What’s the real story anyway? Thoughts of a potential buyer

What’s the real story anyway? Thoughts of a potential buyer

So, I started a little research into buying my first place. After doing a little number crunching, it looks like at least next year before it would be feasible. But I’m having difficulty trying to find an honest appraisal and state of Portland’s housing/condo market. It’s pretty clear that the meteoric rise of housing prices we saw the last 5-10 years has stopped. But things beyond that get very fuzzy. Previously very desirable neighborhoods seem to be seeing stagnation, new areas seem to be gentrifying fast, other areas are very hard to read, etc. Condos vs houses have conflicting anecdotal evidence. And that’s the problem – I can’t find any solid information other than what is gleaned from news stories and looking at the latest for-sale lists. Problem is, individual selling prices are all over the map – disproportionately high/low levels depending on the sellers motivation. It’s hard to get a read if a location is losing favor since people are all trying to sell at pre-slowdown prices. And that’s what I need to know as I make a minimal 5-10 year investment – will it be going up or down in the next 5-10 years? What’s the trending by location? What’s the trending by type: home vs condo?

It’s curious that local realtors’ websites are still quoting figures from the boom 2-3 years ago while updating their for sale lists every day. It kind of makes you think they know something you don’t. How come they could get those numbers in the heat of the boom, but they can’t seem to get them now? Why all the hush-hush? It makes me as a future buyer feel uncertain – and uncertainty is not a good thing when buying – makes me want to keep my money on the sidelines until patterns become clearer. The fed just announced no rate change, and inflation is ‘not a concern’. Sure, investors are pulling their money out of these high-risk, fast-and-loose mortgage places – so money is going to be tougher to get if you have tarnished credit. But if you’ve got good credit, there isn’t much to worry about. Prices are definitely not meteorically rising anymore and interest rates are likely to stay flat – so the pressure to buy isn’t there either. If I can save/invest my down payment and earn 8%, that’s roughly the same as investing in a housing market that’s growing by ~5% (for tax breaks, etc).

My concern is that I don’t want to pay a bunch of money and find out my property/area is in the middle of a decline that will probably last 3-5 years – and I just got in at the top of that drop. The few real estate agents I’ve talked with all seem overly up-beat about everything and don’t say squeak about any place’s declining values, etc. All three realtors I’ve chatted with were like: go ahead and buy now! It’s all good! And their not totally wrong, but they get more quiet when I ask where isn’t a good place to invest in.

If I were to guess, there is a lot of re-adjusting going on as the money leaves the market. And money is leaving the market as a whole; but there is no crash going on. Overall, things are probably cooling in some spots of Portland more than they thought. But where are those places? The hot and not spots of town are definitely moving around – just based on watching how much foot-traffic and cars wander through. If I had to guess, NW Portland is cooling – 23rd and 21st aren’t nearly as busy and hopping as they used to when I moved in a few years back. Alberta on the east side is going nuts with activates, new businesses, bars, fairs, etc. Hawthorn is flat to down. Condos? With lots of new buildings half-done, I suspect that unless they stagger their openings, there could be a glut. This condo developer seems to think so. But he did it too – oh – everything’s perfectly fine. I’m completely changing my business model – but there’s nothing going on at all. Yeah. I don’t think that’s the whole story.

I have been left with a bad taste in my mouth from the realtors. It almost feels like there’s this big inside secret – an elephant in the room – they won’t talk about. Because if someone does, then folks will start being told that their properties up in NW or the Pearl or Hawthorn, or wherever will -gasp- not be as good a buy as the area is slowing (or even declining) in value a bit more than other areas. And if somebody stands up to say the emperor’s clothes are off, and that certain areas are not such a good ‘buy’ – that might mean the prices for the whole area drop. And if the prices for one place drop, maybe the curtains will come down other places that are slower too. And then what will happen to our business as sellers? It’ll get tougher. What is going to happen to all those realtors that were coming out of the woodwork from real-estate school during the boom as there are less folks to sell to or a more competitive market? You’ll be shooting yourself in the foot needlessly. It’s simply not in their interest to be honest – it’s in there interest (and indirectly the seller) to get the sale. They’re long gone by the time you come around to sell again. So there is incentive from everyone in the industry to just shush, and let people wander around on their own.

This probably isn’t as dire as I’m painting it. The few figures I have found say the market is growing at the 5-7% year on year rate – pretty darn good really. But the lack of information that certainly MUST be out there and being done by these condo/housing developers isn’t getting out. It sure got out during the boom of how good things were, now, not so much – which tells you something in itself.

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