Real Estate Q&A
We are not ready to put our home on the market but do have a related question for your consideration. We have read that homes have increased in price nationwide 12 percent over the past year, but only half that here in Grand Junction. As usual it seems we are lagging the market as is typical. I know there are several factors involved in these market moves, supply and demand being the primary one. Can you elaborate on this; specifically what will it take for our market to hopefully get back to where prices were before the bubble burst a few years ago?
— Anthony and Robert
Anthony and Robert,
Good question and one that I hear often, or at least a questions in that vein. Your quick answer: time, jobs and pray the government does not muck it up! : )
There is no doubt that our market and other markets have been fueled this year by incredible interest rates and rock bottom pricing. As interest rates have increased and prices have begun to rebound, we have seen a slowdown in home sales, locally and nationally over the past two months, and this is likely to continue through the next several months and maybe into spring. On the Western Slope we had a significant drop in value starting in 2009 and continuing into 2012, our market fared far worse than the rest of the state during this time because of the energy boom that was driving our prices. Our prices went higher than anywhere else in the state and thus dropped far more substantially than anywhere else in the state and this will take time to recover. If you have a 30 percent reduction in prices and then you have a 5 percent appreciation year over year, then you are looking at roughly 6 years to get back to where we were at prior to the downturn. Remember the old adage, time heals all wounds? I remember my mom saying this to me as a kid and I thought “how corny”, but she was right and this wound is no different. We must remain patient and realize we are on the way back!
Jobs are another issue that must be dealt with on a national and local level. I attended a seminar this past week put on by the Home Builders Association where an economist was speaking and one of my key “take aways” was that large corporations have seen profits rise, considerably, over the past several years as they were forced to shed all fat and get lean and mean. In order to survive the recession they had to get every ounce of production they could out of every employee to keep overhead down and increase the bottom line. Large corporations have gotten very good at squeezing the employee for more while continuing to pay less — or at least not pay more. While this has been good for the bottom line, these corporations are now to the point where they have squeezed all they can squeeze from the employees and in order to grow, they will be forced to build facilities and hire more workers to produce more goods.
I say this because, as these corporations and companies continue to grow and add facilities and employees, our area needs to fight to attract them so we add good paying jobs to our economy and not just hold our cards till the next energy cycle comes around. We need to be as proactive and aggressive as we can be to attract businesses and industries that will offer better than low-scale employment opportunities. I know, easier said than done, but if we do not attract new business and industry to our area, we are simply waiting for the next energy cycle. If we do this, then when the next energy cycle comes and goes, its impact will be much less profound and damaging as energy will be a smaller piece of the economic pie.
Last, when you go to bed at night, pray that our leaders have the wisdom to make the right choices and actually begin to lead. Pray that our government actually has a change in spirit and becomes more about the people and less about themselves and special interests and not rule along party lines, but rule by what is best for our country!
The Kimbrough Team, RE/MAX 4000, Inc
P.S. Happy Thanksgiving and remember to spend a little extra time this coming week to be thankful for friends, family and what we have to be grateful for!