Old Town Florence and the historic Siuslaw River Bridge

Old Town Florence and the historic Siuslaw River Bridge

Monday, January 25, 2010

Being a smart real estate buyer and seller

I am sometimes cursed having been born under the sign of Libra. Always trying to maintain a sense of balance. My last post was written from the heart-this post is from the head. I was never good at math in school, but managed to meet the minimum requirements for a liberal arts education. Finance on the other hand was not so much about numbers, but about process, flow, and relationships. Our current national financial crisis is the direct result of the misunderstanding of debt and equity by investors, regulators and legislators. The world of derivitives blurs the characteristics of equity and debt. As a debt investor, the best I can obtain is the return of my principal and a few dollars in interest. As an owner of an asset, my investment return is from production of income and hopefully, appreciation over time. This is like buying stock in a company that pays dividends, and you hope the value is higher when you want to sell.

How does residential real estate relate to this. We buy our homes as a place to live. The pleasure we receive, and the memories we make, are like interest and dividends. They bring joy while we are here, and are a significant part of the return on our investment. When it is time to sell, we may or may not make a profit, depending on our timing. Historically, residential real estate has been a good investment over time. The market has always been cyclical. Here in Oregon, the cycles from the 1970's forward have been far apart, and values have not been as volotile as in much of California, Florida, and Texas. Florence real estate had plugged along for over a decade, until 2003-04. A shortage of buildable land created by government interference in the market, along with a spike in demand following the city being named the most desireable retirement spot in America, caused values to sykrocket in 2005-06. After the bubble burst, there was no soft landing here. Values fell over 30% and demand slowed significantly. Buyers cautiously waited for the bottom, and this, in my opinion, is where we are now. Everything that was good about Florence in the 1990's and first half of the current decade is even better today. Sellers who need to move on are finally realizing this is a soft market, and discounts are becomming the norm. The door is wide open for buyers to come to Florence and enjoy our coastal paradise.

Friday, January 22, 2010

More thoughts on real estate

Well, here we are again. It has been about six weeks since my first post. Not much action so far. Although I have been a realtor for just six years, I feel I have a lifetime of experience around construction, beginning with scavenging scrap piles around construction sites at age 7-8. Back in the early 1960's, there was a bit of a building boom in Del Monte Forrest, along with the construction of the Shore Course at Monterey Penninsula Country Club. Building materials and methods of the time created quite a bit of wasted plywood and dimentional lumber, and builders were always pleased to see neighborhood kids show an interest in building things like forts, rafts, and even space ships. I learned to use a hammer and saw to create things powered mostly by my imagination. During high school and college, I developed an interest in architecture and photography. I have been fortunate to have been a homeowner most of my adult life. Mucking around in the yard has been a consumng past time, always trying to make my built environment a little bit better. In 1973, I visited my sister for three weeks in Washington DC. My first experience with 150+ year old houses which don't exist on the West coast. It gave life to the Ethan Alan catalog of the time. After flirting with modern design, we have rediscovered Pottery Barn, taking us back to the 1st half of the 20th century. We feel good in places which takes us back to what for most of us, was a happy childhood. I have enjoyed reading the works of Tracy Kidder, Lewis Mumford, and other authors who tell us the story of home and why we feel good there.

When working with clients, I try to bring a sense of who they are, and what makes them happy to the home buying process. I am often frustrated working with the client looking for the "best deal". A successful buyer, to me, is one who finds the place that touches them inside, makes them feel secure and alive, full of love and energy. Home is where we are renewed. We heal from the injuries we receive from the outside world. We can be ourselves. I can't sing, dance, or make music very well, and rarely do those things in the spotlight. In my house, I do all of those things with bliss.