Over time, the mortgage is paid down, or paid off, and the cash flow increases. In some respects it’s a forced savings program, yielding a greater amount as time goes by which is a perfect investment for retirement as it increases in cash flow down the road.

  • Real estate is tax deductible

Tax codes allows various deductions for the normal expenses incurred in owning real estate, such as property upkeep, maintenance, improvements and even the interest paid on the mortgage. The deductions can offset income and reduce your overall taxes.

  • Real estate is depreciable

Depreciation is a non-cash expense permitted by the tax code that depreciates in value of your investment property over time. However, the value of your investment property actually appreciates. The depreciation deduction allows a real estate investor to generate a larger positive cash flow while reporting a lower income for tax purposes. This creates a higher return than you may initially realize.

  • Real estate has a lower tax rate

If your investment property is sold after a year, the gain is subject to capital gains tax rates which depending upon your individual tax bracket is generally 15% or 20% which is usually less than ones personal tax bracket.

  • Real estate gains are deferrable

Our tax code, under a 1031 exchange, permits the gain on the sale of an investment property to be transferred from the property being sold to a new property being purchased, hence deferring the payment of any tax on the sale of the property.

 

There is one final advantage to a real estate investment and that it is understandable and easy for most everyone.  It’s easy to purchase, it’s easy to finance and there are no insurmountable financial barriers to entry. It’s easy for most investors to improve their properties and it’s easy to use the tax advantages. While Wall Street is becoming more and more of a mystery and becoming the game of financiers, real estate investing is looking better and better.

Low Level Buzz

Nunan, Bella & Others 026Nunan, Bella & Others 025Do you feel it?  Do you see it?  Something is different!  The Rogue Valley has a deafening low level buzz rising in the air.  It’s an energy that wasn’t here before: our Valley is coming back alive again!   Big Corporations have taken notice – from Trader Joes to REI who opened their doors in the same month at the same plaza.   I watch in amazement at the influx of new businesses and additional locations of existing businesses multiply in our Valley.  What do they know? What growth studies are they privy to? Listen closely, do you hear it?  Are we the newest up and coming place to live?

We’ve spent the last decade or so in the worst recession/depression since the 1920s.  Being in real estate, I’ve had a front row seat.  I’ve seen the tragedy of families losing their businesses, homes, and their hope.  I had the privilege of helping many of them navigate through what seemed like impossible times.  But now, things are changing.

We saw the first signs of this in real estate when home prices began to increase and buyers flocking back to the market driven by still low prices and low interest rates.  Then we saw new construction starting up.  What were once abandoned subdivisions are now fresh neighborhoods buzzing with big trucks, contractors, and homes popping-up in what seems to be overnight.  From Ashland to Eagle Point, Medford to Jacksonville there is movement and activity everywhere.  When you’re driving around, try to count the number of new buildings, new wineries, new breweries, new restaurants, big name national retailers with storefronts in our valley and local businesses who are thriving like never before. Try driving 5 miles without seeing a logging truck on the road!  We even have a couple of proper sports teams to call our own now.  Somehow, when we weren’t looking, our Valley not only rose out of its depression but it’s still rising and thriving.  And how?

 

Local Businesses Thriving!

Harry & David have come back from bankruptcy to post a $13 million profit for its fiscal year ending June 29th.  Lithia Motors passed the $1 billion mark in revenue during a single quarter and is seeing a 31.3% jump in profit over the last year.  Boise Cascade reopened their White City plant and Brammo Electric Motor Cycles just purchased the empty Wal-Mart building in Talent to house their new assembly line.  Rogue Credit Union purchased Chetco Credit Union on the Oregon Coast and Umpqua Bank purchased Sterling Bank. Peoples Bank has just completed construction of a multi story building off of Barnett.  Erickson Air Crane has purchased two other helicopter companies, Evergreen and Brazilian Aerial.  Raising Sun Farms Inc was listed in Fortune Magazine as one of the 5,000 fastest growing US companies.  Amy’s Kitchen is planning a $19 million expansion in White City which could push its workforce to 800 employees by the end of the year.

 

National Retailers & Restaurants

Walgreens has announced their third new store to be built in Central Point. Wal-Mart has opened its third new Super Center in the Valley.  REI, Petco and the long awaited Trader Joe’s (thank you!), Auto Zone and Verizon Store, (including that Time Square worthy billboard by the Rogue Valley Mall) have all arrived and settled in our valley. Natural Grocers out of Colorado opened a store off of North Pacific Highway and the Texas Steakhouse Restaurant has opened off of Hwy 62. The valley also has a new Starbucks, Pita Pit, and our very first Chipotle Mexican Grill.  So what do all these big time national retailers know that we don’t.

 

Sports & Entertainment

The historic Holly Theater tours begin this month that will raise capital to complete the interior remodel of this 1200 seat grand theater, Mt Ashland is expanding their ski park and the Medford Rogues seem to have come out of nowhere to give us a great baseball team with a winning season at the Harry & David Field.  The Southern Oregon Spartans are playing ice hockey in front of sold-out crowds… yes, ice hockey in the Rogue Valley as well as Go Kart Hero where we can drive up to 50 mph!

 

Hotels

Ashland is about to see the construction of a new boutique hotel called “The Vine” on Lithia Way.  Lithia Springs Resort in Ashland is being renovated and Windmill Inn in Ashland newly purchased is also going through a renovation. The Red Lion in Medford was purchased and will follow suit with the facelift, as well as a new name “Inn at the Commons”.

 

Building/Investment

Lithia’s new multi-story corporate offices off of Riverside are now complete but construction continues on “The Commons” parks that surround it.  Southern Oregon’s University’s massive dormitory complex just opened in Ashland.  The “One West Main” construction project is underway, four stories, retail shops on the ground floor and housing of corporate headquarters for three local companies.  The Federal Building in downtown Medford was demolished only to make way for a Jackson County Health high-rise building and parking lot.  A residential/commercial complex is breaking ground on Lithia Way and there is a buzzing around, of a proposed 25 unit housing complex to be built above the parking lot on Central and 10th across from the Medford Library.

 

Wineries & Beer

We’re all enjoying a wave of new wineries such as Dancin, Kriselle Cellars, 2 Hawk, and Red Lily.  The newest kid on the block, Bella Fiore Winery, is something straight out of Napa and is the most ornate production facility of 20,000 square feet, 3 stories of beautiful Italian style construction and a ballroom. In addition there is a 19,000 square feet Chateau with slate roof and turrets that may be reserved for special occasions.  It’s not just the wineries that are bringing a claim to fame to our valley, beer fans are delighted at the opening of Caldera’s new industrial cool brew house in Ashland, which was named in September’s Sunset Magazine as the new “it” place to hang out in Southern Oregon.

Forgive me for everything I left out, but I’m just one person and this is just a list of what has caught my eye.

So next time you’re stuck behind that slow moving logging truck, just smile and be grateful for this low level buzz.

To Own or Not to Own. That is the Question.

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Rental Market:

There are two inter-related trends that have impacted the rental market. The first is the rapidly growing number of Americans who cannot afford to buy a home.  These are the millions of, “Generation X and Y”, young adults who do not have the money, credit scores or income to qualify for a home mortgage. Their only options are to rent or live with their parents.

Second, we have increasing number of renters that have lost their homes in the “Great Mortgage Fiasco.”  Hundreds of thousands of families across the nation have been faced with the unseemly choice of giving their house back to the lenders or experiencing the dread of foreclosure.  Those families who have lost their homes make up a new breed of residential renters.  We see them renting the nicer homes; they are people who think like owners, not renters.   Property managers like us have to make allowances for credit scores when screening potential residents. Many of these people have lost their homes may have low credit scores but make great, responsible renters.  Some are couples where one of the wage-earners lost their job and their income was reduced so drastically they could no longer afford the mortgage. They are not a bad credit risk, just people who suffered a string of bad luck.  They will have the pride-of-ownership mentality and want to live in a nice home.  They actually want to take care of the rental as if it were their own home.  These are great renters.

More evidence is mounting that only about half of the foreclosures and REO houses have hit the market yet. That’s correct: as many as 50% of the mortgages that have gone into default have not been foreclosed on and put up for sale. With both home sales and home prices going up, most banks are in no hurry to foreclose; time is on their side.  The demand for rental housing has been increasing and will continue to increase in the months (maybe years) ahead.  We will continue to see a shortage of rental housing, which means rental prices, will continue to increase.

Because of the increasing demand on the rental market, the last few years we have seen rents that are climbing and occupancy rates remaining high. Nationwide rental statistics recently released by Axiometrics Inc. revealed that rental prices rose 5.16% in 2011 and 5.17% in 2012. The single family rental market demand has expanded by 16% since 2007. Axiometrics predicts an additional 1.7 million new renter households between now and 2015.  We are seeing these trends play out in our local business.  As an aggressive property management company, we are seeing average length of  vacancy of only 3 to 5 days.  We also work with seemingly desperate relocation tenants that need to move and are renting homes sight unseen over the phone.  These are professionals who are relocating to take employment in our slowly improving local economy.  They often transition into buyers that purchase a home.

Rent or Buy?

Because of all time low interest rates and home prices that have risen more slowly than rents, buying is now cheaper than renting in many markets. A survey by Trulia.com states that, on average, owning a home is as much as 45% cheaper in the 100 largest U.S. metro areas than renting. We see this every day in the rental homes we manage that are priced under $350,000.  At current mortgage rates the mortgage payment would be less than the monthly rent payment. On homes priced above $350,000 that is not necessarily true: the rental price of the home is less than the mortgage. In Jacksonville, a nice $300,000 home would rent for around $1500 month and if you had 100% financing, one would pay around $1,480 month in mortgage payments. In West Medford, a little 3 bedroom/1 bath cottage would rent for $1,000 a month.  It would sell for $100,000, but the mortgage payment would be about $500 a month.  So owning can cost far less than renting, while also providing tax breaks and possible appreciation benefits.

Lending

Many are surprised to learn that even after the mortgage meltdown there is still a huge range of loan products available, including low- to no-down payment options. There is a USDA rural loan that can be used in most areas of Jackson County, except the cities of Medford and some areas of Central Point.  This loan requires very little to no down payment, and can be used to purchase a home. Another loan from FHA requires less that 4% down.  If you are a veteran there is a great VA loan requiring nothing down. In conjunction with using these low down payment loans, one can also ask for seller credit for most, if not all, of the closing cost.

So, from a purely numbers standpoint, right now it makes more sense to buy rather than rent, except in high-end homes. There are two catches.  First, you have to qualify for a mortgage, which many not be easy for those drowning in credit card debt, student loans or those with credit score below the mid 600’s. Second, you need money for a down payment and closing cost, which, for most, is the difficult part (see the Side Bar for ideas for securing a down payment).  If you can come up with the down payment, have a credit score of mid-600’s or higher, and are currently renting a home valued less than $350,000 you could probably own the home for less!

(Side Bar)

How to Secure the Down Payment

The biggest challenge in buying a home will almost certainly be securing your down payment and closing costs. Whether you are trying to scrape up the 3.5% down for an FHA loan or you are planning to put down a full 20% to avoid paying PMI (principal mortgage insurance), saving for a down payment might be the largest savings endeavor you ever undertake.

But it can be done.  If you look at it as a challenge instead of a slow deprivation-driven chore, you could own a home! Here are some creative ideas for where to find a down payment:

  • Cut Your Budget’s Biggest Line Items. This is where you may spend the most money, and offer the biggest chance for big savings. 
    • Move home or to a less expensive rental
    • Go from two cars to one car
    • Eliminate meals out
    • Cancel your cable TV and put up a digital antenna
  • Eliminate Your Vices.  Some indulgences are expensive.  By eliminating them, you save money.  You might even improve your health.   
    • Stop smoking
    • Drink less alcohol
    • Cook at home rather than dine in restaurants
    • Stop recreational shopping  and curb your impulse spending
    • Make coffee at home and skip expensive coffee shops
  • Sell your stuff.   Your garage is full of valuable stuff that you seldom use.  Clear it out and make some extra cash.  Here are some examples of things you may consider selling:
    • ATV’s, snowmobiles, jet skis, motorcycles, boats, extra cars
    • Clothes, shoes, handbags
    • Supplies and equipment for hobbies you’re no longer interested in
    • Workout equipment that is never used
    • Furniture and antiques
    • Electronics, CD’s, books, TV’s, Computers, old smart phones
  • Rent your stuff for income
    • Sites like www.gettaround.com and www.zimride.com, allow you to rent out your extra seat on a trip, rent your vehicle, your boat, your motorcycle  etc. to earn extra income.
  • Market Your Skills and Time
    • Spend your off time, evenings and weekends leveraging your professional skills or personal hobbies.  Earn extra income by providing technical support, car detailing, bookkeeping, babysitting, sewing, house cleaning, dog walking or whatever you are skilled at.
  • Your Family
    • If you are fortunate enough to have friends or family that can gift you money towards a down payment, this is an allowable source of down payment by the lender.  You can make your case by asking for cash in lieu of gifts for weddings, a new baby, birthday(s) or graduations. This gift may even be tax deductable for the giver.
  • Your Employer (401K)
    • A common way to raise money for a down payment is from you 401K program at work. Many first time home buyers turn to their 401K retirement plans and borrow the money from their own retirement savings to be used as a down payment.  Just talk with your HR department before you act so you know what to expect.

So if you are determined to save money for a down payment to purchase a home, be creative and you can be on your way to becoming a new homeowner.

What Women Want

This may sound like an article in Cosmo but it’s not…, it is a male realtor’s point of view after years of showing couples homes and observing what women tend to focus on vs. men. The National Association of Realtors say women account for 85% of the home purchase, so what women want is what they usually get when it comes to home purchases.

Both women and men usually start their home purchase by looking at homes for sale on the internet. Because so many of our buyers come here from out of state they are looking at great homes but have no idea where they are located until their first day here, loaded into the car and driving off. Usually the man is salivating over the size of the property, “I want 100 acres” and his wife is asking ‘Are we there yet?” as we are no more than 5 minutes from downtown Jacksonville. Once while leaving Jacksonville and driving up Sterling Creek road with a couple in tow, the wife looked out in amazement at the forest of trees and declared “The trees are too tall.”  The comment seems funny when saying it, but I did understand what she was saying. She felt uncomfortable in such a rural location and the trees made her feel closed in so it was no surprise that couple ended up in a home with a wide open view of the valley.

What do women want in a home? Women’s home preferences tend to be more practical and functional than men’s. Women like dining areas with easily wiped hardwood or tile floors, not carpeting and the location of a laundry room is likely to matter to them…they consider it a smart design if the laundry is by the master bedroom.
Men seem to be more interested in a home’s space and dimensions. “The guy may be saying, ‘Oh, man, look at the size of this place,’ and the woman saying, ‘Oh wow, look at the cabinets and the hardwood floors.”

So what do women and men want in a home?

  • Great location: Women usually care more about location and think more about how life will look in their house for the next 20 years. For couples who are retiring here, he may be enchanted with a large rural location and she is worrying how she is going to take care of everything in a remote location so far from all the amenities. Women also think more about safety and can feel more comfortable closer to other homes. Men on the other hand seek more peace and quiet and are drawn to rural locations.
  • A great kitchen: This is definitely the most important focus for women who see the kitchen as a family focal point. Both men and women love big open kitchens that include space for dining, entertaining, doing homework, using computers, watching TV, and hanging out together.
  • Land: It is a guy thing that bigger is better and it certainly applies to the size of a lot or acreage. A women’s point of view is different, she not going to use 100 acres so it’s not important, but for a guy just telling his friends back home that he’s buying a home on 100 acres fulfills some male need from “Maslow’s Hierarchy.” 
  • Big closets: Women want a home that helps manage their family’s accumulation of stuff. That means cupboards, drawers, cubbies and organizing systems. But above all, it means great walk-in closets. In many case the walk-In closet is just for her and he has to find another place to store his stuff. Trendy open designs, while fabulous, typically rob homes of storage space because they have few interior walls, which are crucial for built-in closets, shelves and cupboards to help tame clutter.
  • Bathtubs: They are a big attraction for female buyers. Not sure why, but I think it goes back to those Calgone TV commercials where the tub is one place in the home you can escape from the kids and life.
  • A comfortable place to socialize: A party space is nice, but women seem to focus more on a comfortable environment for sitting around, sharing and enjoying family. It could be a kitchen island or counter, a comfortable den, or a sofa pulled up in front of a fireplace. Men, on the other hand, go straight to the back yard to see where they will socialize. The recent trend of outdoor covered kitchens complete with TV’s, heaters and fire pits can fulfill a man’s dream.
  • A dedicated laundry room: Laundry rooms are becoming more important and a washer & dryer in a garage doesn’t make it anymore. Women want the washer and dryer by the bedrooms and better yet close to the master.  Trooping up or down a set of stairs with a laundry basket to reach the washer and dryer is another huge turn-off.
  • A floor plan that makes sense: Guys seldom get this but women are aware of the way a home flows. They do a great job of imagining living and functioning in the house, where guys just want to know where there TV and chair goes.
  • A two-car insulated garage: Countless times I have seen the husband head straight for the garage once we enter the home and his wife doesn’t even bother looking. When we’re back in the car she will ask if the garage was nice and he will ask where the laundry room was? So garages are important to men but seen as just storage by many women.

Side Bar:

How is the real estate market doing?

The real estate market continues to exceed expectations with fewer homes on the market, multiple bidders on homes under $200,000 and the return of out of state buyers buying homes over $500,000. A slight rise in interest rates to over 4% is putting more buyers into the market place and may accelerate the numbers below.

  • Median price per home percentage: Up 19.8% to $190,000
  • Average days on the market: Down 27.7%
  • Number of homes for sale: Down 10.5% 
  • Pending Sales: Up .8%
  • Month’s supply of inventory: Down 34.5%
  • Interest Rates on a 30 year fixed:  Rising slightly: 4.16% **

If you have any additional comments please give us your input on our blog at http://expertprops.com/blog/ .  Expert Properties specializes in Real Estate Management, Sales and Furnished Rentals.

*Statistics are for Existing Home Sales for the last 90 days:  March 1st -May 31st, 2013 and compared to the same time last year. Provided by the Southern Oregon Multiple Listing Service.

**Per Bankrate.com 6/5/2013

Real Estate Values Up 32.1 Percent!

Real Estate Values Up 32.1 Percent!

In 2012 we ended the year with a nice 8.4% increase in existing home prices in Jackson County. However, this is just the beginning of the story as in the last three months we have seen the median price of existing homes in Jackson County climb by 32.1%. Median prices have gone from their low of $140,000 to $185,000. On top of this price increase, the inventory of houses available for sales has declined 30.5% to only 823 on the market for sale.

This does not mean that everyone’s home has gone up 32.1% but what it does mean is our real estate market has bottomed out and is now growing faster than the national average. Median prices rise because of a combination of factors and in our market we have seen major recovery in both the entry level and high-end markets. For homes under $200,000 there are multiple offers causing prices to be bid over the asking price. In one case, last month, we represented a buyer on a home in South West Medford that came on the market and in three days there were seven offers, three of them over the asking price. It is surprising but the once dead market of over $500,000 increased 40% since January 2012. What is even more encouraging is there are more homes over $500,000 now pending than sold in the last 90 days. This illustrates that the high end market is experiencing a nice rebound and this pattern is likely to continue.red-graph

Distressed properties, which have dominated the market since the financial crash, have decreased to less than 13% of the inventory from their previous high which exceeded 50% of the inventory. We are still seeing a number of homes going into default but they are dwindling. As prices climb less homes are under water and apt to default back to the lending bank.

Thanks to the Federal Reserve, mortgage interest rates remain at an all time low. This has resulted in mortgage payments being less than tenant’s rent and has allowed investors to secure properties with returns exceeding 10%.

So what does the future hold? Who knows, it’s a world economy but with our stock market reaching an all time high, employment increasing and our real estate values soaring back, I think the future looks pretty good.

Statistics on Existing Home Sales in Jackson County*

December 2012 – February 2013

  • Median price per home: Up 32.1 % to $185,000
  • Average days on the market: 62 days
  • Number of homes for sale: Down 30.5 % to 823
  • Interest rate: 3.58% (30 year fixed, per Bankrate.com)

If you have any additional comments please give us your input on our blog at http://expertprops.com/blog/ . Expert Properties specializes in Real Estate Management, Sales and Furnished Rentals.

 

*Statistics are from the Southern Oregon Multiple Listing Service.