Portland Real Estate Blog

Let’s talk inventory here. RMLS calculates inventory by talking the number of available listings at a fixed point and dividing by the current rate of closed sales: if there were 100 homes on the market and they are selling at a rate of ten a month, there is ten months of inventory. Inventory for March was 3.8 months.

Inventory spiked in January at 6.2 months and declined to 5.2 months in February. March’s 3.8 almost matches Jan. ‘05 and July ‘06 levels. Inventory bottomed out at in June ‘05 and was under 2.0 between March ‘05 and September ‘05.

Looking back at the previous years, inventory drops through the spring, bottoms out in the summer and increases during the fall and winter months. Inventory is used a lot as an indicator of determining a buyers or seller market. It looks as though we spent the winter in more of a buyer’s market but may trend back towards (though not as extreme) seller’s market. Looking at the past to predict the future may not be the best investment strategy.

The sky may be falling in real estate markets across the country but Case-Shiller reports again that Portland and Seattle aren’t following the national market:

Home prices fall at fastest rate in 13 years
Case-Shiller index shows prices down 1.5% in past year
By Rex Nutting, MarketWatch
Last Update: 1:05 PM ET Apr 24, 2007

WASHINGTON (MarketWatch) — U.S. home prices continued to fall in February, with prices down 1.5% in 10 major cities compared with a year ago, according to the S&P/Case-Shiller home price index released Tuesday.
Home prices depreciated year-over-year for the second straight month, falling at the fastest pace since late 1993. A year ago, prices were rising 14%…

Never fear:

Prices fell year-over-year in 13 of the 20 cities, led by Detroit (down 7.8%), San Diego (down 5%), Boston (down 4.7%) and Washington (down 4.3%). On the other hand, prices have risen 10.6% in the past year in Seattle, 7.7% in Portland, Ore., and 7.3% in Charlotte, N.C.

We still like our market for being the lowest priced major west coast market, having property prices protected by the Urban Growth Boundary and being a nice place to be. We can’t predict whether Portland will get on the national train and decline or if lending rules will torpedo the market…

Spring is here and the flowers are starting to come out. Lawns need mowing and weeds controlling. The landscaping can be the clincher or killer for your home’s curb appeal. We generally expect yards to look rough in the winter months but sympathy goes away once the shorts come out.

Bark dust not only looks and smells good, it helps keeps the weeds down. Unfortuantely it isn’t a long term fix. If you put it down last year, you need to do it again this year. Mowing is relatively easy but I still haven’t mastered edging. If your grass is anything like ours a little weed and feed may go a long way to thicken it up. If you need to seed, try to match the seed you already have or you’re going to get a patchwork effect.

It’s especially tough for the seller of a vacant home. It’s hard enough to get out into the yard of your home never lone packing the needed tools over to a house on the market. But it is worth the effort. People notice.

WASHINGTON: The mortgage-lending subsidiaries of national banks are immune from state regulation, the Supreme Court has ruled in a decision that upheld a controversial regulation issued six years ago by the Office of the Comptroller of the Currency, the chief federal bank regulator.

The attorneys general and bank regulators of all 50 states had urged the justices to find the regulation out of bounds, either as a misinterpretation of the National Bank Act or as a matter of constitutional federalism.

The story in the International Herald Tribune continues here.

While this doesn’t mean that Wells Fargo (or Wachovia which filed the lawsuit) will be putting signs up in your neighbor’s yards tomorrow, it does open up that possibility. The ruling in the bank’s favor today would allow them to conduct their real estate activities outside of state control.

Real estate is currently state controlled (the Oregon Real Estate Agency). This will blur that line. Obviously the National Association of Realtors was one of the most outspoken opponents. If big banks enter real estate a lot of the marginal (previously referred to as stupid) Realtors are going to have an even harder time competing in an already tightening market. While I can’t say that it thrills me either on a personal or professional level we’ve been positioning ourselves with our tools and service to be able to compete in any market. Since they would enter the game way back on the learning curve, I expect that they will have to pay their way into markets by buying out existing brokerages.

Not everything is price driven. It’s why Target and Nordstrom both do equally well serving their target market.

I just got off the phone with a potential client today that probably won’t become a client. The issue is that she was honest and up front about working with another Realtor (thank you) and we work exclusively under contract with our buyers using the Exclusive Buyer Service Agreement. This form is supplied by the same source as the Earnest Money Agreement and Listing Contract not some form I cooked up last night at happy hour. The form references the Disclosed Limited Agency for Buyers so that is included here as well.

The phone rings and it is a client Realtor A knows little about and wants to see properties all day. They’ve been out once before so they have an informal relationship. He thinks they might buy but isn’t sure when so gladly makes the appointment and if he gets lucky, the buyer might use him, not the friend of a friend who is a Realtor. That Realtor is pretty much gone for the day chasing their next paycheck and not working for you. That person never gets in my car. It’s a bad use of my time and therefore a bad use of time for our serious clients.

Not everybody we meet wants to work with us and we don’t want to work with everyone we meet. We don’t ask for the contract when we first meet but before we meet a second time.

This is a very common trick used by a large majority of lenders and brokers out there. Instead of being straight-forward, and saying "Mr/Mrs Borrower, I am charging you 1% of your loan amount as an Origination Fee", they will try and hide their profits from you by breaking them into "junk fees".

They give them cute names, like "broker fee", "application fee", "administration fee", "processing fee" and so on. Don’t get me wrong, sometimes some of these fees are valid. You can almost always expect a reasonable processing fee on your loan. However, I have heard people brag about how their broker didn’t charge them any "points or loan origination fees" on their loan, but when I looked at their Good Faith Estimate, I could see why. The lender was making $4,700 on miscellaneous junk fees!

Keep your eyes open for excessive fees, read the entire Good Faith Estimate, and ask your broker or lender to explain where the money is going so you can know if you are being charged the norm, or if they are trying to suck every last cent out of you in a very devious manner.

Shawn Headlee

Columbia Mortgage

sheadlee@cmortgage.net

NAR released this story today:

Tighter Lending Standards Good For Housing, But Will Dampen Sales
WASHINGTON, April 11, 2007 – Tighter lending criteria and fallout from the subprime loan debacle will lead to a healthier housing market with greater assurance that owners can handle mortgage adjustments, but higher loan standards will slow the housing recovery, according to the latest forecast by the National Association of Realtors®.

CNN goes on to report that prices dropped in 73 metro areas in the country. Take a look at the list of 1 year appreciation. Oregon gets three of the top 15 spots (Salem #5, Portland-Vancouver-Beaverton # 13, and Eugene-Springfield #14).

This leads us back to the question: is Oregon real estate still safe? If national home prices drop for the first time in 38 years, what do we do? Personally, we’re seeing new listings sell faster than older listings because they are coming on the market accurately priced for the current market, not the hangover effect of the previous market.

I should mention on the “put your money where you mouth is” front, we signed a contract for the purchase of a property in NE Portland yesterday.

Back when the EcoBroker designation came out, I was pretty critical of it and then followed up. Not because it isn’t a goof cause but because it is a designation awarded by a third party for taking and paying for some classes. I received a solicitation for the RREIS – Residential Real Estate Investment Specialist today. The classes will cost $1180 to earn the designation.

Neither designation is sanctioned by the National Association of Realtors (NAR). Don’t get me wrong, continuing education is great but do we strengthen our industry by adding to the already too long list designations??? Attorneys don’t add anything after JD though they too have continuing education requirements. I feel our industry is too busy trying to impress each other and not the consumer that couldn’t care less (for the most part) about the alphabet soup after our names.

Let me be clear: I think the education is great. I just don’t understand how earning a non-sanctioned designation adds value to the consumer.

Charles, BROT (Best Realtor Out There)

Your guide to investing in Portland real estate… Who has the best real estate investment advice? Starbucks? That may be a stretch but let’s take a look at the logic before discounting it. Major corporations do massive amounts of research before they open stores. They look at emerging markets target where they think they will get the best return. They’ve got to be the earlier adopter or they have to deal with the competition. This is by no means an “invest here” post but there are three new stores going in within 20 miles of downtown Portland:

1. Morocco-Portland State
603 SW Jackson, Suite 116
Portland OR, 972014975

2. PDX D 4
7000 NE Airport Way, MB#23
Portland OR, 97219

3. Fred Meyer-Oregon City #242
1839 Molalla Avenue
Oregon City OR, 97045

We can discount the first two: one in downtown and one at the airport. That makes the Oregon City store the most interesting of our purposes. The median price in the Oregon City/Canby area is $318,000 and one year appreciation is reported as 13.8% according to February’s RMLS Market Action.

We’ll revisit this later and see what new stores Starbucks has upcoming. I was disappointed that there were no stand-alone stores on the list. Are we coffeed out? I doubt it.

The title sounds like an ad for a discount brokerage. It is not.

The House Revenue Committee will hold hearings on HB 3052 and HB 3258 on Monday, April 9 at 1 pm in Hearing Room A of the State Capitol, 900 Court Street NE, Salem. Both bills would allow for the creation of a real estate transfer tax. HB 3052 would impose a 1% real estate transfer tax on all transfers of real property. The money generated would go to the State of Oregon. HB 3258 would authorize counties that lose federal timber payments to impose their own real estate transfer tax. No percentage is given in the bill.

Oregon.gov goes on to explain:

Imposes real estate transfer tax on transfers of real property. Exempts certain transactions from tax. Directs county recording officers to collect tax. Provides special rules for collection of tax on transfers of manufactured structures and floating homes. Establishes exemptions from tax. Establishes Shared Services Fund. Continuously appropriates moneys in fund to Oregon Department of Administrative Services for distribution. Applies to real estate transfers occurring on or after January 1, 2008.

Is the bill for the greater good or is an embattled but not beaten real estate market going to recoil? Or both?I’m not finding much pro or con on the Internet.

Fun(?) note: HB 3052 shares the same name as the 1999 medical marijuana bill.