Is Oregon in a Real Estate Bubble?

© Judy Ben Joud | Dreamstime Photos

Have you been wondering if we are in a housing "bubble" and will that bubble pop?  As home prices keep rising, it's a question that has been raised often. 

Here's a simplified look:  In the pre-2008 era, home prices were going up and up as more people got into the game and loans were being given out like candy.  Then towards the later part of 2008, when home prices started declining, those that needed to refinance to avoid the higher interest rates of their adjustable-rate mortgages, found they couldn't.  What came next was people starting to default on their loans. 

So are we in that same pre-2008 zone again and is another crash coming?  First let me say that I am not a mystic, not into parrot astrology, nor do I consult the spirit world.  I do not know what the future holds.  That being said, I think there are some differences between now and 2006.  First, lenders aren't giving out loans to anyone with a pulse.  Are there some loans types out there that are a bit risky, yes.  But are the majority of loans being given out sound?  I think they are doing a much better job now of keeping stronger lending practices then they were doing pre-2008.

The second different between then and now is the pre-2008 demand was due to the whole loans-being-given-out-like-candy thing.  Whereas now we have a huge demand because the supply simply isn't there.  Builders aren't keeping up with the pace that buyers are purchasing properties.  They are struggling to find buildable land that is profitable to build on.  Without enough new construction homes, buyers are left to spar over the resale homes.  Sellers just aren't jumping into the market fast enough to keep up with all the demand that's coming from home buyers who are chomping at the bit to buy! 

Another factor that makes some think that the real estate market is going to stay strong is the fact that the job market is super.  Unemployment in Oregon is at all time lows.  Then you've got the rental market.  Rents are skyrocketing, leading many renters to wonder why they should be paying their landlord's mortgage, when they could be paying their own.

As people keep moving to Oregon in droves (because it's amazing and who wouldn't want to live here), as long as interest rates stay at lower levels and until new construction can catch up, I think you'll continue to see this strong sellers market.