How to Beat The Real Estate Market in 2023 (aka: Cher Wins! We can finally turn back time…)

HOW TO BEAT THE REAL ESTATE MARKET IN 2023

aka: CHER WINS!  We can finally Turn Back Time…

If we had a $1 for everyone who said to us in 2013, “Boy, do I wish I had bought something in 2010!” well, we wouldn’t exactly be rich but we sure would have a lot of really happy real estate clients!  Ok, eyes back here everyone (we can’t even with that outfit!).

In many parts of our Portland market, it’s feeling a little like 2010 out there and for some of you, buying now (or in the next 6-8 months) BEFORE the Feds lower interest rates is how you are going to “Beat the Market” in 2023!  And we’re not just talking about cash buyers.  Yes, if you have the available cash to make a real estate purchase, these next 6-8 months are going to be an amazing time to buy real estate.  But there will be fantastic gains for financed buyers too.

Right now, interest rates are hovering around 7%.  And for a lot of kind of complicated reasons, it’s likely that the Feds will raise interest rates at least once more in 2023, and maybe even again in 2024.  So even if you qualify for a loan, that monthly payment is going to feel like a big stretch.  We get it.  For many, it’s just a reality that can’t be overcome.

So a lot of folks who want to purchase a home just won’t be able to until interest rates are lower.  And that means a lot less buyer competition for the houses on the market.  If you have a low down payment, or want to use a FHA or VA loan for your purchase, a lack of competition is key to your success! When the Feds reduce interest rates, thousands of Buyers will newly qualify and jump back into the real estate market. The chances of successfully competing against stronger offer terms greatly diminishes in a strong Sellers’ Market as Sellers will once again, have a lot to choose from and will almost always go with the strongest financial offer.  Finding a way to purchase in a weak Sellers’ market is very important for Buyers who solidly qualify for a loan, but don’t have a lot of cash reserves.

The fabulous flip side of these higher interest rates and higher monthly payments, is that we are seeing prices for homes in certain parts of Portland that we haven’t seen in a very long time.  Our active Buyers right now are getting so much more house for their money.  Buyers now have time to make decisions, negotiate great Seller concessions, and even tour the house twice (gasp) before writing an offer!

PORTLAND REALLY IS A UNICORN

aka: Why a “crash” is unlikely.

Does that mean the market is going to “crash” in these next 6-8 months in the Portland Area?  Sorry – nope.  While we are experiencing a ‘softening’, a full-on 2010-style “crash” in our area is unlikely.  Portland real estate is unique.  Our urban growth boundary and higher-density living parameters mean that we just don’t have the space to sprawl and build new homes.  Most of what we sell in the Portland Metro area are existing homes.  And since a lot of existing homeowners don’t want to give up those low 3% interest rates, there are fewer homes available for sale.

The amount of new construction homes in the Portland Metropolitan area is about 8% of the available housing inventory (for sale).  Compare that to the national average of 23% and you’ll see why Portland’s real estate market is unique.  In spite of high-interest rates, we have an inventory shortage in our area, and even in this softer market, demand for homes in our area is still larger than our supply.  That’s why average home prices for detached homes have stayed basically level this last year in Portland.

With every month that passes, however, demand for owner housing is building, and this suppressed demand is not sustainable.  At some point that dam is going to break and Buyers who make a purchase before that dam breaks are going to do very, very well.

CLIFF’S NOTES VERSION

aka: Key takeaways below!

If you can find a way to tolerate these interest rates for the short term, you will most likely be able to refinance with a lower interest rate, and thus lower your monthly payment, in the next two years.  You will get to sit back in a home that you love and watch the value of your home appreciate almost overnight as thousands of newly qualified Buyers jump back into the real estate market and cause housing prices in our area to skyrocket.

Here are our tips for how to beat the market if you’ve been considering a real estate purchase:

1. Think like an investor.  You know what most wealthy individuals have in common?  They are frugal. They budget and they plan.  And they sacrifice short-term pleasure for long terms gains. Can you tighten your belt for 12-18 months and cough up those higher monthly payments while you wait for interest rates to come down, and a chance to refinance?  Hold off on that new car purchase, opt for cheap “staycations” in the area instead of expensive world travel, cook meals at home instead of going out, wear the clothes in your closet, or head to your local thrift store to add to your wardrobe, analyze your subscription payments and terminate what you aren’t using, etc.  Set a monthly budget and do your best to live within it.

1. If you already own a home, sell your home first and be willing to rent for a while so you have cash in the bank ready to take advantage of a great deal when it comes up.  Yes, you have to move 1.5 times but most folks end up putting around 70% of their belongings in storage and only end up moving 30% of their stuff twice.  And often your realtor can help you negotiate a “rent-back” period that allows you to stay in your home for a month or two after closing to give you a little more breathing room before you have to move out.

1. Learn to love Frumpy! Fully remodeled “insta-worthy” homes are what most Buyers want right now.  These are the homes that still have multiple offers and end up significantly over the asking price.  In our experience, 85% of Buyers want the same 10% of available homes right now!  Don’t be “most buyers”!  Spend time with your realtor talking about cost-effective improvements that you can make to a “less desirable” home to make it fit your style.  Find a home that you can live in for a while while you save money to complete that kitchen or bathroom remodel in a few years when you refinance.

1. Consider houses with stairs and no bedrooms on the main floor.  Aging-in-place housing needs are dominating the market right now.  If you aren’t afraid of stairs or having all bedrooms upstairs (or downstairs), you will likely have less competition right now.  One-level homes, or homes with strong bedrooms and full baths on the main floor are flying off the shelves and will cost you more to purchase.

1. Ask the realtors you know (hopefully that’s us!) if they are considering purchasing real estate right now. If the answer is yes you know it’s a great time to buy.  We know a lot of realtors who are making purchases right now and taking advantage of some great deals in our market.  You can do this too!

Kari McGee & Erika George: The HouseLove PDX Team at Living Room Realty

And yes we did just reference Cher and Plato in the same article..😜

Erika George & Kari McGee

Broker-Esquire | Principal Broker | Seniors Real Estate Specialists | OR

Meet cousins Erika George and Kari McGee - the highly skilled HouseLovePDX Team at Living Room Realty in Portland, OR. 

Broker Erika George brings to the table 20 years of experience as an attorney specializing in construction and contracts, and 10 incredible years of real estate success stories.  Principal Broker Kari McGee is an 11-year Portland Monthly 5-Star Realtor®  with almost 20 years of real estate experience under her belt. As Seniors Real Estate Specialists (SRES®) we love to put our superpowers to work to help all kinds of folks transition to new chapters with compassion, expert guidance, and a customized plan.

Here are our Top Five Favorite Things to do for you:

1.  Ask you questions (lots of questions!) and actually listen to your answers. 2.  Show out-of-area Buyers all the fun neighborhoods and important spots that make the Portland Metro area special. 3.  Crack you and ourselves up with funny photos and random moments of hilarity that pop up in a day of touring homes or after a long day of listing preparation chores! 4.  Negotiate and advocate strenuously for you and your goals. 5.  Celebrate the many (big and small) milestones in a real estate sale or purchase. 6.  Watch your life grow and change after the sale closes, and be there for you when you need us. ps - oh how we adore your "look at what we did to this house" photos!  And lunch. We also adore lunching with you.  (Yes, we know, that's two in one and we're already at six...). 7.  Make "Top-Five" lists that always have more than 5 top-fives.  Just goes to show you how much we love to exceed your expectations! We would be honored to help guide you through your changing real estate needs in Portland Oregon. CONTACT Erika George and Kari McGee 503.349.5449 | 971.322.6612 Team@HouseLovePDX.com www.houselovepdx.com  

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• T: 503-349-5449
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• Team@HouseLovePDX.com