Portland Poised for Growth

Even though the U.S. economy continues to be challenged, Portland appears to be holding its own and showing improvement in the residential housing market. Like the rest of the country Portland has experienced its own bumps and bruises but we’re starting to see some positive signs and improvement in the market. Fortunately, Portland enjoys superb livability and lifestyle which positions us to emerge even stronger as the market continues to heal itself.

In the Portland market, this year has resembled the activity in 2010 until this fall where we’ve seen a positive shift in sales activity. A couple of recent market statistics for the Portland metro area that indicate buyers and sellers are reaching agreement at increased levels are as follows:

1. Closed sales were up 14.1 percent in October 2011 compared to October 2010.

2. Pending sales went up 15.1 percent year over year with 22 percent fewer newly listed properties on the market.

Below are several market drivers that support the improving picture:

• Interest rates: lowest rates in recorded history,

• Inventory: With 6.8 months of total remaining inventory, Portland is at its lowest level in several years.

• Affordability: The current median home price of $223,900 is back to the 2004 level power has shifted substantially.

• Job growth: Oregon is currently ranked 13th out of 50 states for job growth, one ahead of Massachusetts and one behind Washington. Such growth means that demand will only continue to increase.

If you'd like to talk with us about buying or selling a home in the Portland area, please contact us.

Sales picking up

Condominium sales are picking up this quarter. During the month of May, sixty one units went under contract (sale pending). This continues an upward trend that began in March.

So far we've seen 81 condo sales close over the past two months. Another sign of improvement compared to the end of last year and the beginning of this year.

Current Real Estate Market News

Portland Real Estate market showed signs of improvement in April. Below are some of the highlights as reported by the Real Estate Association.

• Pending sales for April were 13.6% higher then March.


• Closed sales for April were up 10% from March.


• Pending sales for 2009 are rising at a faster rate then they did in 2008 - 13.6% vs 6.8%.


• Inventory levels continue to decline. Now at 11 months vs 19.2 months in January.

While we are still at levels lower then last year, we are clearly on the upswing.

Below is an interesting chart from RMLS. It shows the average number of times homes are shown for each day of the week. Clearly Saturday is the most popular day to view houses while Monday is the least preferred.

Rules for new Mortgage Modification Program.

A recent article in Realty Times talked about how a person could qualify for the new Home Mortgage Modification program. Below is an excerpt from that article:

The Treasury Department recently released its Home Affordable Modification Program Guidelines (part of its Making Home Affordable initiative), which include eligibility requirements to determine which homeowners qualify for relief under the plan. Following are the eligibility requirements as specified in the guidelines:

• Mortgage must have originated on or before January 1, 2009.
  
• Home must be an owner-occupied primary residence – this program is not designed for investor-owned properties.
• Home must be a single family 1-4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under state law).
• Home may not be vacant or condemned.
• Borrowers in bankruptcy are not automatically excluded from consideration.
  Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
• First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than:
  1. 1 Unit: $729,750
  2. 2 Units: $934,200
  3. 3 Units: $1,129,250
  4. 4 Units: $1,403,400
• Foreclosure actions are suspended (not cancelled) during the trial period or while borrowers are considered for alternative foreclosure prevention options. If homeowners fail to qualify, foreclosure proceedings may resume.
• No minimum or maximum LTV ratio for eligibility purposes.
• Loans are eligible for only one loan modification under the program.
• Subordinate liens (such as second mortgages or home equity loans or lines of credit) are not included in the Front-End DTI calculation, but they are included in the Back-End DTI calculation. Back-End DTI is used to determine whether the borrower will be required to undergo credit counseling as a condition to modification.
• Servicers should follow any existing express contractual restrictions with respect to solicitation of borrowers for modifications. Applicants will be accepted into the program only until December 31, 2012 (the program expiration date), but incentive payments will continue up to five years after the date of entry into the Home Affordable Modification Program. Monitoring will continue through the life of the program.

Source: Realty Times

Condominium Sales Continue to Improve

We are seeing some signs of improvement in the downtown condo market right now. During the month of April, 32 condo units closed escrow. That's compared to 72 for the entire first quarter of the year.

But even better news is that during April, 47 units went "Sale Pending". Clearly buyers are now willing to write offers and move forward with purchase plans.

Downtown Condo Market Update

On a quarterly basis, we monitor sales activity for condominiums in the downtown area. The results for the most recent quarter reflect the slowdown in the marketplace.

The median price for a condo has drifted downward since it's peak in December 2007. currently, the median price is $335,000 meaning half of all sales are below this number and half above. It's a decline of 8% over one year, but is equal to the the median price observed two years ago.

Quarterly sales are at the lowest number since we began collecting data in early 2004. this reflects a very low month of January and February. Sales have picked up in March and we will watch to see if this increase can be sustained.

Condominium price per square foot continues to move downward for the fourth straight quarter. This is where the most pertinent market information is found. Condominium values have dropped 19% over the past one year and are down 22% over a two year period.

Buyers are getting spending less and getting more space for the money. Below are a few charts for you statistics lovers.

Welcome Signs

According to a Realty Times article passed to me by one of our faithful blog readers - "the signs are all there. Sales and pending sales of homes have turned up sharply in hard-hit markets. House prices are more affordable. Consumer confidence polls show slight but noteworthy improvements in the public's outlook".

Condominium sales picking up

Condo sales in Downtown Portland seem to be picking up. In the first quarter of this year we saw only 73 unit sales close escrow. This is a very low number, about the lowest number of sales we've seen in over five years.

However; good news seems to be coming forth. In the past 30 days, there have been 47 new "pendings". These are accepted offers now in the escrow process. This is one of several pieces of positive news which will create a higher level of optimism about our local housing market.

On another bit of news, a local title company reports that 31% of downtown condo sales this year involved all cash transactions.

Habitat builds first LEED home in Portland

My wife, Dianne Rodway, serves on the board of our local Habitat For Humanity affiliate and yesterday we attended the dedication of their latest project. This project was special because it involved the design and construction of two LEED Platinum certified homes. These homes are two of just a handful of LEED certified homes in Oregon and the first LEED homes in the "affordable" classification.

Primary sponsors for these homes were Bank of America and Walsh Construction while many others donated time and materials for these special homes.

We are told the energy efficiency of the homes actual exceeds the platinum standard. This project further demonstrates the Portland area's emergence as a leader in green construction and livability.

Work resumes at Waterfront Pearl

According to the Portland Daily Journal of Commerce, construction work has now resumed at the Waterfront Pearl Project.

In case you didn't know, Hoffman Construction had not been paid for several months of construction activity during a period of time when the developer was renegotiating his financing package with his lenders. As a result, Hoffman stopped work and filed liens against the complex. This problem further resulted in buyer purchases being held up until the cloud hanging over the project was cleared.

The developer has now apparently received new financing and Hoffman is back on the job. Remaining tasks involve completion of the water feature surrounding the two building and general repair/touchup.

Housing Market Signs

Media attention to the housing market is beginning to take a more positive spin. This may be due to the fact that we are all looking for a market floor (i.e. bottom) and trying to interpret the most recent series of activity reports. These reports are beginning too show positive signs that the housing market is getting better or at least not getting any worse.

Home sales for February were higher then last February. These sales were up quite a bit for the Western US, 24 percent. Also, in some of our worse performing markets such as San Diego and Orange County, list prices are beginning to creep upward. A sign that these markets are levelling off.

Government programs to help banks with troubled mortgage assets has been positively received by investors causing a rally on Wall Street.

It's still too early to call, but like spring, signs of life are beginning to appear around us.

Monthly Real Estate Market Report

The data gatherers over at RMLS just published their monthly report for February and the results are mixed. One the one hand, sales and pendings compared to prior years is still showing a downward trend BUT... compared to prior months we are seeing a slightly upward trend.

Inventory levels are down from January (a good sign). Sales and pendings are up from January (another positive sign). Average sale price and median sale price are both up compared to January (means the free fall is stopping).

It may be too early to know for sure but we could be turning the corner on this real estate bubble thing and nailing in the floor for future prosperity.

Portland housing market ranked fourth best

Forbes magazine has reviewed the latest S&P/Case-Shiller 20-city home price index which shows a record 18.5% drop from the previous year. Portland ranks as the fourth strongest market in the country.

Forbes analyzed monthly declines and year-over-year declines in home prices to determine where prices were falling fastest and where those drops were picking up momentum. It's not a good thing for San Diego that prices from November 2008 to December 2008 fell 2.13%, but as prices declined by 2.29%from October to November, and 2.44% from September to October, the speed with which prices are falling is slowing.

That slowing rate of decline — also seen in places such as Denver, Washington, D.C. and Boston — helped rank those cities as some of the stronger markets in the country.

Five best housing markets:

1. New York
2. Washington DC
3. Charlotte, NC
4. Portland, Ore
5. San Diego, Ca

Five worst housing market:

1. Las Vegas
2. Phoenix
3. Detroit
4. Minneapolis
5. San Francisco

Case Shiller Index report for December

The Case Shiller Index report for December was released today. The Portland market continued to see declines: a 13.14% decline for the past one year. Since our market's peak in July 2007, we have seen a drop of 15.02%.

Other West Coast cities saw steep declines:

Phoenix -33.96%

Los Angeles -26.42%

San Diego -24.84%

San Francisco -31.24%

Las Vegas -32.98%

Seattle -13.35

Getting Close to the Real Estate Tipping Point

Are we getting close to the "tipping point" for real estate? One observer thinks so. Below is an excerpt of an article published in Realty Times by Kenneth Harney.

Are we somewhere near the "tipping point" for real estate, where an accumulation of positive economic and government policy developments starts moving housing toward higher sales and stabilized prices?

This week there are some strong signs that we just might be there.

Tops on the list: The massive stimulus bill signed into law by President Obama is certain to pull buyers into the market who otherwise would have stayed on the sidelines.

The new tax credit in the legislation goes up to $8,000 and is non-repayable -- unlike last year's ineffective credit program. It' s intended for "first time" purchasers, but under the program definition, you're a first timer as long as you haven't owned or co-owned a house during the previous three years.

You might have sold your long-time home in 2005 or early 2006, and haven't owned a house since, but you still qualify as a first timer for the $8,000 credit this year.

Most economists aren't sure just how many additional home sales the credit will stimulate, but even Mark Zandi of Moody's Economy.com says the "credit is a plus for the housing market." Brian Bethune, an economist with IHS Global Insight, says the $8,000 credit will not only push large numbers of consumers to buy homes, but will also "buffer the rate of decline in home prices" by creating more demand.

A second major government initiative announced last week should also be helpful: The Obama administration's massive $275 billion relief program to keep three to four million home owners out of foreclosure, and to refinance three to four million mortgages where owners can't otherwise qualify for a new loan because of property value declines.

Still another positive sign: Home buyers and owners are beating a wide path to their mortgage lenders not only to refinance but to take out new loans to buy houses. Total applications for new mortgages last week exploded -- up by an extraordinary 48 percent, according to the Mortgage Bankers Association. Applications for conventional loans to buy houses were up by 11 percent.

Part of the reason was that rates fell again -- this time to an average of just 4.99 percent for 30 year fixed rates and 4.7 percent for fixed rate 15 year loans.

The opportunities here are pretty tempting ... and it looks like buyers are getting the message.

First Time Home Buyer Stimulus - explained

The Stimulus bill signed by President Obama has a terrific benefit in it for first time home buyers and for people who have not owned a home for over three years.

First-time home buyers (including those who haven't owned for three years) who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income. The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Another provision of the stimulus bill is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

We believe these initiatives will help provide stability for the real estate market and give folks confidence to make a purchasing decision.

January RMLS Market Report

January is a good news, bad news month. The bad news first - closed sales were really low. Just 732 homes were sold in January. Compared to January, 2008 that is a decline of 25.8%. This is no surprise as we feel the December snow storms kept many people indoors resulting in fewer offers to buy.

The good news is that January pending sales are up 52.5% compared to the previous year. Perhaps the snowbirds who didn't write offers in December, came out and made purchasing decisions in January.

Hopefully this upward trend will continue and be based on good value in the market place, low interest rates, and pent up demand for housing.

The Case for Buying Real Estate Now

There is no better time to purchase a downtown condo then now. Over the past six years we have been watching this market. Buyers are facing their best prospects, yet many don't seem to know it. The primary fear is that prices will continue to go down. This may seem like a valid concern but for investment minded people with long term plans to own, this is the right time.

No one can time a market bottom - not in stocks and not in Real Estate. We see the bottom only when we look in the rear view mirror. Mortgage rates are terrific, sellers are highly motivated, the supply of available units is astonishing, and government programs to encourage home purchases are creating some tempting opportunities.

For those who think of real estate as a short term investment, this is not for you. For those who want to own the home they live in and want to have lots of choices, you should be looking now. You should be well versed in what you can afford and how you will structure a loan. This means serious discussions with a lender.

Our team has years of experience working with buyers and sellers in all price ranges. First time home buyers and transferees moving to our region get the same service as our immediate family members would.

Don't wait. Interest rates may dip some but will eventually go up. Inflation will surely come on the heals of the big stimulus programs being debated in Washington DC, and sooner or later, the supply of decent homes will trend downward. These factors usually contribute to rising home values.

Please feel free to contact us for more information.

Should you refinance?

According to Consumer Reports Magazine, with fixed rate mortgages hovering near 5%, now is a good time to refinance. If you're underwater with your mortgage - you owe more than your home is worth - you won't be able to do that. But if you have significant equity as well as great credit, you're a prime candidate. Expect to pay for an appraisal and face strict documentation requirements.

In this chaotic housing market, it pays to shop around for a lender. According to mortgage experts, there can be a 1 percentage point difference in rates from the highest-priced lender to the lowest-priced and 0.25 percentage point swings in the market day to day. When comparing mortgages, be aware that lenders might offer you their best rate when you first contact them, then quote a higher rate when you apply. Any rate you're offered can change quickly, so if you get a great rate, lock it in that day.

If you would like a list of lenders who have worked successfully with our buyer clients, please let me know and I will email you their list.

Latest Housing Index Shows Portland Down 11.45%

The Case-Shiller Home Price Index come out with it's November, 2008 report today. Compared to one year ago, Portland area housing prices are down 11.45%. Looking at the data over a two year period shows a total decline of 10.32%. Based on the Case-Shiller data, Portland area home values have fallen back to November 2005 levels.

How do we compare to other metropolitan areas? San Diego is down 25.8%, San Francisco is down 30.8%, Phoenix is down 32.9% and Los Angeles is down 25.86%. Seattle performed similar to Portland and is down 11.2%.

Overall, Case-Shiller's index of twenty metropolitan areas is down 18.2% for the past one year.

This is one time when being below average is probably a good thing.