We once again interrupt our regularly scheduled Dear Property Guy fun to take some time to assess what’s going on in the real estate world.

Last time we looked at how the economic shutdown is affecting members of our community as both renters and property owners. Since then we’ve added riots to the mix as well. So let’s take some time to address the questions blowing up my inbox: “What’s going on?” and “When will this madness be over?”

To those questions, I have no answers, but let’s talk about some definite real estate trends that may point to answers.

1. Supply and Demand:

Residential values are holding. Commercial values not so much. People haven’t been trying to sell houses during lockdown (reduced supply). The thought of allowing icky strangers to tour one’s home in recent weeks has been too much. Listings are way down across the local area, across the state, and across the country. As the country reopens, we are seeing more listings.

Coincidentally, people haven’t been lining up to buy either (reduced demand). So values are holding steady as we presently have market equilibrium. More than we can say for our stock investments. That said, nobody knows what spring will bring and my crystal ball is pretty cloudy…

2. Geographic Shifts:

Call it the “suburbanization of America.” Nationally, we’re seeing a significant shift away from big cities, and towards suburbs and smaller cities. On the West Coast, this means a shift from places like: San Francisco, L.A., and Seattle (not coincidentally COVID and riot hot spots), to places like: Bend, Boise, and Kirkland. This whole COVID deal is only serving to accelerate a shift already in motion.

Riots in major cities are going to accelerate this trend. Retail establishments that were burned or looted will have a tough business case for rebuilding. Expect excess commercial space.

3. Work From Home:

This genie is out of the bottle and it is not going back in. People like working from home, and recent studies are showing improved productivity. Companies like Twitter have made work from home a permanent feature. And working in one’s jammies has a certain appeal all its own.

This feeds into the geographic shift referenced above, and allows people to live where they want, instead of where they work. And where do people want to live? That’s right, Central Oregon. There is already quite the subculture of people living in Bend and work in Silicon Valley.

4. Retiree Geographic Shifts:

COVID is hastening the exit of many seniors from both cities and high-tax states. In addition to health and crime concerns, many retirees are experience economic fear as their stock investments have fallen. So what do they do? They sell their $3 million, 1,500-square-foot casita in the Bay Area. They buy a nicer place up here for 25 percent of the cost and live off the rest of the money. This is another trend that is supporting residential prices in Central Oregon.

5. Rents, Renters and Investors:

This shutdown has tossed tens of thousands of people across the economic spectrum out of work. Riots are only going to make this worse, as many of the destroyed businesses and jobs aren’t coming back. And unfortunately, renters (who trend toward the lower end of the income scale) are taking the brunt of it.

That said, most landlords realize that mass evictions for non-payment are self-defeating. And most tenants realize that not paying rent and all but destroying their credit and rental history is equally self-defeating. So most have reached some sort of “pay what you can” scenario and are dealing with it. My advice to clients with unemployed tenants has been: “Be kind, be patient, and be realistic.”

In short, we have a very dynamic situation that is impossible to predict. That said, we have some strong trends that should support the Central Oregon market in both the short and long-term. But to answer the question of: “When will this madness be over?” Nobody knows, only: “This too shall pass.”

Mike Zoormajian is principal at WetDog Properties in Sisters. Providing local property management and investor services. Questions, comments to: letters@wetdogpnw.com. Free legal advice is worth what you pay for it. Consult a real attorney before doing anything crazy.

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