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Ask a Principal Broker: How Is The Real Estate Market?

by Catherine Fisher, Principal Broker of Town & Country Realty

That is a great question and one that Brokers are often asked! Let me start with a quick economics lesson. The real estate market follows a cyclical pattern – meaning that the market expands and contracts in a wave pattern, taking approximately 15-20 years to go from low point to low point (or high point to high point). This cyclical nature is driven by supply and demand, interest rates and consumer behavior.

• Supply and Demand (Inventory) – The number of available houses at any given price point will drive home prices up or down. If there is low inventory, more people will be fighting over the same houses which will cause prices to rise. If there is excessive inventory, there will be too many houses and not enough buyers which will cause prices to drop.

• Mortgage Interest rates (Loan payment amount) – You may think that the federal government sets the mortgage interest rates in some way. However, the rates are, in fact, determined by the price of mortgage bonds, which are bought and sold on Wall Street like stocks and other bonds. The federal government can affect interest rates by directly buying or selling mortgage bonds which will affect the mortgage bond supply, and thus the rates.

• Consumer Behavior (What you or your neighbor chooses to do) – Consumer Behavior is a huge unknown. While economists can predict what people may do, consumer behavior is the single most volatile part of the entire situation. A consumer includes the current economy and available inventory into their decision to buy or sell. Additionally, regarding housing specifically, the consumer usually has a strong personal preference about size, location, style, price, etc. For most people, unlike stocks or other investments, a home is an extremely personally motivated purchase.

So, back to the original question – how is the market? It’s great. In the Willamette Valley, we have relatively low inventory (not in all price points though) and interest rates are still low (even with recent rate increases). Thus, home prices are rising.
However, consumer behavior is still fairly unpredictable. So, before you make an assumption about the best price at which to sell your home or the best offer to make on a house for sale, talk to your trusted real estate professional. An experienced Broker can help you determine how the specific characteristics of a home will affect the marketing strategy, pricing, negotiations and more.

At Town & Country Realty, we have been providing the place you love to come home to since 1951. Call us today at 541-757-1781 or 541-924-5616 for all of your real estate needs and questions.