Recession Blues or Opportunity Knocking in the Housing Market

Full Video Transcript Below

Recession Blues or Opportunity?

[00:00:00] Well, good morning. Real estate fans, Alice Lema here, broker general Scott, with another edition of the weekly podcast. I wanna say it was kind of a big week in real estate land nationally and here locally in Southern Oregon. And so this week we're gonna talk about recession blues or opportunity knocking.

We've got five years of predictions coming up. We're gonna talk about how bad it is and where the opportunities are. Before we get to that, please subscribe to the channel. It helps a lot and it's also fun to see that people wanna continue getting this content. Give us a like, give us a thumbs up. Give us some comments, ask some questions. We read everything and we respond to everything. And as always, if you wanna speak to me personally, you can text or call 541-301-7980.

Okay onto the podcast for recession blues or opportunity knocking, we've got five years of price predictions, plus some addictions plus some interesting things that are happening. You're not gonna wanna miss all the way to the end. [00:01:00] Okay. So it's official. They said two downward trending quarters nationally means a recession. So we're gonna put that in the no duh pile, cuz all of us have been experiencing the recession. We've been, we've been saying it we're in it. We're in it. Well now it's official.

Okay. So now that we know. Looking backwards. We're an official recession. What does that mean to us in the housing market? Now, a lot of the housing markets slowed down was brought on by the high interest rates and that was on purpose. They were trying to slow demand. It would've been nice if we could have increased supply, cuz that is another way of doing it.

But we're doing decreasing demand. Okay, well, so here's the interesting thing now that a lot of the markets and buyers are adjusting to the new interest rates and guess what's happening. The prices are softening, a deceleration. That's what we've been talking about, deceleration [00:02:00] different from depreciation.

If you want more info, there's two podcasts to go. We'll talk about that. So, but here's what's happening. So if last year, this time you were bidding on a house $500,000, we're just using that, that kind of a, an even number in the real estate world. And you know, even in Southern Oregon, we had people multiple offers overbidding on those, you know, up to $550,000. So if this time last year you were overpaying up to five 50, but you had a lower interest rate run the numbers, you know, what would that payment be now? If you don't have to overpay cuz you know, when you're overpaying and it doesn't appraise, somebody has to make up the difference and in a hot seller's market, it's usually the buyer.

So you're bringing in more cash. Ugh. Anyway, so now here we are a year later and we're seeing some big changes in our Southern Oregon market. Seeing some big price changes all across the land. Well, what if that same house that fight tooth and nail to get for $550,000, [00:03:00] you can get for $500,000, that's a 10% deceleration, 10% decline.

However you wanna slice and dice, it makes a difference on your payment, even if your payment is higher. So this week, the official average interest rate for owner occupied, that's the lowest interest rate you can get is if you live in a property, so owner occupied 5.8%.

There's other things you could do to lower your interest rate. You can buy points, you can have an amazing credit score, but owner occupied, usually you get the best deal on the interest rate. So 5.8% is the average. And then if you're an investor, that means you're not gonna live in it. That is 6.8 or higher, depending on your portfolio and all that, but 5.8 and a lower purchase price.

Are you following me? Compare that to $550,000, a higher purchase price and a lower interest rate. Just run the numbers. I've got a free app on, on my [00:04:00] website AliceLema.com. You can also go to Zillow. Realtor got everybody and their dog has an app that you can run mortgage payments on. Prediction they're not perfect, but they give you the idea.

So all of a sudden, a lot of us are sitting back going, hmm. Well, so if it was only a few hundred dollars difference, then buy some points down or negotiate a little harder. Maybe pick a, a property to bid on that's been on the market more than 30 days. You know, I gotta remind everybody, the average time on market is for a neutral market where neither the buyers or sellers are in charge. It's neutral. It's four to six months, not four to six minutes. So now we've got people, you know, just drooling at the thought of bidding on something that's been on the market for 30 days. But that's what it is. It's like, have you been on the market 30 days, 60 days, something's wrong. Something's wrong.

And the market fell. Off of you fell below you you're languishing. So if you're selling [00:05:00] and you don't have offers and showings, the hope of offers comes from the showings. Then you need to reassess what we're doing here, because you need to get on with your life or take it off the market or rent it or something, especially in Southern Oregon game.

We need more rentals, but boy, is it tough to be a landlord? So here we are looking at this adjusting, the market's adjusting. The sellers are lowering the price yes. The interest rates are outrageous compared to what they were, but all of us old folks remember when it was way better. We would've given anything to pay 5.8% back in the day, but, but look at what your payment's gonna be.

I just wanna bring you down to the numbers. And the data, and then going back to KCMS chart for the prediction of the home prices for the next five years, I want you to see that. Yes, we had our spike in 2022. We had one in 2021 as well. But look at going out, this is very sustainable. You know, this three to 5% national [00:06:00] appreciation is super sustainable.

That's more of a normal, healthy market. It's not you know, jacked up with the prices and all the hoopla, but that's okay. Cuz at the end of the day, we want normal, sustainable, where we have enough houses for the buyers. You, you get more than three seconds to think about it and the sellers can take their time being on the market.

30, 60 days even in a, in real downturn, I don't recommend in waiting more than 30, 60 days to get offers. But but yeah, so let's look at what is actually happening with the buyer's payment. And I think the initial shock was hard. The first few weeks were hard, but now we're kind of settling into a little routine. And five years from now it's still gonna be great that you bought something.

And remember in Southern Oregon, we usually outpace the appreciation of the national averages. Why? Because everybody loves [00:07:00] living here and because everybody wants to live here. And so we have this perfect, perfect little utopia that apparently is not a secret anymore, but we have the combination of access to beautiful hiking and fishing and boating.

But we also have our little urban areas, which are quite well developed. We have Medford has two, best hospitals for hundreds of miles. We have an international airport. Ashland has the the Shakespeare theater you know, and we're right on the I five quarters. So you can be anywhere in just a few hours.

You can be to the beach in just a few hours. It's really quite remarkable. We have rural property. We have, you know, real remote and then we've you know, a nice little urban groove going on. So that's why I think that my prediction for the next five years in Southern Oregon is not gonna be three to 5%.

I'm gonna go on, on record saying, I think it's gonna be more like six. [00:08:00] Six to seven, six to eight. We'll see. It's just the desirability here. And now that we have Starlink, you know, the Elon Musk high speed satellite for the rural districts and people are getting them installed here in Southern Oregon. So all of a sudden you can have high speed internet, you know, out in the boondocks.

Well, that's gonna be amazing as soon as that really gets some legs. I think more people are gonna wanna live here. The people that live in town are gonna wanna be out there, cuz you're not giving up your, your movies and your shopping and all that, that we get with the fast streaming.

So yes, the recession is sucky. Yes. It's hard. We're all getting hit right where it hurts in the pocketbook, the gas, the food, the, this, the, that. But I want you to take a breath when it comes to your housing, because I think it's still a good time to buy and as we get more and more listings coming on the market, There's more choices. So there you go.

Yes, the recession is horrible and I still think there's some [00:09:00] good opportunities, cuz at least in Southern Oregon, the prices are gently gonna go up. Okay. Once we stabilize. We'll get our little, our groove going and have a normal market, please, please. Okay, so that's it for today. If you need any help you wanna talk?

Give me a text, gimme a call 541-301-7980. Otherwise have a safe and fabulous 4th of July. Hug all you love. See you next week. Bye now.