Ladd Group Webinar: Navigating the Housing Market in Uncertain Times by Ladd Group, Cascade Sotheby's International Realty

Navigating the Housing Market ...In Uncertain Times

Bio of Panelists

Brian Ladd Principal Broker, 20 Years of Residential Experience, Developer, Builder, & Investor. Forbes Council Member. #1 Sotheby’s Broker in the State of Oregon

Erin Martin Broker, ABR, Voss Trained Negotiation Specialist, Listing Coordinator Ladd Group

Alice Fairbairn Broker, ABR, Pricing Strategy Advisor, Buyer SpecialistLadd Group at Cascade Sotheby’s

Clint Edwards President High Lakes Lending, 20+ Year Mortgage Broker/Banker

Overview

❖ Historical Perspective ❖ Financial Markets ❖ Current Conditions ➢ Sellers ➢ Buyers ❖ Q&A

Perspective

Assumptions ❖

Health is the most important factor during this uncertain time. Nothing supersedes this.

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We are continuing to work with the utmost caution and care for our clients and the community.

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All of this could change with pandemic trends and prolonged economic shutdown and unemployment.

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We have no crystal ball and are certainly not pandemic or health experts.

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It would be easy to hide from talking about this until it is over, but that would be cowardly as our clients and the market are needing information and interpretation on how this affects housing.

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We come from a place of service and support, not hype, hysteria, or hyperbole.

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It’s our intention to deliver insight and guidance so that you can make informed decisions.

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We believe this information will be relevant for those who need to buy or sell now AND for those who simply want to understand the market as they look toward the future. © Copyright 2020 Ladd Group at Cascade Sotheby’s International Realty

Our understanding of the overall economy Beyond the headlines we are finding commonality in projections from the top institutions: ~Sharp, swift contraction of the economy in Q2, 2020 ~Recovery timelines differ… Q3 2020 to early 2021 1)

GDP Slide

~“Shock” and “Market Disruption” not “built-up market excesses” ~More akin to previous market shocks like 1918 Pandemic and 9/11, which traditionally see sharp declines then sharp recoveries

Unemployment and Housing

Unemployment slide 2 (Weekly jobless claims-Two charts on one slide)

Unemployment - Recovery Timeline Variables: ~Service jobs come back relatively quickly ~If pandemic requires a longer than expected shutdown, jobs that are slower to recover become affected

Unemployment in Perspective Two things to worry about with housing: Depth of the decline and length of the decline. Depth hurts, duration kills. A “V” shaped recovery would not be as bad on housing demand. Great Depression hung around for many, many years. © Copyright 2020 Ladd Group at Cascade Sotheby’s International Realty

Recession and Housing Prices

Recession and Housing Prices “With the exception of two recessions, the Great Recession from 2007-2009, & the Gulf War recession from 19901991, no other recessions have impacted the U.S. housing market, according to Freddie Mac Home Price Index data collected from 1975 to 2018.” ~Doug Brien, CEO of Mynd Property Management

Personal Household Debt

Personal Debt Composition

Housing Inventory ~ Prices/Economy

Narrative Economics-Power/Risk of Fear

Current Market We are 9+ years in to what is typically a 7 year cycle. . .and experienced a strong Q1

Current Market Low inventory

Fewer competing homes

Current Market Current Market Stats - Year to Date Closings are up 14% Y/Y, Down to 2018 *Pre-covid activity

Current Market Current Market Stats - Median Home Value is $449,900

*Growing trend of price reductions in the last few weeks...

Current Market 2020 March Pending Units 461 vs. 2019 March Pending Units 483 = 5% Change

Seller’s Perspective

Seller’s Perspective Investors Have Challenges ❖ Short Term Rental Drop-off ❖ No-eviction requirements ❖ Landlord-Tenant Laws

Seller’s Perspective Scenario 1 - Sell now - Benefits: Visibility, some showings, little competing inventory - Drawbacks: Health concerns, momentum, traffic, social responsibility - Right pricing matters - Buyer Profiles - Primary home buyers may not be able to sell their current home - Investors may be waiting to see how economy and stock market trend. © Copyright 2020 Ladd Group at Cascade Sotheby’s International Realty

Seller’s Perspective Scenario 2 - Prepare Now - Benefits: Home and marketing preparation, watch the market but be nimble - Drawbacks: Timing fluidity, economic factors, possible inventory increase which leads to price drops - Don’t expect appreciation in short term - Buyer Profiles - Primary home buyers may be motivated to change scene - Investors may be encouraged or discouraged based on economic recovery pace © Copyright 2020 Ladd Group at Cascade Sotheby’s International Realty

Seller’s Perspective Scenario 3 - Hold for Now - Benefits: No required moves to make, maintain long-term strategy/hold period - Drawbacks: Uncertainty, increased inventory expectations, possible mortgage defaults affecting pricing - Buyer Profiles - Example: Inventory in SE may change the tides with mid-range product - Investor product may increase inventory steadily as tenants move out © Copyright 2020 Ladd Group at Cascade Sotheby’s International Realty

Seller’s Perspective Three Pressing Questions: Q: If my home is already listed, should I be worried about days on market? Q: If I list my home now, won’t people think that I am desperate, and low-ball me? Q: If I am challenged financially, should I sell now, or request a forbearance? *Hint...Speak with your loan servicer and CPA

Buyer’s Perspective Is now the time to buy a house?

❖ Consider WHY you want to buy a home ❖ Work with your Ladd Group agent to create a customized plan based on your long-term financial goals and your family’s needs © Copyright 2020 Ladd Group at Cascade Sotheby’s International Realty

Buyer’s Perspective

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Even if we see small dips in pricing, this won’t compare to the savings you will receive by taking advantage of the currently near historically low interest rates. © Copyright 2020 Ladd Group at Cascade Sotheby’s International Realty

Buyer’s Perspective

Bend Population Trends

❖ From 25,000 to 100,000 19902020 ❖ Bend on-track to hit 130,000 by year 2030 ❖ Demand outstripping projected housing supply and land availability

Buyer’s Perspective Tips: ❖ People are still buying homes while following federal and state social distancing and safety requirements. ❖ There may be some good negotiation power for buyers right now with a very strategic approach. It is not widespread, but there are some highly motivated sellers right now. ❖ Take advantage of the currently near historically low interest rates while they last. ❖ Talk with a lender EARLY in your process to avoid pitfalls and disappointment. © Copyright 2020 Ladd Group at Cascade Sotheby’s International Realty

Lending Perspective Pressing Questions -

Which loan programs are the most challenging right now? Should we expect tightened guidelines? Why have rates been fluctuating so much? What about jumbo loans?

Take Away & Questions... ❖ Recession is here. Housing not directly correlated to overall economy and price trends are unknown/more nuanced. Individual sectors (primary/secondary/investment) react differently. ❖ For sellers, inventory is currently tight and people are still buying but uncertainty in the near/mid term. ❖ For buyers, trying to time market is risky. Long-term strategies and tools (low mortgage interest rates) are more important than ever. ❖ All of this could change with pandemic trends and prolonged economic shutdown and unemployment. © Copyright 2020 Ladd Group at Cascade Sotheby’s International Realty

Thank you!