Krista Bolf

Real Talk

The first half of 2010 has been a challenging year for the real-estate industry, but forecasters tell us signs of improvement are everywhere.

We decided to ask a local expert, Krista Bolf, what Rogue Valley buyers and sellers can expect in the second half of the year. Bolf is principal broker at Coldwell Banker Pro West and president of the Rogue Valley Association of Realtors.

Q: What's the biggest difference in the Rogue Valley residential market from a year ago?

A: I'd say the biggest difference is lower consumer confidence. If you look at jobs and the economy statistically, you won't see a big difference from last year. Even though jobs are not better than last year, we've seen the worst. There are always changes, and you can't put life on hold and wait forever. If you had a new baby, you can't live in a one-bedroom home forever. If you're getting a divorce, you can't extend it over two or three years and think housing prices are going to rebound. You need to make (housing) changes for the right reason, not just for speculation. I think that's what we'll see this year. Consumer confidence is not great, but it is sufficient to continue on. People are returning to buy and sell for the right reasons, and not just speculation.

Q: Who has had the hardest time adjusting to the correction in the real-estate market, the professionals — the agents, lenders and appraisers — or the people buying and selling their homes?

A: It's hardest for people selling homes outside the industry. Typically, consumers seeing what is in the newspaper or anecdotal information they've heard — but that's what is in the past and not what's happening now. In our business, things that happen today take three or four months to show up as a statistic. The time for buyers to look, get into a contract and close is three or four months ... and the same is true for sellers. Most consumers are seeing information that is three or four months behind, so they haven't seen the good and bad effects as readily as we're seeing them on a daily basis.

Q: Who is going to be in the driver's seat in the second half of 2010?

A: I'm going to say it continues to be the buyers for two reasons: The first-time home buyers credit has expired. The people who were going to buy and get that credit bought quicker than in a normal real-estate cycle. We're going to see a lull for a few months because they have already bought. I'm sure when statistics for the spring of 2010 come out, they're going to be higher than normal spring statistics due to the first-time home buyer credit.

My prediction for the summer months is for slightly lower activity than normal because of the heavily weighted spring. By the fall, however, the buyers will be back. Even though it seems counterintuitive to buy just after the tax credit expires, there is still the advantage of low interest rates, and inventory is going up a bit. So there will be more and better choices for the dollar. Over a 30-year period, even though you lose an $8,000 tax credit, you make up for it with the lower interest rates we have now over 30 years. We are going to start seeing a little bit of interest-rate creep though, so that can potentially force prices down. That will depend on how fast and soon interest rates go up.

Q: What's different about the Rogue Valley residential market from the rest of the country?

A: The one negative we have is the job market that is different from the rest of the U.S. A second difference is that a huge amount of the real-estate sales here are based on people coming from out of the area to buy. If we have good jobs and inflow migration, our real-estate market is going to be much better. From a broad view, we are OK. Real estate is so local, no matter what is happening trendwise. The Midwest didn't see the boom or the bust as much; they were affected, but the swing was much less. I just read something about the Los Angeles area: They've actually gone from being one of the worst markets a couple of years ago to being the sixth best in major cities. What bodes well for us is that California passed their own $10,000 tax credit for home buyers, making it easier for them to sell their house and relocate here.

Q: If you were buying a house during the next six months, what three steps would you take to make a speedy acquisition?

A: (1) I would contact a realtor to discuss needs, wants and desires so they are on your team and understand what you want to do. (2) Go to a lender and get prequalified — it could take an hour or two days, but not very long. (3) Don't rule out possibilities and try to look at as many houses as you can, so when the right home comes along, you know it's the right home and can make an informed decision.

Q: What would be the approach if the goal is simply get the most home for your money?

A: When I hear the phrase 'getting the most home for my money' I think of not necessarily getting the best house, but the best deal. Typically, you might be writing more offers to find the seller most willing to give you the best deal. You want to be the most qualified you can be, having as much information as you can to make the cleanest offer you can. The seller is looking for the most money and best terms. You want to offer the best terms to make it seamless for the seller. They want to make the easiest transition they can.

Q: If you are selling a house here and want to move up or move down in our market, what is the best strategy?

A: If you are moving up, you want to sell sooner because you are going to contend with the interest-rate issue later on. It might be better to sell cheaper because you are borrowing money for the next purchase. Since money is still cheap and you're paying for the next 30 years on your next home, you are hypothetically better off to take a little less for your house and to buy a little less home at a lower interest rate than to hold on and pay higher interest on the next purchase.

If you are moving down, you might wait. If you sell at a little higher price, you are borrowing less money on your next purchase. The interest might be slightly higher, but the amount borrowing will be a little less.

Q: Does your strategy change if you are moving out of the area or moving into a retirement home?

A: If you are moving into a retirement home, you probably will no longer have a mortgage payment. So you are balancing the interest rate and reduction on taxes. If you need tax deductions, you may be better off to move into a retirement home as late as possible. If not, then you probably have lower income, and it might be better to be in a retirement center. Some people in that situation might want to consider a reverse mortgage.

For people moving out of the area, it depends on why they are moving. If they have a job, obviously that means more than having a house, but you have to weigh the costs of renting and paying mortgage.

If your intention is not coming back in the future, it's better to cut your losses. In the new market, you are going to get something probably at the same market value. You might also be making more money in the new jobs; then you've got to weigh the difference between a mortgage payment and rental income. If there is a small gap, there might be some tax advantages in keeping the house, but it's hard to manage property from afar.

Reach Mail Tribune business writer Greg Stiles at 541-776-4463 or e-mail business@mailtribune.com.

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