On a previous blog I addressed the impending issues regarding commercial real estate and foreclosure proceedings in both the Southern Oregon real estate market as well as the national commercial real estate market. The global economic meltdown resulted in consumers collectively tightening their belts and spending less. This reduction in spending had a profound effect on the Southern Oregon real estate market and we soon saw “For Rent or Lease” signs hanging in the windows of vacant commercial buildings. With reduced consumer spending, businesses in mini malls, downtown areas, larger malls, and strip malls began to close their doors, unable to pay their rents due to the slowdown in spending. Now another calamity appears perched to effect commercial real estate in Southern Oregon and elsewhere.

It seems that between 2005 and 2008, billions of dollars of commercial real estate was either sold to a new buyer or refinanced to grab equity. The most popular terms used during this refinancing phase in commercial real estate called for payment schedules based on a 20 year amortization and fully due and payable within 5 years, making the first round of loans initiated in 2005 due to be paid off next year in 2010. For the following three years, loans will continue to come due and payable through 2013 as required by the terms of the contract and agreed to by the borrowers. Unfortunately for the banks, this potentially means 3 years of painful commercial foreclosures as borrowers struggle to come up with the funds necessary to comply with their contractual payoffs. Looking ahead to the next three years, commercial lenders must begin to aggressively address this issue or they will join residential real estate lenders in the challenge of unloading foreclosed property. Ultimately, this could mean steep bank losses, tighter money, and continued challenges for a recovering economy.

But are their solutions to this impending problem? Most certainly, but as the personal trainers say to their clients, “No pain, no gain.” A Federal bailout for commercial lenders seems unlikely, so creative options like mortgage modifications seems the likely first step, and we all know how much fun that can be.

More to come on this pressing issue.

Michael Masters

A Socially Conscious Real Estate Consultant

In my last post, I mentioned that the economic meltdown currently referred to as the Great Recession was ignited by sub-prime loans and run-a-way foreclosures, and that recovery from this economic tsunami may well take as much time to heal as did the Great Depression. Today, the Great Recession is experiencing a slow recovery, which is painfully felt by those holding real estate in the Southern Oregon real estate market.

I also mentioned in the previous blog that in 1932, money was “sucked out” out of the system by Herbert Hoover’s Recovery Act that raised taxes and left the masses even more penniless than before. In 2008, money was also “sucked out” of the system, but not by taxation. Instead, it was the price of gasoline which rose to over $4 per gallon in some geographic areas of the country that sucked billions of dollars out of the system and sent them to the oil producing countries of the world. Once gas prices began to decline in price due to decreased demand from people driving less, the economic system took a deep gasp… and crashed.

So here we are, nursing a recovery for the Southern Oregon real estate market and wary to announce that “Prosperity is just around the country.” But remember this — the Baby Boomers are still perched to retire to more comforting digs like Southern Oregon, ownership of real estate has always been the greatest protection from run-a-way inflation, and the buying incentives of tax credits for first-time home buyers and others are still engaged.

My prediction for 2010 — the Housing Sector will continue to recover and begin to make noticeable gains trackable through statistics. No, we’re not out of the woods yet, but there is light glimmering at the end of the tunnel. Stay tuned.

Michael Masters

A Socially Conscious Real Estate Consultant

“Money, money, money makes the world go ‘round.” So says the song writer. In fact, money does much more than just that. It can enrich your life by providing affordable comforts and financial security — and it can also make your world crash down around you when you lose it. The Southern Oregon real estate market, like elsewhere in the country, has had its real estate values traumatized since the bubble burst in 2006. Today, the supply of money is very much in the headlines and a look at money and the market is worthwhile.

Turn back the clock. Herbert Hoover was barley in office for 9 months before Black Tuesday arrived, October 29, 1929, and the stock market crash was heard around the world. President Hoover’s immediate solution to the economic distress was to cut taxes in an attempt to put more money into the system and to encourage spending. However, after two fruitless years of Continue reading Money, Money, Money, and the Southern Oregon Real Estate, Part I

As it draws to an end, 2009 continues its slow advance toward recovery. We’re probably all in agreement on this one; 2009 has been a formidable year for the economy. The Southern Oregon real estate market joins the nationwide real estate market with unsettled issues regarding the Housing Sector as we approach 2010, and yes, there is good news. The good news for the stock market is that the Dow Jones is inching over the 10,400 mark and appears to be gaining strength. The good news for the housing sector is that the numbers for sales and median home prices have shown steady increases for the last three months in a row. But the overall recovery news is mixed. The unemployment rate has pushed over 10% and is responsible for Continue reading Commercial Real Estate and the Southern Oregon Real Estate Market

Oh, if only the problems of the world could be solved with the writing of a single blog. But we all know better; most problems are easy to identify but tough to solve. Short sales in the Southern Oregon Real estate market are no different, and despite my own self-imposed skepticism, I will point out some obvious problems with the short sale process and suggest a simple way to streamline the procedure.

A short sale occurs when a homeowner attempts to sell his home for a price that is less than what is owed on the mortgage. It is incumbent upon the seller to inform the bank of the their intentions to sell for a reduced price, but simply informing the bank is no guarantee of lender cooperation. Often the short sale is additionally complicated by 2nd and 3rd mortgages that are attached to the deed and must be removed before the deed can be transferred to another owner. Nevertheless, the mortgage holder in the first position has Continue reading Short Sales and the Southern Oregon Real Estate Market, Part II

So what’s wrong with the Southern Oregon real estate market and what can we do to fix it? Recently, the stock market rallied to 10,000 only to dip back down and regress due to a loss of confidence for a sustainable economic recovery over a lot of things, from unemployment to inflation. Meanwhile, the stability of the Housing Sector may have strengthened, but only incrementally. The overall road to recovery for the Housing Sector continues to be road-blocked by foreclosures and short sales.

Like communities nationwide, the Southern Oregon real estate market is undergoing a profound increase in the overall numbers of Continue reading Foreclosures, Short Sales, and the Southern Oregon Real Estate Market – Part I

We’re turning the corner in the Southern Oregon real estate market. Here’s why:

Those of you who follow the news have probably heard that unemployment claims are at their lowest numbers in months. Add to that, a stock market rally last week that sent the DOW over 10,000, it’s highest level in over a year. And as of this writing, the DOW continues to rise.

So how does this good news in the markets effect real estate? Continue reading Turning the Corner on the Southern Oregon Real Estate Market

Has anyone noticed what’s happening to the price of gold lately? This precious metal has risen steadily over the last year, gaining 6% in value in 2008 compared with the 50% slump with other assets. Gold is currently at $1,050 per ounce and last week gold rose $41.30. Why all this interest in gold? The recent demand for gold from investors has Continue reading The Price of Gold and the Southern Oregon Real Estate Market

Remarkably, after a year of intense rafting on the river of financial crisis we’ve somehow managed to avoid either a complete collapse of our economic system or a slide into another Great Depression. But in the process of surviving the current crisis that has come to be known as the Great Recession (we have survived, haven’t we?) we are now coming to grips with the bitter reality that the financial security we had all become accustomed to will take much longer to return to that warm and fuzzy place we call a financial comfort zone here in the Southern Oregon Real Estate Market.

Knowledgeable economists now inform us that the worst recession Continue reading The Great Depression, Recessions, and the Southern Oregon Real Estate Market

As a real estate professional specializing in consultations pertaining to the Southern Oregon real estate market, it is my job to keep track of statistical data in order to better inform my clients and the readers of this blog. For the last few years, paramount in the minds of everyone involved in the real estate industry is the need to know when market conditions will begin to improve and when prices will be hitting the bottom. In order to address these concerns, part of my research means keeping up-to-date on the latest trends and market activity. Recently one of those trends now clearly indicates a statistical rise in prices for the last three months in a row, and June, 2009, may well become the statistical bottom of market prices.

The thing to remember and to take into any calculation when trying to make predictions based on trends is that data always is a step behind reality. Or put another way, data is behind the curve while reality is in front of it. It is now safe to say that we are beyond hitting the bottom for the Southern Oregon real estate market and we are now bouncing off the bottom. So if you are a buyer, do not hold any great expectations that prices will continue to drop any lower. Yes, there will be specific properties that for unusual reasons become bargains and drop significantly in price. But these price drops are anomalies that are to be expected in a normal real estate market. Suffice to say, prices are stabilizing and they will now, with time, begin to trend upward.

Once again, I offer this friendly reminder… buy low if you anticipate selling high at anytime in the future, and guess what… it’s low.

Michael Masters

A Socially Conscious Real Estate Consultant