Time to Buy, Sell or Panick?

Like any other investments, real estate has its own cycle of ups and downs. But unlike any other investments, real estate is "THE ONLY" investment vehicle where financial institutiions are dying to give you the money to invest in or to buy a home. I think we can all imagine the reaction of a banker if you ask him for $1000 to invest in the stock market: "NO! Get outta here! You fool." If you walk in to a bank and ask for a mortgage, the likely response you get is: "How about a cup of coffee?"
We've all heard from the news about the slowing real estate market across the country. Portland, however, remains as one of the very few cities that still has positive gains. According to various sources, including research from the National Association of Reatlors, Portland real estate market will continue to grow. Sure, prices are coming down for some homes in the Portland area, but in my opinion, that was the result of over-aggressive pricing that needs to be corrected. Some sellers or perhaps their Realtors have over-estimated the worth of the homes and resulted in pricing above the market. Unless the home has some very special features that no other homes have, a pricing correction is inevitable.
To gauge the solidity of our real estate market, we need to look for the soundness of our market fundamentals. Do we have real growth in population? What are the prospects of employment? Has our appreciation been reasonable and consistent in the past?
GROWTH IN POPULATON
According to an article in the Oregonian in Spring 2006, our population in Metro Portland wil double to 2 million people by the year 2025. The other half are going to be Californians. Judging from our own business trend and our own neighbors, it's going to be hard to dispute that. The fact is, waves of Californians are coming up to Portland for our lifestyle, our stability, and our real estate.
EMPLOYMENT

Unemployment rate in Oregon hovers around 5%. Jobs in engineering, architecture, nursing, and to a certain extent software have posted strong gains. This reflects the long term strength of our economy.

APPRECIATION

The term "slow down" is relative. What we are calling slow down is being compared with the last two years of highly unusual growth. The Portland real estate market is still stellar by any means. Despite the fact that homes that a little longer to sell, Portland home prices are still increasing at a rate of 15% throughout 2006. Having said that, this rate of growth is unlikely to continue if our housing inventory continues to build up. At some point in 2007, the price correction is inevitable to retain the stability of our real estate market. To get the latest appreciation figures, click here.