Feature Article by Realtor Roy Widing
Predictions on Newberg’s real estate market are difficult to make with accuracy. Take, for example, local weather forecasts. Even when armed with technology like detailed satellite images, plus wind, barometric and temperature data, weather forecasters can get it wrong…and that’s for predictions merely a week or two away!
Predicting Newberg’s Real Estate Trends
Now imagine the difficulty in predicting real estate market activity a full year into the future. Along with seasonal influences, other challenges in real estate forecasting include changing interest and employment rates, ever-shifting home inventory levels, plus a myriad of lending regulations and the mysteries of the Federal Reserve’s monetary policy, just to name a few. Little wonder, then that some view real estate predictions as akin to flipping a coin or using a dart board.
Real Estate Forecasting: What Can Work
While not foolproof, one generally helpful tool for predicting future real estate trends can be past real estate trends. Major unpredictable shifts occasionally occur, but the key word here is occasionally.
For example, the Great Recession that hit Newberg and the rest of the country starting around 2007-2008 was our nation’s worst economic downturn since 1929. Thankfully we haven’t seen such financial meltdowns every year, or every decade, or even every half century. So aside from similar cataclysmic shifts, a certain degree of real estate predictability is possible.
Reasons For 2015 Newberg Real Estate Optimism
Several factors are coming together to provide for an optimistic New Year in our area. As you’ll see, some factors are under federal control and others occur locally, but each has an impact on Newberg real estate. So if you’ve held off selling your Newberg area home, here are four of them that portend a good 2015:
1. Credit Scores Loosen
Most homebuyers need a home loan, generally known as a mortgage. The good news is that mortgage credit is becoming more available as lenders loosen credit requirements.
2. Lower Down Payments
Government-sponsored loans from Fannie Mae and Freddie Mac recently brought out a 3% mortgage option. If conventional lenders also start offering similar low-down payment choices, this could bring more first time homebuyers into the market. This vital Oregon homebuyer group has long been under-represented, with their levels at the lowest since 1987.
3. Consumer Optimism
Recent figures from the National Association of Realtors confirm homebuyers are now more optimistic. This includes our area. When it comes to single family homes, the ‘Confidence Index’ chart below shows most states now have a majority level of optimism in their region, including ours.
4. Home Inventory Remains Low
Thanks in part to the reduced level of local new construction, home inventory in our region is still near historic lows. Our most recent survey shows we have 3.2 months of housing backlog. This suggests we have more buyers than sellers. As a result, Newberg homesellers can take advantage of what remains largely a ‘seller’s market’ heading into 2015.
The Bottom Line
If you’ve held off selling your Newberg home because you were ‘under water,’ or concerned about the market being too low, now is a good time to consider re-evaluating.
Newberg’s real estate market has changed. Experts predict regional home price growth to continue at a steady, albeit slower pace through 2015, compared to the 7.2% price increase to date for 2014. As a result, some suggest a 3% annual increase in area home prices. Depending on a variety of factors, that may indeed end up being conservative on the low end. For Newberg, expect between 3% to 6% in 2015 home price appreciation.