All I am hearing is that this real estate market is “worse than the Depression”, “the worst ever real estate market” etc. Today I heard that it’s the “worst real estate market since World War II”.  Granted there are people hurting, granted there are people losing their homes, granted these are tough times; but, this is not as bad as it was in the 1980s. ***UPDATE – READ ” Part 2  – 1980s Real Estate Market vs. Today’s” as well”"”

(Note: You can click on the photos to see the larger versions of each).

As a Realtor® in Portland, Oregon, I can only speak about my market. In the 1980s I sold real estate here, likewise in the 1990s recession and I am still selling real estate full-time today.  My career selling real estate in Portland started in 1975.  I’ve been through “rough” times, but it hasn’t been as bad as the 1980s.

There are major differences in that market vs. today’s market.  In the first place, in the 1980s unemployment got as high as 10.8% nationwide. Today on average throughout the U.S. it is around 5% (Oregon’s is 5.5%).  Interest rates in the 1980s averaged at 15.8% (here in Portland they got as high as 21%) and now they hover just under or close to 6% in different markets.  Inflation rates were also higher and they averaged as follows:  1979-11.22%, 1980-13.58%, 1981-10.35%.  By 1982, inflation dropped to 6.96%.  Inflation, unemployment, and interest rates were all higher.

Transactions had to be either cash, land sales contract, 2nd mortgages, lease options, lease purchases, assumptions of mortgages, conventional loans with 20% down, Farm Home Loans, State G.I., FHA or VA.  There were no Down Payment Assistance Programs or 100% financing.  Today we have more financing options.

Conventional financing completely dried up.  Appraisals were always low.  Banks weren’t loaning what people were wanting to pay for houses.  I had many houses listed that sold for considerably less than what people bought them for years earlier.  One house I remember not only sold for considerably less than what they bought the house for, but also had repairs (we didn’t negotiate repairs like we do today and the sellers had to pay all of them) plus 14 discount points to help the buyer get VA financing.   Another house that sold for considerably less than what they paid for it, had the appraisal come in $10,000 low plus the seller had to pay $12,000 in repairs.  Houses  cost a lot less then and were priced between $40-60,000. We didn’t have sellers that were ”flippers” or sellers who got sub-prime loans.  None of the sellers could sell their houses.

The sellers in the 1980s didn’t have the same options sellers have today. There weren’t any government bailouts, lenders didn’t restructure or modify loans, nor were there short sales, no one was “forgiven” and they didn’t just walk away from their homes or mortgages.

Real estate is cyclical.  It has always been a good long-term investment.  Yes, there will be times when the real estate market dips, but for the most part, housing has appreciated over the long term.

Copyright © 2008. Betty Jung.  All Rights Reserved. (For more local and national real estate news, click on my monthly newsletter – JUNG’S JOURNAL – on my website www.bettyjung.com).