From Wikipedia, the free encyclopedia:
“Signs” is a song by the Canadian rock group Five Man Electrical Band. It was written by the band’s front-man, Les Emmerson and popularized the relatively unknown band, who recorded it for their second album, Good-byes and Butterflies, in 1970. “Signs” was originally released that year as the B-side to the relatively unsuccessful single “Hello Melinda Goodbye” (#55 Canada).
Now that we have these important factoids out of the way, let’s talk about real estate. We can all relate to signs. To seeing things that we know will eventually lead to other things. And right now, I’m seeing signs. Signs that the real estate market in the USA generally, and Central Oregon specifically, is cooling. And for the record, “cooling” to me means that there is a SHIFT in the market occurring. A gentle, subtle shift that, if it continues, will eventually take us from a sellers’ market to a buyers’ market. That could take a while. Or not happen at all. But it’s important to watch for the signs.
We have been in an up-trending market far longer than is usual for this industry. 5.5 years of constantly rising home prices is about 2.5 years more than we normally get. So, what are the “signs” I’m seeing? First – I’m seeing MANY more price reductions for homes that are currently listed. There are some specific exceptions to this, but overall there are more price reductions in the last two months than I’ve seen in a very, very long time. The exceptions I mentioned would be Northwest Crossing, Tetherow and possibly a few other neighborhoods. The other sign is also easy to spot; I am seeing more homes languish on the market for months instead of days or weeks. Another sign is one I get from the buyers I work with on a constant basis. Many of these people are from California, Seattle, Portland, etc. And what I hear them saying is that they are really not interested in coming here and paying over $350 per-square-foot for a home.
And don’t just take my word for this – although you all know that I am terribly reliable.
Here’s a couple of paragraphs from a July 27, 2018 article in the Seattle Times:
“The U.S. housing market — particularly in cutthroat areas like Seattle, Silicon Valley and Austin, Texas — appears to be headed for the broadest slowdown in years. Buyers are getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes, and there’s only so far they can stretch.
“This could be the very beginning of a turning point,” said Robert Shiller, a Nobel Prize-winning economist who is famed for warning of the dot-com and housing bubbles, in an interview. He stressed that he isn’t ready to make that call yet.”
And here is a link to that entire article.
Am I saying that we are in a bubble that is about to burst? No. What I am saying is that all markets shift at some point in time and anyone wanting to sell or buy a home would be wise to look at the signs so you know when to buy and when to sell. What this means for sellers is that they should no longer throw a price on their property thinking that some desperate newcomer to Central Oregon will snap it up simply because inventory is so low. Homes need to be priced fairly based upon today’s market. They can no longer be priced based upon what a seller thinks they need to purchase elsewhere or what they need for the retirement fund. Buyers need to be aware of what is going on and look before they leap. It may be that lower offers can be made than were possible a few months ago.
Either way – if you are a seller or a buyer – look at the signs. Get good advice (I just received a huge shipment of good advice and will gladly share it!). I will keep you all posted as we head toward mid-term elections and other factors that affect real estate sales. It’s just good business to read the signs. Back soon…