There is an emerging realization that the economy as a whole may recover in a way most folks would never have imagined. There may, in fact, be two economies that develop throughout America in the next few years. The Southern Oregon real estate and Grants Pass real estate markets are a case in point. As in all parts of the country, homes in Grants Pass are not selling like they once were. The same is true for all of Southern Oregon, including the Medford real estate market which is the neighboring community. These two towns represent Southern Oregon and are a microcosm of what is happening in Oregon real estate and America. Grants Pass and Medford foreclosures have risen as homes sold from 2004 through 2006 are going back to the banks in record numbers. These homes are being sold for about 2/3 of their sales price 3 years ago. Builders and developers in Grants Pass and Medford cannot compete with foreclosed homes so they have quit building until the market improves, and to add fuel to the fire, media pundits are analyzing the economy and telling buyers and sellers alike that Southern Oregon real estate is not going to get better soon. Yet, these are the same experts that said there would be no end in sight to the appreciation of real estate values here in the Southern Oregon and Grants Pass real estate market or throughout the country. The reasons behind the rapid rise in appreciation at the time were the booming California market and a desire for Californians to cash out and take advantage of more affordable Southern Oregon real estate prices, not to mention the additional benefits of the Oregon lifestyle. So Southern Oregon built and built to accommodate the endless waves of anxious immigrants from California to Grants Pass and Medford — and then the music stopped! Grants Pass new homes and Medford new homes stopped selling. It was then that we realized that the experts were wrong and they only predicted what they thought would materialize based on what had already happened. These same folks told us that oil would be $200 per barrel by the start of 2009 and that gold would be $2000 per ounce by now. I also heard predictions that the DOW would rise to 20,000 by the end of 2008. All of this forecasting was based on what was going on at the time without taking other local factors into account that would effect the Southern Oregon and Grants Pass real estate markets. Hardly anyone saw the crash coming. So now the experts see what has happened and they are telling us to expect more of the same. But once again they don’t take into account the variables that actually have the greatest impact on the economy and world trends.

Here in the Grants Pass real estate business I try to identify trends for builders, developers, buyers and sellers. Some of these local trends are serving as indicators of where the future of the Southern Oregon real estate market is headed and probably the greater national picture as well. Here are some of the facts that matter:
Financing costs are down about 18% since the peak of the market. The same priced home now has an 18% lower payment than a few years back. A typical $250,000 home in Medford with a 30 year mortgage at 6.25% in 2005 was $1539.29 per month, but today because of lower interest rates it would cost the homeowner $1266.31 per month for principle and interest at 4.5%. But the good news is that prices aren’t the same! My experience reveals that depending on what price range and location you are seeking, Southern Oregon real estate prices have dropped from 20 to 35%. Consequently, the Grants Pass Homes that typically might cost $300,000 may now be purchased for as low as $200,000, and if you couple that price advantage with a drop in mortgage costs, you are talking about a reduction in payments from about $1847+- per month to just over $1013 per month. This means that the final cost to purchase an existing home locally may be lower by 40% to 50% than just three years ago. Better yet, the average person who is working is probably making 5% to 10% more than in 2005, so affordability right now is excellent and Buyers are beginning to respond.

     

More on Topics: Grants Pass, Grants Pass Real Estate, Southern Oregon, Southern Oregon Real Estate

Tags: Grants Pass, Grants Pass Real Estate, Southern Oregon, Southern Oregon Real Estate

This entry was posted on Tuesday, January 13th, 2009 at 4:00 pm and is filed under the category Grants Pass Real Estate, Green Real Estate, Michael Masters. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.