What’s in Store for 2018

What’s in Store for 2018

Happy New Year!  2017 was a great year for Jackson County real estate. The median sales price for existing single-family residences climbed 10.3 percent last year to $264,700 following a 6.6 percent increase to $239,900 in 2016. The median also surpassed the previous high of $259,000 from before the market collapse in 2007. So real estate in Jackson County is worth more now than it has ever been before!

Although there were more homes for resale in 2017 than 2016, we still have hundreds of buyers that haven’t found their dream home and demand is stacking up. We could have sold many more homes if the inventory was there.

So, what do we predict for 2018? To answer that, we just need to look at all the factors that create the supply and demand and then predict what will happen.

Demand: A good part of our real estate market is driven by retirees and escapees. There are 10,000 people turning 65 in the United States every day so we will see the number of retirees increasing in the years to come growing our area at a faster pace than before. We will also see a ‘short term’  increase in the numbers coming because of issues faced by Californians such as fires, mud slides, lack of housing and some of the highest prices for both rental homes and primary residences in the country. We are also seeing a slow move out of large crowed metropolitan areas to smaller towns as more and more corporations allow their employees to work from home which allows many people to move to smaller, less expensive areas such as ours.

Rental Prices: Another great determiner of demand comes from those who rent. With rental rates extremely high in Jackson County, and only 1% vacancy, rental rate rates are bound to stay high. In most cases, a rental home with a value of $350,000 or less will cost less to buy than it does to rent! This means that many of the 40% of families that rent are trying to get into a position to buy.

Economy: We don’t have much industry in Southern Oregon; it’s mainly medical, manufacturing and the service industry – that’s the bad news. The good news is our economy isn’t  affected by short term highs and lows in any one industry. For example, Houston is the center of the US energy Industry, with more than 3,000 energy-related businesses which has their real estate prices tied to the ups and downs in oil prices. The good news for Jackson County is that unemployment is at an all-time low at 4.2%, so almost anyone who wants a job can get a job.

Supply: There were virtually no homes or apartments built in the United States during the housing caused recession lasting from 2007 – 2013. New homes couldn’t compete with the price of foreclosed homes being sold by banks. This has caused a shortage of homes throughout the United States as well as a shortage of good, licensed contractors to build them. We are really feeling this in Southern Oregon as new homes are selling as fast as they can be built. We are also seeing many out of state home buyers parked in rental units waiting, sometimes a year, before they find the home they want to buy. All of this compounded with stringent lending to commercial borrowers creates a lack of new homes. Currently there are just over 700 homes for sale in Jackson County, which is a two month supply, where we used to average 2500 homes for sale prior to the 2007 recession, and new home construction is moving slowly.

Interest rates: Although interest rates are slowly increasing, they are still at a historic low. The Federal Reserve has stated they plan on raising the prime rate three times in 2018 which will probably increase the mortgage interest rate to  somewhere between 4.8 – 5% by the end of 2018. Retirees and Escapees aren’t affected too much by interest rate but first time home buyers are. As long as rental prices stay high, and unemployment stays low, first time home buyers will be trying hard to buy their first home.

Income Tax Changes: The new Income tax changes that take effect this year don’t help the Housing Industry, but don’t hurt it very much either. If you are a young millennial buying your first home you probably won’t take advantage of writing off your mortgage or property tax because the new standard deduction will be greater than your real estate cost. But again, as long as renting costs more than buying, the demand for first time home buyers will stay high.

So you can see that our housing demand is at an all-time high and supply is at an all-time low.  This has led to a 6.6% increase in real estate pricing in 2016 and a more than 10% year to date increase in 2018. We see nothing in the short term future that will change the supply and demand, so prices in Jackson County are likely to continue to increase by 7 – 10% a year until supply and demand stabilize.

By Graham Farran

1447 East Main Street, Ashland, OR 97520

$469,000


This beautiful 1949 home was remodeled down to the studs in 1981! In the last 5 years the roof has been reshingled, a new heat pump and coil installed, all water pipes replaced with PEX, new tankless gas water heater and new gutters! The kitchen has been beautifully remodeled with full granite backsplash, new stainless appliances, granite counters, automatic hot water dispenser and 1 yr old stainless fridge! This home boasts a wonderful open floor plan with huge family room with gas stove, large enclosed sunporch, certified woodstove and covered porch with outdoor wink that has hot/cold water, outside the home is surrounded by a fully fenced gorgeous garden with shade and fruit trees and a wonderful privacy hedge! Bonus: the property boasts TID rights w/irrigation pump included, and the huge field next door is EFU land belonging to Ashland School District that will never be built upon! Settle in and enjoy your new home in a park-like setting less than a mile from downtown Ashland

44 Mallard Street, Ashland, Oregon 97520

$324,000


This level, large, ready to build lot also boasts a bonus 1,760 sq ft, two story remodeled former dairy barn!  This charming property offers you the chance to build the home of your dreams and retain the dairy barn to use as?  Less than a mile from downtown Ashland it  backs against an expansive field that belongs to the Ashland School District and is zoned Exclusive Farm Use so it will never be built upon.   The remodeled dairy barn’s ground floor has an 425 sq ft well-appointed studio apartment (unpermitted) with W/D, small kitchen, breakfast bar and laminate flooring and spacious workshop. Upstairs you enter into an 880 sq ft loft with stunning views of the mountains and valley.  The lot has Irrigation rights and is not part of Mill Pond Estates HOA and their CC&Rs do not apply!  Water, electric, sewer and cable are already stubbed on the property, natural gas is available, and the curb cut is in!

160 W C Street, Jacksonville, OR 97530

$599,300

Home / Commercial Spaces

The Historic Combest House, located in the heart of Jacksonville, offers an incredible opportunity! Make the beautiful two bedroom, two bath house your home while you run your business out of one or both of the updated detached buildings. The Historical Core zoning allows for a multitude of commercial uses. Taxes are frozen at a special rate until 2023. The fully updated 1862 property features hardwood / carpet floors, updated appliances, beautifully landscaped grounds with in-ground sprinklers, and hard to find off- street parking. Be sure and check out the original 1862 root/wine cellar! The Historic Combest House is registered on the National Historic Register and featured on the Jacksonville Walking Map and Trolley Tour. All this just blocks away from the Britt Festival, the Jacksonville Trails, and all that downtown Jacksonville has to offer. Come tour the Combest House today!

60 Rose Ave – For Sale

Classic Craftsman Home with Additional Unit

MLS:2963954

$229,000

Come tour this classic Craftsman home and fall in love with its charm. Built in 1912 and remodeled in 2002, this home features both
hardwood and tile flooring, sunlit rooms, a gas fireplace, formal dining room as well as a dining area in the kitchen and a large laundry room. The downstairs master has it’s own private entrance and could also be used as an office or guest room. There is an additional dwelling unit in the back with its own yard and separate entrance. The yard is nicely landscaped and features the quintessential covered porch and picket fence. Make this home yours, and enjoy a summer’s evening sipping lemonade under the blossoming wisteria.

 

 

CLICK HERE FOR MORE INFO

 

 

Accidental Investors

I just left the title company where our clients picked up a $61,000 check – the proceeds from selling their house. What makes this such a great story is how young and financially smart this couple has been. I first met this twenty- something couple, two and a half years ago when he was transferred here by the army; she was pregnant and they came to us looking for a rental home. They settled into a rental home in Eagle Point for $1250 month, and after renting for six months, they called us to see if we could help them buy a home. They soon found the perfect home for $167,900 and moved into it. Because he was in the army, he was able to get a VA loan with zero down giving them a mortgage under $800 a month – $450 a month less than they were paying in rent. In addition, they had a $9,000 a year tax deduction by writing off their mortgage payments, and in two years’ time they walked away with a $61,000 check. Accidental Investors or really smart young couple, you decide? 

One of our brokers is 25, married, and bought his first home at 23, which in two years is worth $65,000 more that he paid for it.  He’s a great example of either a financial wizard or Accidental Investor and he now gets to help his peers follow his path. One of his clients called him after a year of owning their home and they wanted to sell it to move to the country. He had to deliver both bad and good news to them. The bad news was that if they sold their home without owning it at least two years, they would have to pay state and federal capital gains tax on any equity they had in the home. The good news is that they had made $40,000 in equity in just one year and if they want to move at the end of this year they will most likely have about $80,000 in equity. What’s also interesting about this couple is their parents weren’t always supportive of them buying a home and they thought they should wait and save more money first. If they had waited to purchase a home, any savings would have been wiped out by the $40,000 cost increase of their home. 

Our young broker had another couple that came to him to see if he could buy a home with the goal of paying less in a mortgage payment than what they were paying in rent. They were successful, and in addition to lowering their monthly payment they have made at least $25,000 in equity; and if that’s not enough, their lot is so large they are now working with a private planner to split it in half and sell off the vacant portion for $70,000. 

Today we just completed a “value evaluation” for another young, newly married couple who bought a small two bedroom, one bath home in 2015, with a mortgage payment less than their rent and it looks like they have made about $2,275 in application for each and every month they have lived in their home. This month we close on a new home for the newly married daughter and son-in law of another broker on our team and they will soon be enjoying the world of tax deductions, sweat equity and appreciating values as well. 

All of these cases are young couples just married and making smart financial choices. Don’t you wish you were as smart as they have been when you were their age? They all have mortgage payments that are lower than their previous rent payments! They all save on their taxes by deducting their mortgage payments, and lastly, they are all making about $30,000 a year in appreciation. 

Accidental investors or financial wizards, these are all smart couples who have made sound financial decisions. We hope other young couples reading this article think twice about continuing to rent and they too can become Accidental Investors! 

Written By Graham Farran