March 2013′s 3.1 months of housing inventory ties the lowest levels we’ve seen in the last two years according to the latest RMLS Market Action report.  We saw the same level in April and August last year.  Actual closed sales are down slightly compared to March of 2013 but the drop in listings is what is really driving the low inventory levels.  Inventory is the ration of active listings to closed sales.

RMLS March Listings

3.1 months represents the five county area that defines “Portland Metro” for RMLS.  If you dig a little further, North Portland has a 1.7 month inventory!  NE Portland has 2.0 months of inventory, 2.4 months in Southeast and 2.6 months.

Here’s our monthly info graphic compiling the RMLS Market Action report:

Mar_Portland_RMLS_Infographic_print_small


The national Case Shiller report for December 2013 was released this morning. Portland remained flat in December at 159.84.  During the traditional “slowdown season” of real estate, the Portland market has hovered at this level since August.  The Case Shiller Index report has a two month lag and reports on the Portland Metro MSA.  This is a seven county area compared to RMLS Market Action’s five county report.  RMLS data is only 15 or so days old when it is released.  The current market is good for both sellers and buyers.  Low inventory means buyers are competing for property.  Low interest rates and prices that have yet to recover to normal appreciation rates still makes property based on past history a good value when looking at the macro market.  Real estate is local so both reports need to be used as a guide, not an absolute.  RMLS breaks down into smaller areas but must requires additional math to get localized inventory levels.

Case Shiller Portland Dec 2013

—Chart from http://us.spindices.com/indices/real-estate/sp-case-shiller-or-portland-home-price-index


Our house was pretty much a gut remodel. All the systems were new-to-the-curb and I was never happy with the HVAC system. We’ve got a high end variable speed furnace with AC but in reality we would have been better off with two separate systems to heat and cool the four floors. One system can’t deal with pumping air evenly. The basement was usually 20 degrees colder than the top floor. I looked into Home Comfort Systems years ago. The cost of the install was about the same as the new furnace and AC we had just paid a boatload of money for.

Fast forward to this year and Home Comfort is now owned by emme. An improved system costs less than half of the original bid. The premiss is that a computer controls bladders in all the ducts and the wireless thermostat in every room tells the system where it needs to heat or cool. Using the fan, it can circulate air from floor to floor to adjust the temperature. The video here is sped up by a factor of 4:

There are three levels of programming available and to be totally honest, we’re using the basic mode as I haven’t taken the time to program the more complicated programs. The thermostat is disappointingly slow in its response time, even after two software updates. It’s on WiFi so at least I could sit at a computer to program. We used to use space heaters in both the home office and our son’s room and those are no longer required. The basement still runs warmer than any of the other floors when the furnace is running but the temp difference is small compared to before. The in-room controllers allow a temporary setting to be held for two hours or to send that room into “saver” mode which lowers the heat/cool for that room until it is turned off.

emme thermostat

The control system attached to the furnace. There are also two wireless access points boosting the signal from the room controllers.

emme control boxes


House in HandsWe work with some great lenders.  Every lender out there offers the standard 20% down, good credit, conventional loan but each lender also has unique or favorite products that they can offer.  I asked our lenders what loan products they like best.  ***Disclaimer: every loan is unique and not everybody will  qualify for a given product or interest rate.  These are examples only start to show the myriad of loan products that are available.

Shane Musselwhite – Mortgage Professional, Northwest Mortgage Group,Inc.,  , 503-908-7116, NMLS # 249862 / MLO249862 |  Corp. #40562 / CL 40562

Condominium Financing is very complex, and can be a source of great frustration when dealing with a lender unfamiliar with intricate agency guidelines.  Not only does Northwest Mortgage Group, Inc. have extensive experience in knowing what to look for up front, we also have the ability to perform full condominium project review “in house” from our corporate office in Portland and grant approval for  many of those condominium projects that don’t meet agency limited review guidelines.  Full project review at large banks can take weeks, or even months to complete, and can be a faceless process where reaching someone capable of answering a question or making a decision is virtually impossible.  This is just one more example of why trusting your transaction to a proven, local professional can be one of the most important choices you make when purchasing a home.

Liz Marre NMLS 118575 & Amanda Good NMLS 298019—Green Mortgage Northwest MLO 106–1739—503-568-1285

Our favorite loan product is our Agency Direct product. Because of the size of our company, we have the ability to sell our conforming loans directly to Fannie Mae and Freddie Mac. Mortgage lending has become a pretty rigid system, but our in-depth knowledge of guidelines help us create flexibility for those borrower’s that may not otherwise be approved. The below list is an example of how a Fannie/Freddie direct loan helps us approve more home buyers:

-The ability to finance up to 10 properties with conforming loans (most lenders only allow 4 financed properties).
-No occupancy restrictions for condominiums in an established project when the client is obtaining a loan for an owner occupied or second home (a lot of lenders require the project be at least 51% owner occupied).
-No minimum borrower contribution when using gifted funds on a 95% conforming loan (most lenders require the borrower be liquid for 5% of sales price before receiving a gift of less than 20%).
-The ability to use business funds for down payment or reserves (some lenders may allow this, but always with a lot of red-tape).
-Higher than 45% debt to income ratio allowed with an ‘accept’ on Freddie Mac’s underwriting software (many lenders will not go above a 45% debt ratio).
-1 year’s tax returns only for self-employed borrower’s when we receive an ‘accept’ through Freddie Mac (most lender’s require 2 years tax returns for self-employed borrowers with no exceptions).

Drew Lovern, Mortgage Loan Officer, Umpqua Bank,  503-219-6174, NMLS # 650099

One of my favorite programs would have to be the Mortgage Credit Certificate (MCC). A homeowner is able to get 20% of their interest paid on their mortgage loan back as a tax credit at the end of the year. What is even better, we can take that 20% you will get back and add it to your income, thus increasing the amount of home you can afford. Unlike most programs that have very low income limits and restrictive qualifications, MCC allows solutions for a wide range of buyers. It was just announced that the new annual income limit is $69,400 for 1-2 person households, or $79,810 for 3 or more person households. MCC can be paired with a purchase using a Conventional, FHA, or VA Loan. With just a little extra paperwork, you save a lot of money, and could afford a better home.

Thanks to these great lenders for taking the time to write these up.


Case Shiller nov2013The November 2013 Case Shiller report was released yesterday.  There was a slight dip in the Portland index but a drop of less than a point at this time of the year shows the market remains strong.

Historically real estate has seen about 4% appreciation.  If we apply that to the Portland real estate market since 2000 when the Index was set to 100, we can see that the market is still below the line.

As the market climbs, the number of properties with negative equity decreases.  We’re looking at a window of roughly October 2005 to November 20008 where the market was above where it is now.   If we had 4% appreciation from here on out, it would be July 2015 when we matched July 2008′s 180.6, thus wiping out all underwater purchases statistically.

The crystal ball doesn’t expect 2014 to repeat 2013′s 13% year-over-year increase but we can see that there is some room to beat the market average.


SW Parkhill DrThe MLS (Multiple Listing Service) number is essentially the serial number of a listing.  In RMLS the first two digits denote the year: 13208782 shows that the property was listed in 2013.  So what do the next six numbers tell us?  Absolutely nothing.  The last six digits are randomly assigned.  Up until a couple of years ago listings were assigned sequential numbers.  Low numbers in the series meant the listing was older.  This caused many agents to “refresh” the listing by canceling it and relisting so a new MLS number was assigned  It also reset the Days on Market calculation.  Though the practice of relisting still goes on there is less motivation to do it now.  The second deterrent was the addition of Cumulative Days on Market tracking.  Instead of the days resetting with a new MLS number the days continue accrue unless the property is off the market for at least 30 days.


What a difference a couple of years makes!  In February of 2011, I ran a search in RMLS that resulted in 4208 active listings in Portland.  441 of those were bank owned (REO) and 750 were short sales.  REOs made up 10.4 of the market and 17.8% were short sales.

I ran the same search yesterday: 1544 active listings of which 45 were REO (2.9%) and 87 short sales (5.6%).

Why the drop?  The simple answer is that the economy is better.  There have been fewer foreclosure actions/defaults and as the real estate market improves, the number of underwater owners decreases.  Additionally, a strong argument can be made that those that have held on this long can/will probably ride through the rest of the storm.  The system has worked through the majority, but not all of the at risk properties.

On the bank owned front, there are additional reason.  A quick scan of the listed REO tells me that the majority are owned by the quasi-government agencies, Fannie Mae and Fredi Mac.  These agencies are not subject some of the restrictions and laws (for mediation) placed on the commercial banks and were not subject to the impact of the MERS related ruling in the Oregon Supreme Court.  My belief is that the banks are not sitting on property they can bring to market and sell but that they are holding property that they don’t have the ability to clear title and therefore cannot bring to market.  I know of two instances where the mortgagee filed for bankruptcy and the properties have been stuck in limbo and vacant for more than a year.

I expect that we will see another wave of bank owned property in the Portland area but it will be nothing like what we saw in the past and I don’t think those properties will be massively discounted.  Why?  Look at the number of active listings.  There’s just 36% of the number of listings on the market now as there were two years ago.  I did discover that Zillow appears to universally discount bank owned properties 13% from their Zestimates.

I’ll do more of a year in review when the next RMLS market Action comes out mid-month.


RMLS Market Action for November was released yesterday and we have our new infographic ready!  The Portland real estate market has slowed some but we expect that with the holidays.  We typically expect to see fewer buyers and sellers in the market at this time of year but they are usually more motivated- it’s not a lot of fun looking at homes in the rain and cold.

It’s been quite a year.  Year over year, the average sales price is up 13.5% to $310,800.  We can’t do that forever but it gets us a lot closer to getting back on the 4% track we have seen historically over the last 40 years.  The market went way over the trend line pre-bubble and way under it a the post-bubble bottom.  Like all markets we’ll have our ups and downs and we got a painful reminder that real estate is a long term investment (there are exceptions).

Noverber 2013 RMLS Market Action Infographic

 


Case Shiller’s September 2013 housing report was released yesterday.  The two-month lagging report show that the Portland real estate market edged up from August.  The 160.18 is up less than a point but more importantly has rebounded 30 points from the March 2012 low of 129!  That means that the pool of underwater houses has dropped to three years: the market was higher than today between October 2005 and September 2008, not taking into account entry and exit costs to the property.

Case Shiller September 2013 Portland

Historically, over time, real estate markets have increased 4% annually over time.  If we extend that out from October 2004, Portland’s index would be at 180 so we are still behind that trend.  How long will it take to catch up?  That’s the crystal ball question which the “Now is a great time to sell” and “now is a great time to buy” pundits ignore.  Have you ever noticed that most real estate marketing suggests that right now is the best time to do something?  It may be for some but for others there will be other opportunities.


RMLS Market Action for October 2013 is hot off the press and it shows that housing inventory in the Portland Metro area dropped to 3.4 months.  Inventory was 3.7 months in September and 3.8 months this time last year.

The average sales price is $314,100 which is a slight drop from September but up 13.5% from October 2012.  That level of year-over-year increases isn’t sustainable.  Historically housing prices have increased about 4% over time and after the bubble crash, we’re still behind that but not by much.  [Graphic below infographic]

We’ve created a new info-graphic for this month’s Market Action (click image to view full size):

Oct 2013 RMLS Market Action Infographic

Annual Price Graphic