What is your home worth?
Home prices are rising as our economy continues to improve; retirees are retiring in droves and millennials are moving out of their parents’ basements and into the housing market. Housing demand is strong and the inventory of homes is low so home prices are being driven up. So how do you figure out the value of your home?
There are many ways you can calculate the value of your home, but most of them are pretty inaccurate. You can go to Zillow.com and look up your home’s “Zestimate”, which is a home value calculated by taking a radius search of neighboring homes that have sold. This will work great if all your neighbors’ homes were built in the same year, by the same builder, have the same features and the exact same amenities. If not, then this won’t work. You can take the price you purchase your home for and add to that the average price growth in your area. This may or may not work as home prices in Jackson County went up and up until 2006, then declined from 2007 – 2011, leveled in 2012, then started going back up in 2013, so you would have to do lots of addition and subtraction. So how do you come up with a value of your home?
Your home’s value is determined by two factors – what a buyer will pay for your home and what an appraiser will appraise it for. We have three major groups of buyers in Southern Oregon and each group has its unique requirements for housing which, in turn, is causing different levels of demand for different price points of homes.
• Locals: The population is growing in Jackson County and kids are getting older, getting married, moving out of their parents’ home to buy their first home. Or, first time home buyers are moving up to a larger home as their families grow. The median price of a home is in the $200,000 range, so homes priced under $200,000 are in high demand as our service industry grows and our population ages. Because many of these homes are being bought by young couples, they typically are heavily financed with little money down and they must appraise. Many sellers of homes can get a buyer to pay a higher price for their home but they are limited by what an appraiser will appraise it for. The buyer and the bank pay the appraiser to make sure the price they are paying is equal to three similar homes just sold in the area. This protects the buyer and the lending bank from overpaying for the home. Expect to see very steady demand and price growth in homes priced under $200,000 but appraisers will keep the prices from growing too quickly.
• Retirees: We are again seeing hundreds and hundreds of retirees choosing Southern Oregon as a rich place to retire. With our unique combination of four seasons, outdoor activities, abundance of wineries, golf and cultural activities such as live plays, music events, and reasonably priced housing, we are the perfect place to retire. Retirees are clear in the homes they want to purchase. They may have sold a home in California for $1.5 million but part of that revenue will be for retirement and part for the purchase of their home in Southern Oregon. Most retirees focus on modest sized newer and nice homes with all the living and master on the first floor. Currently the demand is larger than the supply of these homes. In Jacksonville, if a newer home comes on the market in the $400,000 – $500,000 range with the master bedroom on the bottom floor there will be multiple offers, and most of them will be all cash. The demand for these homes far outnumber the supply so prices of these homes are climbing quickly and often sell above appraised price. Expect to see prices increasing on these newer homes priced below $500,000 faster than any other price category as appraisals aren’t important to these cash buyers.
• Escapees: We are seeing working families we call Escapees, which leave large metropolitan areas in California, Washington, and all over the United States to come to our area for a better quality of life. The catch is it’s hard to make a high wage once they arrived. Our economy in Southern Oregon is largely based on the low paying service industry catering to the retirees. The local medical industry does bring in high paying workers, as well as some high level management jobs at Harry & David, Amy’s and Lithia; but, our economic base is small. Many families want to move here but can’t duplicate the salaries available in large city’s so most Escapees bring their job with them and continue to work for fortune 1000 companies remotely from home. These escapees are buying the higher priced homes but the market is sketchy. Homes priced over $500,000 can take two, three or four years to sell waiting for highly paid escapees to move to our area. This buyer can also be all cash but there are far more homes on the market priced above $500,000 than there are buyers for those homes. When these homes do sell, they usually sell for less than asking price. Expect to see prices rising as retirees start to buy higher priced homes here as they net more from their home sales out of state, and large companies allow more workers to work from home increasing the number of Escapees in Southern Oregon.
So what is your home worth? What will a buyer pay for it? Where does your home price fall? Does your home appeal to a retiree? Do you have a new home with a master on the bottom? If you want to know the value of your home, skip Zillow and call your local Realtor who can tell you the exact value of your home. If you bought your home from 2003 – 2007 and the value is not where you want it to be, consider renting it out to one of the retirees who are waiting for a newer home with the master on the bottom to come on the market.