I added a new poll today, below in the sidebar. Please share your opinions in it or add your comments to this post. Price Waterhouse Cooper and the Urban Land Institute just came out with their report on Emerging Market Trends. They have a pretty bleak outlook for real estate, without the usual bits of good news that usually temper such reports. Price Waterhouse has at least not been one of the big financial and accounting firms in the news lately as in trouble.
We’ve all heard real estate is local, yet regional and national trends have had their impact locally. The national outlook is that highly leveraged deals are dead. Figure on at least 20% cash going forward to buy a home. Land developers are suffering devastation as their equity has evaporated and they are often on the hook with personal guaranties. The report claims the exurbs and McMansion subdivisions in the sticks will take a double hit, from high transportation costs to high heating costs.
So, where to you think the Chelan Valley fits in? Certainly I have my thoughts on the subject. Two years ago, I was advising clients that the residential development market looked very risky and more could be in the pipeline than might be sold in decades. Even so, I would not have told anyone that I expected that we would be seeing unprecedented financial turbulence and such a depressed national market. Fundamentally, I do believe this is a spectacular area that people will want to come to. Today’s question is when?
Some also fear we may be facing unprecedented inflation in the future. That could further depress real estate by making financing costs so high that buyers can afford to spend even less. There are projects that continue to be planned and building activity continues albeit at a slower pace. Investors are looking at projects that can be phased as the market demand is present. So, what do you think, a good time to buy, hold or sell?
Certainly, the answer depends partly on your own circumstances. Getting a fixed rate mortgage at rates that are still among the lowest available in my life time could be a good deal if high inflation hits. A couple points higher in interest offsets a huge amount of purchase price in the payments. Yet, it is not a good deal if you might want to sell before the market recovers. Right now, most real estate investments are not for the quick flip. Selling today could also make sense depending on your view of the market and if your circumstances warrant.
The Chelan Valley has been focused on high growth for the last several years. What might be the issues if growth slows, stops or the population actually shrinks? This blog is a good place for folks to have the discussion, in the comments and on the poll. I would certainly like to hear yours. I’ll share more of my thoughts as we go!
This is a subject that is on all our minds in the construction industry. The last few years have been a great run. The pace was unrealistic though, and unsustainable. It had to slow down, and now it has. Quietly several people I’ve talked to like a little slower pace. Quality of workmanship goes up, customer satisfaction goes up to as people can actually get someone to work on their homes. I think long term we’ll be just fine. People have been coming here to visit for years with the goal of someday moving here. I don’t think that will change, it just may take a few more years to realize that dream. All in all we are doing better then some areas of our state. Keep the info flowing Al! I look forward to checking and see what’s new and fresh. How about that permit info you used to give us? Keep it up!
Brett