Let’s Talk Real Estate – July 2020
As we slowly return to normal, and we can find toilet paper in the stores and restaurants with open doors, we do have to wonder if we’ll ever be the same.
I look back on my life and how all the economic events shaped it and changed its course. I know our current pandemic, and resulting recession, will most likely have as much or more effect as past events in my life. I can only guess what the long-lasting effects will be, but I wouldn’t be here if it wasn’t for the past economic events shaping the course of my life and creating the road I took.
The first economic event that changed the course of my life was the dot.com boom, then the subsequent bust in early 2000’s. I was living in the San Francisco Bay Area and had started a web development company that I named eBusiness Design. We helped pre-existing and new dot.com companies develop and implement their online strategies. There was an incredible boom and massive growth in the use and adoption of the internet and business was booming. Money flowed in from investors all over the world to fund dot.com start-ups. At the peak, the NASDAQ index rose 400%, only to come crashing down 78% from the peak by October 2002 creating the first recession that changed my life. Needless to say, most of my business with dot.com companies disappeared and the majority of companies in the high-tech field were economically devastated. Knowing high-tech would not recover for a few years, I had to reinvent myself and my career. I have always vacationed in Southern Oregon and it was my favorite place to visit, so it made sense, if I was going to start over, I should do it in a place I loved. Because I love our area so much, I knew I would be good at selling Southern Oregon and that is exactly what I did. I moved to Southern Oregon, became a Realtor, and started selling Southern Oregon all because of a recession that had changed my life.
The next economic event that changed my life was the real estate crash and recession of 2007. Whether you call it a recession or depression, millions of families lost their homes all because of excessive speculation in the housing market combined with poor oversite of the lending institutions. I went from selling over a hundred homes a year to just a few. Home prices declined so quickly that buyers were understandably scared off and homeowners gave their homes back to the lending banks as their home values became less than what they owed. My partner and I sat down and asked ourselves how are we going to survive this housing crash? We knew we couldn’t sell most of our clients’ homes because they owed more than we could sell their house for. Our idea was, if we can’t sell our clients homes, we could rent them out, cover their mortgage cost until home prices increase and then sell them. We were worried that the depression and growing unemployment rate would cause the rental market to drop but the opposite happened. So many families lost their homes and entered the rental market that the demand outstripped the supply and rental prices went up. Fast forward to today and home values far surpassed 2007 values and are increasing by about 6% a year. Many of the homeowners who chose to rent out their homes in 2007, are still renting them out through us and enjoying a monthly income stream. Some of our clients have purchased additional rental homes and have become true real estate investors. Now we sell real estate, have a property management company and a short-term furnished rental company for travelers and house hunters. Again, my life was changed by economic events out of my control.
This brings us to the current pandemic and the recession it has caused. How will this change our lives, what will be different moving forward? During the pandemic, millions of American workers were forced to work from home. In many cases the employees have been more productive and enjoy not commuting. We are already seeing more buyers from California looking to move here while continuing to work for their California-based employers. It’s very likely we will see more employees working from home and having the choice to live where they want to live and not where their company is headquartered.
Life has seemed to slow down; I have less desire to go out all the time and I have no desire to be in large crowds. Spending time at home with my family seems more inviting than it has been in the past. I don’t want to leave my little town of Jacksonville and I want to support all of our local merchants and not national restaurants and big box chain stores. Community now seems more important and traveling less inviting. I’m happier to be where I am today and thankful for the past events that created the road that got me here!