Archive for the ‘Portland Real Estate’ Category:

The December 2012 RMLS Market Action gives us the complete picture of the 2012 Portland real estate market.  There 17,84 fewer new listings than 2011.  Coupled with 3,340 more closings than 2011, inventory was driven to lows we haven’t seen since 2006.  The low inventory has created the first seller’s market we’ve seen in years.  Multiple offers, which were almost nonexistent for years aren’t that uncommon now.  As always, the lower end of the price spectrum is seeing more activity than the upper end where the qualified (willing and able) buyer pool is smaller.

Affordability (not quoted this month) is much higher than it has been due to lower home costs and the lowest interest rates in history.  Most of us thought rates couldn’t go any lower than they were in 2012 but we were proved wrong.  Most pundits believe they will remain fairly steady in 2013.

Today’s Oregonian says that new listings in the first couple of weeks of the year are way down compared to last year.  That’s going to put more pressure on inventory and may fuel the seller’s market.  Can we get to 10,000 listings and 4-5 months of inventory?  That would be a healthy market.

The increase in average sales price from $260,800 to $290,220 equates to a 4.4% rise which is a strong result.  The market can handle numbers like that year in and year out where it couldn’t sustain the rapid growth of the run up.

The crystal ball?  It’s a little less murky than its been the last few years.  It looks like we will be able to call March 2012 the bottom of the market.  I’d like to be in June before making the final call but sans something major we appear to be out of the woods.  If there really is a huge shadow inventory it would seem like now is the time for banks to put them on the market.  Working through that inventory while it is low seems prudent.  That might put some pressure on the average sales price as REO property tends to be less expensive but we need to get people into these homes so they don’t sit vacant.

When RMLS Market Action was released this afternoon the first thing I noticed was that December’s inventory is the lowest shown on the graphic.  The write-up doesn’t help as it just says it, “is the lowest in months.”  A quick dive back into the December 2006 & 2009 Market Actions helps paint a better picture (and show some evolution of the report).  It isn’t until we get to 2006 that we see inventory this low (so “lowest in months” equals 76 months).   In August of 2006 there were 10,544 active listings.  This December there were 6,352.  Since inventory is calculated as a ratio of Active Listings divided by closed sales we can see there more closed sales driving the August ’06 inventory numbers.  That means buyers had more homes to look at but they were being snapped up in larger quantities.  Today’s buyer has fewer homes to look at.

These are “Portland Metro” numbers, a five county area.  When we drill down a little we see:

• North Portland: 3.5 months
• NE Portland: 2.3 months
• SE Portland 2.5 months
• Lake Oswego/West Linn: 5.5 months
• West Portland: 4.0 months
• NW Washington County: 3.0 months
• Beaverton/Aloha: 2.5 months
• Tigard/Wilsonville: 2.75

We then notice that the low inventories aren’t just isolated to the close-in city center areas.  Beaverton and Tigard/Wilsonville also have really low numbers.

Rather than continuing with other market stats in review I’ll stop here and continue in another post shortly.

Portland’s Case Shiller this month is really only worth a twitter type post: “PDX CS up 1pt in Oct to 142. Down 1pt same period in ’11 & ’10 so good news.  Winter key to recovery picture. Market strong at year end.”  138 characters, ’nuff said.

‘Tis the season to expect real estate markets to slow down.  Right on cue, all indicators were off from October but that doesn’t mean the market is in free fall.  Inventory remains historically low for this time of year.  At 4.2 months, that’s less than half of November 2010′s 10.2 months and well ahead of last year’s 6.2 months.  In both of the last two years, inventory dropped between November and December and then spiked in January so we’ll see if that trends continues. RMLS Market Action Reports:

In the first 11 months of 2012, there were 30,964 new listings, 22,726 accepted offers, and 21,546 closed sales. Compared to the same period last year, new listings are down by 4.2% from the 2011 listing count of 32,315; but pending sales are up 17.1% from 19,411 last year; and closed sales are up 19.9% from 17,968.

The Case Shiller Index was released this morning for the September 2012 reporting period and for the sixth consecutive month, the Portland MSA has increased.  Today’s 141.10 is the highest since November 2010 and 11.5 points above the March 2012 low.  The next few months will be the most telling as we head into the winter months as we typically see a seasonal decline in the winter months.  Case Shiller reports 60 days back.  Here is a refresher on how Case Shiller works.

Last month’s RMLS Market Action for October was also positive with an increase in almost all metrics.  We’ve started to see more movement in the higher end of the market- those houses over $300,000 where the buy pool is the biggest.  Investors, first-time buyers. down-sizers and those making a lateral move all compete at lower price ranges but the pool of qualified buyers shrinks.

Seattle and Portland have always remained relatively close in the Case Shiller Index.  During the 2005-2007 run-up Seattle led Portland by around 5 points.  Portland took the lead and the two areas have traded back and forth for the last few years.  Seattle now leads Portland by .99 of a point.

I think it is likely that we will look back to March 2012 as the bottom of the market.  That’s based on the seven point drop we saw from September 2011 to March 2012 and the fact that we have a 12 point cushion right now on the March low.  Time will tell and the Fiscal Cliff makes for some tough economic forecasting.  Interest rates remain amazing and the media is a little less doom and gloom.

RMLS Market Action for October 2012 was released yesterday and inventory has dropped even further to 3.8 months. 2012 has seen fewer new listing than 2011 but an increase in closed sales has pushed inventory levels even lower.  At the end of October there were only 7981 active residential listings!  That’s a huge drop from 2010′s 13,805 or even 2011′s 10,012.

Prices continue to climb which makes us wonder if we’ve seen the bottom of the market?  Case Shiller puts the bottom of the current market in March 2012 but RMLS reported a lower average price in the spring of 2011 than 2012.  To measure the Portland real estate market the two reports use different methodology and geographic areas so you cannot compare one directly to the other.

The stock market is currently in a bit of an upheaval which is good for interest rates which remain at historic lows.  Principle and interest on a $100,000 loan in 2007 was $624 per month (6.38%).  At today’s rates the monthly cost for the same loan is $443 (Freddie Mac 30yr rate of 3.4%).  The bad news for the real estate market is that lower stock markets tend to indicate less confidence in the economy which is not good for home prices.

The question we get asked the most at this time of the years is, “should I wait?”  Buyers and sellers are more serious in the winter.  Sellers have to put up with showings during the holidays and yards that look stellar in the summer tend to look lousy in the winter months.  As a buyer  it isn’t exactly fun when it’s near freezing and raining horizontally.  Lots of out-of-town buyers use the holidays to start the move process and many companies relocate their employees at the beginning of the year.  If you’re ready to sell hanging out on the sidelines doesn’t make a ton of sense but we wouldn’t recommend going on the market on Christmas Eve.

You probably got your property tax bill in the mail a couple of weeks ago.  If your mortgage payment doesn’t include an impound account to pay your taxes and insurance, in order to get the maximum discount you need pay the bill by November 15th.

This time of year we tend to get a lot of questions regarding property taxes.  In Oregon, the tax year runs from July 1st to June 30th the following year.  The amounts are certified in October and bills are sent out.  The most common question is, “how do my property taxes keep going up if my property values keep going down?”  There are lots of factors that make up the total tax bill including the taxes themselves, voter approved levies and bonds are a few examples.  In the 1990s there were a series of tax reform measures that defined how Oregon property taxes are assessed, including Measure 47.  Measure 47 states that property taxes can not go up more than 3% per year and you’d pay based on the lesser of Assessed Value or Real Market Value.  Taking a very simplified look at the math, here’s what happened:

Assuming the 1996 tax bill was the first under Measure 47 and both the Assessed Value and Real Market Value were $100,000.  Assessed value increases 3% annually and Real Market Value tracks the Case Shiller Index (this is not the true method of tracking RMV but illustrates this example.

In 1997 AV was $103,000 and RMV $106,090.  This trend continues: in 2007, at the peak of the market the Assessed value from the same $100,000 property was $142,476 compared to the RMV of $236,632.  At this point no one was complaining they were paying on the assessed value!

When the market started to decline, so did RMV but the assessed values continued to truck along at 3% per year.  Now, in 2012, the Assessed Value is $160,470 and the RMV is $166,456.  The assessed value is still below the RMV and there’s no real case for an appeal.

If you can show that your market value is below the Assessed Value then you have a case that your taxes should be lower.  There is an appeal process that is unique to each county so do your homework and make sure you follow the process.  Also remember that this is just an illustration of a generalized scenario.

The Case Shiller Index for Portland continued to climb in August. The market looks much better than it did last year but history also paints a cautionary tale. The graph below shows the Index for Portland for the last two years. We’re showing the change from the previous month and the change from 12 months prior.  What gives us pause is that last year the market climbed through September before logging six months of consecutive losses.  On the plus side, in August 2011 the market was 11 points below August 2010.  This August the Index is up five points since this time last year and the highest it has been since October 2010.

All of that said, the Index tend to give back in the winter months so we shouldn’t jump into the life rafts at the first sign  of a dip.  Was March 2011′s 129.01 Index the bottom?  During the seasonal decline last year mentioned above, the Index lost seven points.  We have a 12 point cushion now.

RMLS Market Action was released this morning just after I hit “post” on the time lapse video so today is a twofer.  New listings are down compared to last year and last month but inventory returned to 4.6 months which is better for the overall health of the market than last month’s 3.9.

Year-to-date the average sales price is up 2.9% to $281,400 and up 4.9% from last month.  The average sales price since last September is -.1% which mirrors what we hoped for 2012: flat is good.  Last year the market gained for the first half of the year and then gave it all back plus some in the closing months of the year.  We spend the beginning of 2012 digging out of those losses.  Will the market finish the year strong?  Will the Spring of 2012 be the point that we look back to as the bottom of the market?  For 2010 and 2011 September was close to the peak for that year with a drop off to close it out.

Days on market has also dropped compared to last year.  At 102 days, it’s slightly higher than August’s 97 days but significantly lower than last September’s 131.

It’s always important to remember that these stats reflect the entire Portland Metro Area, meaning a five country area.  Different locations within the area and different price ranges see very different results.  SE Portland has 3.3 months of inventory and an average days on market of only 62.

We took this time lapse video last week during the full moon from the deck of our listing in Kings Heights in NW Portland.  It starts late afternoon and goes through the moon coming up out of the east.