Pandemic Pandemonium: Where Are We Now?
Real Estate sale and rental market Spring 2021, where are we?
What a year. Twelve months ago we were seeing the markets face a near complete shutdown; it was tough to even show property as we really didn’t know how COVID was spreading. We are seeing a total reversal now:
- Properties can safely be shown for sale and for rent with tenant permission.
- Occupants are more open to allowing showings using COVID protocols.
- The usual spring market jump is here 6 weeks early.
- The pent-up demand for rentals and purchases from last year is causing price escalations and low inventory.
- Demand from the influx of people moving from urban cities such as Los Angeles and the Bay Area has depleted our housing inventory and caused massive price jumps.
- Having employees work remotely has shown to be profitable for corporations and has allowed their workforce to operate in a flexible, productive manner.
So where are we now? Investors who have rentals are seeing double digit rental rate growth (cash flow) and even higher property valuations (equity), confirming that housing investments in the Portland and Bend markets were a smart move.
Because of the sharp rise in sale prices, investors are waiting for the demand to lessen before they jump back into the market. While this is always a good idea during the typical seasonal variations, it does not mean that we will face a market drop like we did in 2008. The reason is that the last Real Estate boom was artificially driven by investor speculation, when there was not enough renter demand to bridge the gap between the mortgage payment and the rents received. The difference in this market is that the vast majority of purchasers are moving here for the lifestyle and occupying the properties they purchase. This will have a longer term price increase effect in our market.
What do we recommend? Investors should hold onto their homes and ride the cash flow and equity wave higher and higher. Look for properties that need work. In this market you can invest in remodels and have an almost instantaneous return on your investment. Do not buy into the feeding frenzy of homes that are already remodeled, buy the home that nobody wants and jump into the remodel. Take the long view.