Saturday, June 25, 2011

When has YOUR market hit bottom?

There was an interesting article in the Wall Street Journal June 20th. of this year. In it there was a description of the three factors relating to a healthy real estate market. Since this was in relation to a market area, not an individual home, dealt with the community, and what it looks like economically. The three factors to look for were employment, rents, and foreclosures.

Employment
Around the nation, the communities that have survived the housing crash are those that have had recession insulated employers such as large universities, military bases, or research facilities. To measure a community, look at their unemployment rate in relationship to that of the nation. Areas with low unemployment indicate whether a community has passed through the worst of the housing crisis.

Rents
Local rents can reflect current real estate values. Looking for the price-to-rent ratio will let you know when it is the best time for home buyers to purchase homes rather than rent them. If home prices are less than 15 times annual rents the market favors buyers. Anything over 15 indicates that the individuals should be renting.

Foreclosures
Healthy communities have fewer foreclosures than others. While jobs can forecast a strong housing market, foreclosures can indicate a weak one. Foreclosures bring down the values of properties that surround it. They act as a “bad seed” and large numbers can reduce the values in an entire community.

So where does this put Oregon? The following are some numbers that relate to a few communities. RealtyTrak.com has supplied the largest portion of these numbers along with the U.S. Bureau of Labor Statistics. There are numerous other “reporting” sources. Find a reputable one and do your own math for your marketing area. Many communities are broken down by a number of services by zip code.

National
Unemployment: 9.1%
PtRRatio: 10.14% Metro areas 13.8
Foreclosures: 1 out of every 605

Eugene
Unemployment: 9.2%
PtRRatio: 28.2
Foreclosures: 1 out of every 1426
Bend
Unemployment: 12%
PtRRatio: 27.6
Foreclosures: 1 out of every 411

Portland
Unemployment: 8.8%
PtRRatio: 32.28
Foreclosures: 1 out of every 867

Medford
Unemployment: 11.1%
PtRRatio: 23.7
Foreclosures: 1 out of every 465

Corvallis
Unemployment: 6.1%
PtRRatio: 37.88
Foreclosures: 1 out of every 2789

Using the three factors we can see that Corvallis for example has the lowest unemployment rate in relation to the nation followed by Portland. The foreclosure rate in Corvallis is extremely low followed by Eugene. Since average home prices have remained higher in the Corvallis area, the price-to-rent multiple is over double what a home buyer is looking for. Of course these numbers are reflected from a data base of median rental prices and may not reflect appropriately to specific market area within a community. An example of this is that individual homes may be renting for as much as $1,200 a month while loft apartments can be as low as several hundred dollars. We do know from personal experience that there is a strong market in investment properties in the Bend and Eugene area and that could be indicative of the same in Medford.

Where is the market headed? Gather the data for your “farm” and see when your market has hit bottom.

Sunday, June 5, 2011

Real EstateCycles and You

Everyone knows that commission sales takes creative thinking and determination. But, have you ever wondered what outside factors influence your business? Economic cycles impact us constantly. Many years ago it was tulips, more recently the stock market and we are currently recovering from a real estate bubble. What can the broker expect in the coming years as far a cycles in real estate? Check out a new one hour continuing education course at Superior Schools or Careers Real Estate School called "Real Estate Cycles and Your Business" and see what you might expect in the future.