If you’re in the residential real estate business, you’re likely longing for 2005; a time before the real estate bubble burst, and just before housing prices peaked. Without a time machine, however, 2013 may have been as close as you’re going to get to that 2005 feeling. We recently highlighted the upward-to-downward trend construction spending has taken since the beginning of 2013, and it appears the housing market may be following suit.
A recent home-price index released by Case-Schiller, as well as reports from the RMLS indicate 2013 saw the largest increase in home prices since 2005, but that the trend may be headed in the opposite direction in 2014. Per the reports, Portland housing prices began their decline in December of last year. In December, the RMLS reports, the average price of a home in Portland was just over $267,000. In January of 2014, that number fell to $265,000.
A number of factors may be causing the decline. For one, mortgages are becoming more expensive and harder to refinance, making affording a new home increasingly challenging for many buyers. Additionally, the real estate construction boom of late has resulted in a market full of higher priced homes.
Without the benefit of hindsight, it’s hard to determine whether these trends indicate the beginning of another bubble bursting, or just a minor setback in an otherwise promising period for real estate investment. If you’re thinking of investing in housing developments or acquisitions, you should contact a local real estate attorney to determine whether the time is right for your specific projects.