I started thinking today as I was looking through photos about how quickly time seems to pass by. One of the group’s of photos I came across was from an investment property we rehabbed about 3 years ago.
It should give us all some insights as to how quickly the market is escalating in terms of home values. We purchased this home in a pre foreclosure situation for $110k. In its condition, we estimated its with at the time was $125k. It was neglected and consumed with animals and all that animals can do to a home from the previous owners. We invested approximately $35k into the home and sold it for $250k. The comparables at the time supported a $230k value, but we were confident the area was on an uptick and quality SFH weRe hard to come by with a Portland address for under $250k.
While this may be exciting for sellers, this kind of an environment is reminiscent of issues we saw in 2008 where prices escalated to the point where people could no longer afford them. In so doing, the markets created loan products to continue to grease the wheels of the real estate industry.
It is of course refreshing to see a rebound in the housing market, but how long can we sustain?. Subcontractors are in demand which had escalated labor prices to the point of ridiculousness in some trades. Whiplash is the best way I can describe how our industry feels over the last decade. Petal to the metal through the end of 2008, to a screeching halt by 2010, to petal to the metal entering 2014. Is there another power brake in our future. Can’t we as an industry create a stable supply of both units and subcontractors to give us a nice stay incline that is good for our industry as well as the consumer.