5 Things to Watch for in 2nd Half 2021

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What to look for second half of this year.

Well, good morning, Southern Oregon Alice Lema here, broker John L. Scott, and welcome to another edition of my podcast. So every week we do a podcast and this week we're going to be talking about what to expect for the rest of 2021. So we're about mid year, first week of July, Happy Independence day, everybody.

[00:00:18] And I want to give you five things to look for the second half of 2021. So kind of a housing outlook. So, first of all, I predict that the affordability is going to continue in our local market. And even though we have a slow rise of interest rates, that relationship that buyers have between their household income monthly and what they're spending on their mortgage monthly will still be really, really nice and really comfortable.

[00:00:44] So look for affordability to continue for the rest of 2021, in spite of some gentle interest rate hikes. Number two look for more inventory. We're going to see a lot more listings coming on the market in the second half and the side effect of that will be well, first of all, you have more choices, but also the prices will level off.

[00:01:05] In my opinion, we don't have a crash coming. We're just going to settle back down to something more normal, normal and sustainable. Okay. So that's number two. Look for more inventory coming on the rest of 2021.

[00:01:18] Number three, look for a normalizing appreciation rate. Now, why is this important? It's important for two reasons. One, we're still going to have appreciation again. I don't see a crash coming. I just see a leveling off. And in Southern Oregon, our normal appreciation every year is like five to 9%. We're used to getting that amount of money. Appreciation in our real estate every year, depending on what market we're in and what neighborhood we're in five to 9%.

[00:01:47] So look for that to stabilize, look for a normal appreciation. It's still a great time to buy. If you're waiting for the crash. Please don't you can wait for a little softening. You can wait for more choices, but really it's still a great time to purchase something and it should be well into 2022 in my opinion.

[00:02:06] But, you're still gonna make money 5% to 9% appreciation for just living in something or just being in a house. That's still great. So there you go. So that's number three, appreciation will normalize. But it's going to continue.

[00:02:21] Number four, we have a crisis in our rental market, and that is because the relationship between the household income of the tenants and the check they have to write for the rent every month is very skewed.

[00:02:33] So we have a shortage of rentals in Southern Oregon. Some of that has to do with the fires. Some of it has to do with the Corona. Some of it has to do with the rental laws in the state of Oregon. But we have a lot of landlords selling. We have so many landlords selling. They're getting out of the business. They're taking their rental businesses to other states.

[00:02:55] But the point is the, the rental properties that are being put on the market are not being purchased by other landlords, which is the normal course of things. So if you don't have landlords buying the rental properties, you have owner occupied people buying the rental properties and they are displacing the tenants.

[00:03:16] So we have layers and layers of issues in our rental market right now. So what that means to the rest of us is if you want to be a landlord, or you already are a landlord in the state of Oregon, it's a great time. Because you've got a nice ratio again, between what you're spending in your, your mortgage every month to what the rents are.

[00:03:38] And I think the rents are going to stay high for a few more years. So in my personal opinion, it's still a great business to be in. If you can stomach all the rules and regulations, plus just the normal fuss. Being a landlord, you know, it's like a part-time job. Even if you have people managing it for you, you're still ultimately responsible.

[00:03:57] So I do recommend that people be proactive even when they have property managers. So that's number four is look for pressure on rents. I think the rents are still going to be high. And I think the inventory is still going to be really low.

[00:04:11] So if you're a tenant, just a side note. Really think about buying something if you're going to stay in Southern Oregon. You know, do what you can to get your own place, even if it means joining forces with some of your roommates or trusted family members, but really try to get something that you own so that you can be in that equity position and enjoy the appreciation rate that we're going to experience over the next few years.

[00:04:36] If you really can't or don't want to do that, and I know this sounds extreme, extreme recommendation, alert. Think about living somewhere else. If you're remote, you can take your job with you. You can actually do a lot better. You can get a much nicer place, as a tenant in, in other states, you can go other places you'll have more choices.

[00:04:57] The rent will be lower. You might even like, you might even like the, the vibe or the city better. I don't know, but think about that. And I, and again, sorry, you know, we, we want you to stay. We love you. We're not saying you have to leave, but quite frankly, I look at this from a business standpoint. And if I were a tenant right now, I would totally be looking if I were a remote worker and a tenant, I would totally be looking at some of the other opportunities in other parts of the country.

[00:05:24] Cause you got to go where your life can be better. That's what it's all about. Right? So that's number four is look for a lot of pressure on the rental market. And if you want to be a landlord, it's a great time. And if you don't want to be a landlord, you can still sell your place, but you're going to probably sell it to somebody who's going to live there and that tenants are going to be displaced. So, and that's a different podcast. Well we will do one on that though.

[00:05:48] And then number five, you the sellers have missed the high point in Southern Oregon. And that's not a, it still doesn't mean it's a bad time to sell, but I really think that we it's done the highest point the crescendo is behind us. It's just barely behind us.

[00:06:05] But there we are. So now as we're leveling off, don't look to list your property really, really high. You need to really be right in the middle of your neighborhood or maybe right at the top of your neighborhood. Please don't go over your neighborhood. When we're in extreme seller market. Like we were during the shutdown.

[00:06:25] And after the fires, you can get away with that a little bit because the market is accelerating. We're not, listen up, we're not accelerating anymore. We're going to normal. We're going to have a normal five to 9%. So,sellers, listen. Yeah. The high point is gone, but that's okay.

[00:06:43] You still made a good profit. Everybody's still has a lot of equity. It's just softening. So just know that even though in my opinion, you missed the high point. It's still a great time to sell it, especially if you want to stay in Southern Oregon and buy something else. Because as more listings come on, listings, beget listings you'll have more choices.

[00:07:04] You still have good interest rates. I think it's an environment to sell into because you'll have more choices as a buyer. You're just not going to have tippy top, you know, of the market for your selling price, but that's okay. You're still going to get a good price.

[00:07:18] Okay. So that's number five. You know, the high point is gone, but it's still a great time to sell, especially if you're going to be purchasing a replacement property in Southern Oregon.

[00:07:30] Okay. So those are my five things to look for for the rest of 2021. That's our housing outlook for the rest of the year.  And again, I do want to reiterate it’s my personal opinion, there's not a crash coming. The economic, foundations are pretty strong. It's not like it was in yeah  2005, 2006, 2007. I'm not the only one that believes that, but this is my personal opinion.

[00:07:56] I still think it's a great time to buy. I still think it's a great time to sell. And Southern Oregon is a great place to invest in. Okay. So that's our podcast for this week. Look for another one next week, have a beautiful 4th of July.

[00:08:10] Stay safe, fire safe, especially drink lots of water. It's going to be hot. And we'll talk to you again next week. Alice Lema broker John L. Scott here in Southern Oregon. (541) 301-7980. And yes, I'm working this weekend, not on 4th of July, but the rest of the time I am. So call me, text me. I want to be your agent.

[00:08:29] I want to help. Bye now.