Nationally, questionable real estate lending led us into this mess, and real estate will lead us out.
Irresponsible lending and borrowing have caused a large number of foreclosure nationwide and driven prices down in a lot of areas where “irrational exuberance” had pushed prices up 20 percent or more per year for the last few years (i.e. Florida, Las Vegas, Phoenix, California).
The bubble burst in 2008 with the fallout hitting Wall Street and Main Street worldwide. Our 401(k)s were decimated, and mainstream media is spelling doom and gloom. However, here we are in the sunny in the Tri-Cities where we enjoy living and working. A year ago, I would have told you we were the most affordable major market on the West Coast, and we probably still are, due to inexpensive, abundant land, and non-restriction development regulation by our elected officials and appointed boards.
The Tri-City housing market has experienced steady growth both in number of sales and moderate price increases over the last 10 years due to a stable job base and new jobs being created in our area. We have not had the non-sustainable price increases of other areas. In other words, no bubbles, no burst. Our local lenders have been largely moderate in loaning in the subprime arena, and stable employment has kept the foreclosures to a minimum (although one is too many).
In 2008, closed sales were off by 15 percent to 20 percent in large part to almost all subprime and states-income loans going away and new residents moving here to work or retire being unable to sell their homes in other areas of the nation. In spite of that, almost 3,000 homes were reported sold in our Multiple Listing Services. The number of active listings (homes available) has stayed fairly stable for the past five years at about 1,200 properties.
Looking ahead in 2009, interest rates are at or near historic lows, and real estate loans are readily available for qualified buyers. Also, let’s not forget the recently enacted $8,000 federal tax credit for first-time home buyers (those not owning a home in the last 3 years). This tax credit has changed and is not repayable. If, as reported in the Herald, the economic stimulus pan creates lots of new jobs in this area, it will possibly create an interesting challenge — a lack of homes. You will not see this on the front page of the Wall Street Journal, but all real estate markets are local.
One thing is certain: In this or any other market, if you do not own your home, you will never have any equity in it.