STICKER SHOCK! Seems a common reaction in today’s market. More and more clients, especially #firsttimehomebuyers are surprised at what money can (or actually can’t) buy. A frequent question is, “should we wait until the prices drop? Is this another ‘bubble’?” So instead of making decisions subjectively by what it ‘feels’ like…let’s take a look at just a couple objective data points.
When we experienced a ‘bubble’ in ’07-ish, you could buy a home with zero down, 580 credit score and no income documentation. SHOCKER ALERT – some people bought homes that couldn’t afford them. Today – much stricter lending guidelines – people that are buying homes can actually afford to buy homes. On the supply side, housing starts are ok today (limited inventory but growing) but no where near bloated levels 10 years ago (4% OVER supply of homes). Home ownership rates are the lowest in decades indicating there is significant upside opportunity. And finally from a demographic standpoint – as of 11 months ago, the Millennial generation is the largest segment of the population and will drive business for some time. The average age of homeowners is 33 yrs old….. age of this huge demographic 18-34 yrs old. So if we look at Housing Formation (people moving out, divorce requiring 2 for 1) vs Housing Completion (supply) there is increasing opportunity. And unique to #Portland, we are bookended by Seattle and NorCal & SoCal — market densities that are pushing people into the #PDX promised land 🙂
If you know someone afraid of the impending doom of a possible #realestatebubble or simply think they can’t afford to buy in today’s market. Have them speak to a professional who can show them data to support growth and sustainable appreciation as well as how home ownership is often less expensive than renting (major tax benefits!). Don’t forget, homeowner’s #networth is 40+TIMES greater than renters!