Goodbye ‘05, Hello ‘06

December 30th, 2005

Some final thoughts on the year that was and the year that will be:

A Bubbly Hangover – As the year wore on and after several consecutive rate increases by the Fed, a lot of people were waiting for the sky to land on their heads. But bubble fears gave way to more level-headed predictions. In all but the most hyped and overpriced markets, U.S. communities should see appreciation gains closer to historical averages in 2006. The Portland metro market averaged nearly 15% appreciation gains in 2005. Rising interest rates could cool things a bit, but I believe Portland will continue to see above average gains next year.

Sellers Wield Ultimate Power – Early in the year, so much of the Portland-area market had tipped in favor of the seller. Multiple offers, escalation clauses, no seller concessions, low housing inventory, ‘as-is or nothing’ terms. Buyers had very little leverage in 2005, but I expect (hope) things to be a little more balanced in 2006.

So Many Questions – Will Portland’s relative affordability and livability features continue to drive out-of-state investment? Will Portland’s suburbs continue to absorb families attracted by stable schools and outpriced by urban living? What choices will first-time buyers have in the Portland market? Just how many more $400K+ condos can be supported in the Pearl and South Waterfront? These are just some of the things I plan to keep tabs on in the months to come.

And lastly, a new year’s resolution:
I hereby banish the word ‘bubble’ from my vocabulary in 2006. Hereafter, I will have to make do with phrases like ‘soft landing’ or ‘correction’.

On to 2006! I look forward to helping any and all of you with your real estate needs or questions.

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