By Mel Dorman, February 16, 2021
Redfin published an article stating all time low of inventory in the US. 55% of homes are in contract within 2 weeks!
If you have been out there shopping, you are all too familiar with multiple offer bidding wars. In this rapidly moving market, it’s not uncommon for buyers to offer to pay any difference between the purchase price and the appraisal, should the appraisal come in low. I have seen 10,20, and even 30+ offer situations this past month. Portland has more condos on market than single family homes!
Why is the market so hot? Is this another bubble like 2008?
The quick answer is: No. This is a very different market. We have strong underwriting guidelines (unlike 2008) and the demand is high simply because interest rates are so low. In 2008 the demand was high because anyone with a pulse could buy a house; one they couldn’t actually afford. This led to mass foreclosures as many of those subprime loans were tied to adjustable rates that doubled and tripled the mortgage payment in a matter of months. On the contrary, in this market, we have seen a huge wave of first time home buyer’s who have been accustomed to paying rent between $1,500-$2,500 a month who are suddenly very qualified to pay for a 30 year fixed rate mortgage of that same amount. With interest rates at 2.25%-2.75% (for most of the owner occupied loans I have seen closing lately), it is simply very affordable to buy a home. With the rush of buyers, we have a rapidly appreciating market as buyers clammer for their offer to win.
So what could slow this market down?
If interest rates start going up again, the monthly mortgage payment swill go up for borrowers and they will not be able to afford as much house. For as long as the government is keeping interest rates artificially low to support the economy as we recover from Covid 19, we will have a strong seller’s market. Unlike 2008, those borrowers who have lost their job in the pandemic and need to sell have lots of equity to do so. We won’t be seeing mass foreclosures and downward pressure on the prices with too much inventory. In fact, I have already sold several homes that were in forbearance and sellers walked away with cash in hand.
For those on the sidelines, waiting for the market to “cool off”, I want to give you some warning. Should interest rates rise, you will be buying when you can afford less home. If you want a nicer house within your monthly budget, now is the time to shop. It’s not easy, but with the right realtor supporting you, you can find the right home and win!
Mel Dorman
Broker | OR & WA
She/They
Ten years ago, Melissa was living in a slum in Kolkata, India, helping over 200 women escape sex trafficking by providing alternative work at a social business.
It was there she discovered her passion for financial education as a means of empowering people to move out of poverty. After graduating from UCLA with a Masters, Melissa spent 5 years working as a Social Worker; assisting clients facing homelessness, in jail, or at a psychiatric facility.
As much as she loved the work, imagining saving for retirement on the meager salary of a social worker was becoming grim. That's when Melissa discovered "passive income." In no time, she fell in LOVE with real estate as a vehicle for wealth. Soon after, Melissa began locating off-market multi-family properties to purchase through creative financing strategies and win-win opportunities. Two years into investing, Melissa quit her day job as a Social Worker to become a full-time broker and investor. Initially, she was drawn to people in difficult circumstances, so she developed extensive experience assisting families facing foreclosure, short sales, and probate. Melissa is well versed in helping her clients overcome complex real estate challenges.
Currently, Melissa is teamed up with Super Broker, Yascha Noonberg at Living Room Realty. Together they assist clients to achieve their real estate dreams, including how to strategically buy and sell a personal residence to maximize profits. Far from the slums of Kolkata, her greatest passion now is empowering other working professionals to develop passive forms of income through buying multi-family properties in Portland.
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- T: 503-567-4697
- melissa@livingroomre.com
