Have we been here before? or was it worse?

As a Realtor® in Portland, Oregon that has lived here all my life I can say that I have seen worse times then what we are going through now. Many people and news media have put the current economic crisis as being the worst in history. Well if History has much to say for itself I would say that there have been harder times in our past. Do not get me wrong, I do feel that people are going through a horrible time and things are not as good as they were just a few years ago. Many people are losing their homes, jobs during these difficult times and my heart does go out to them.

Let us take a small little trip back in time.

1979, I was a freshman in high school attending Canby Union High. My Father worked as a local truck driver and was putting in long hours, but we were able to afford a custom built home that was purchased in the early 70's. Inflation was up just past 11% at the end of 1979 and stayed high for the next few years with the average being close to 11%.

1980, in the middle of my freshman year of school I moved to Portland and started to work full time at Salty's , a restaurant  in Sellwood. I did this while attending high school fulltime. I was lucky to have a job so young when others needed it. I heard of interest rates being above 14%, some say that it hit near 21%in the Portland Metro area at one point, Talk about credit card interest rates. I went on about my business and it was not a concern to me. I was living with my Grandparents that had paid off their home decades before during the depression. I worked hard, studied and did not really feel much of what was going on. I did do one thing. I listened to people then. As a bus person I was able to meet people and listen to them talk.  People were not happy. The cold war was still in full swing, John Lennon had been killed and President Reagan was shot that year.  I knew my dad was starting to go through some money issues and refinancing was not an option with the way things were looking. Unemployment was in the double digits, roughly half of what today's rate is.

Real Estate Transactions had to be done with cash, lease options or purchases, or land sales contracts. It was not unheard of to require 20% down or more when buying a home through a conventional loan or banks. More G.I. and V.A. loans were being used at the time. I do not believe that there were any programs with NO MONEY down at this point.

Liar loans were something I never heard of until much later, but we called them no document loans at that time.

1982 by September of that year I was a senior in high school and interest rates were starting to go down past 7% but we still had high unemployment and companies starting to close down. Homes would sit on the market for 6 months to 18 months. Nothing was moving. Nobody had any money to buy or could not get a loan that they could afford.

Real Estate has always been and always will be a great long-tern investment for people. Yes it has slumps from time to time and goes down but in the long run it has only gone up. Those times that the market has gone down, have been times that others have came in and bought up property at deals. People that make money in Real Estate do not do it while the market is on a constant rise, but rather when the opportunity allows a window to get in at a lower price and hold.

 The 1980's also had mortgage delinquencies hitting above 6% and foreclosures around 2%, sound anything like what is happening now? The Real estate market is very cyclical and more then likely will always be that way.

1983  I started college and by 1987 was in my first home. This home was on a double lot, built in the 1950's, 3 bedrooms, 1.5 baths, a double garage with a one bedroom apartment above it. The Cost? Just under 60k

Twenty-five years ago, the average price of a new home in the U.S. was just over $76,000. That was a tough market. Those that rode out the storm, bought and held did very well as times changed.

Be Smart and think things out, but by no means is this market the first we have ever had, nor shall it be the last. Things will get better and prices will stabilize and home values will go up.

The home that was bought in 1987 is now valued at just under $400k in this market; a few years ago it was near $475k. Yes it went down nearly $75k with the crisis but it also went up in value $340k over the last 20 years. That is still an average increase of $17,000 a year growth.

Sorry I had some odd math error do to the time I decided to post this I think, I have made changes :)