I read a great stat in a Seattle blog post today. Jon Talton, a Seattle columnist/blogger wrote this –
The federal Bureau of Labor Statistics has compiled metro employment numbers for November, with Kennewick-Pasco-Richland turning in the best jobs performance for the nation: 3,600 jobs added year-over-year.
Three cheers for the Tri-Cities, where stimulus money continues to pour in, and great people live and work (if I do say so myself!)
He also quotes from a post at the cheerfully-entitled Financial Armageddon blog wherein much doom and gloom is predicted for real estate in general, and our nation’s economic future. I can only speak to the real estate picture in my local area, and I can say that here, we have few of the problems cited.
2. One top economist said if you are a developer find another career for the next 3 years-there is nothing to do and it may be 5 years.
Oh my gosh! Please don’t listen to this top econ person if you live near here. We very much need you to develop to your heart’s content!
4. Real estate values are down generally 40% and there is a huge need for value reset to occur.
Our values are increasing. Remember the fable of the Tortoise and the Hare? Slow and steady wins the race. We continue to see small, steady appreciation in our prices, as we have for several years now. I’ll take 2%-5% appreciation every year over a ten year period, instead of a 20% increase on one year. The rapid rise in value creates a bubble. We never had one here to burst, so no “reset” is necessary.
7. Housing in some bad markets is still bad and the first time buyer credit is making it a somewhat phony market. Phoenix has 45,000 housing lots so there is a literal lifetime supply of lots. Land prices in Phoenix, S CA and other markets are 50% of the cost of the infrastructure installed on finished lots. The land has zero or negative value. In most areas it will be at least 5 years before any of this land will get built out in any quantity.
Wow! Those are strong words, and a very scary prophecy. Land has inherent value. It is in limited supply. There will be no more made, until planetary colonization occurs, which I don’t see happening in the near future.
Here, in the Tri-Cities, we still have some land available, but a ton got developed in the last decade, and now we have less develop-able land than we did, which makes what we have more valuable.
As of this writing, there are 939 houses available for sale in the Tri-Cities MLS. Today marks the 6th anniversary of my first day of work in real estate. For my entire career, I have never seen fewer than an average of 1200 listings for sale. It’s been in the 1500’s, sometimes dipped to the 1100’s, but to dip below 1000, and to stay there as it has for the last few months, is amazing to me. You read the stat that opened this post; we have jobs. People who have jobs need a place to live. And currently, we don’t have a large supply of places for them to choose. Therefore, everything that IS available here, has tremendous value, because of the ol’ law of supply and demand.
10. Real estate will once again be an investment and not the trading vehicle it became which is what led to this crisis.
It was never the “trading vehicle” here that it was elsewhere. I had people call me back in 2005 and 2006 who wanted to snap up a fixer-upper, give it some new flooring and a coat of paint or two, and flip it for a small fortune. Our market doesn’t sustain that kind of behavior, which is what I told people when they asked for my help in that enterprise. Seeing a financial gain from your home, from buying real estate, is for people with money and time (ideally a lot of both).