Portland Real Estate Blog

Is the Internet killing print media ads for real estate? In my opinion, yes. Of course there are exceptions (some open houses do sell houses) but I think print ads are becoming less and less effective while still being very expensive. When we run open house ads in the Oregonian, we’re limited to about 4 lines. The number of enquires we get in a year that we can track probably can be counted on two hands.

In an effort to draw some attention to a higher priced listing, we ran a quarter page ad in California paper on the cover of the local Sunday real estate section- I can’t track a single contact through it.

Using Internet based marketing, I can track where the contacts come from, show the seller statistics about the viewings and consider the best time/dollar investment to marketing the home.

Vote in the right hand sidebar.

The S&P/Case Shiller Report came out this morning. It reports with a two month lag; today’s release is for August.

Home prices in 20 U.S. metropolitan areas were down from a year earlier for an eighth straight month in August, a private survey showed today.

Values dropped 4.4 percent in the 12 months ended August, the most since records began in 2001, according to the S&P/Case- Shiller home-price index.

The data for Portland is pretty much flat, as it has been much of the year:

It’s that time of year. Real estate taxes are due November 15th to take the maximum discount. Your other option is to pay in 1/3 installments. In theory, the yellow bills are just statements because the bill is paid out of a mortgage impound account by your mortgage bank but last year, we had some comments that some yellow bills were actual bills so beware.

Think your taxes are too high? You can appeal here.

You can pay online (for a fee).

Let’s look and some numbers and see if there is any truth to the statement, “now is a great time to buy if you own a house in this market and want to move up into a more expensive home.” The theory is that equity gain by buying the new house at the same discount as he is forced to sell the current house creates instant gain. Let’s see how it pans out if we apply some numbers to it. Simple numbers, we’ll ignore transaction costs in the first round and we assume that he is willing and able and does not want to move into a rental. I haven’t looked at this before so we’ll see where it goes.

Joe lives in a house that he paid $200,000 and is now “worth” $300,000. He wants to buy a $500,000 house. He has $100,000 in equity. He lists the house and sells it at a ten percent discount at $280,000. He then turns around and buys the $500,000 for the same 10% discount at $450,000. He’s moved up and has created $30,000 (he gained $50,000 on the purchase but lost $20,000 on the sale).

In its most simplistic form, is that correct? We’ve ignored transaction costs. He’s got $130,000.

Let’s move in some more realistic facts of the transaction. He paid 6% commission on the sale ($16,800). He needs $90,000 for 80/20 conventional loan on the $450k purchase so we’re $23,200 ahead and now has $90,000 in equity in the new house where he only had $80k in the old house. ($130k-$90k-$16.8k=$23,200). Closing costs eat up another $6000 so now $17,200 ahead.

Unless I have missed something (entirely possible), we can say that he has more equity, has moved into a nicer house and has a 30yr fixed loan and a pretty good historic rate. We don’t know if he dumped an ARM that is about to reset or traded across so we don’t know if he took a big hit in payment or not. If he had a $150k loan at 6% (simple numbers) his payment would have been $900. Same theory it is now closer to $1500 all other things being equal.

Joe is happy?!? It looks like it depends. He can’t tell where the market is going to bottom out. If it drops more, he would have done even better by waiting. If it goes up, he starts gaining. Since he is already in the market, it works differently than for someone that is not. In 2005 many said they couldn’t sell during rapid appreciation and move up. Looks like they can now.

At our company-wide meeting someone said that if Realtors dropped the listings that they had that won’t sell, the inventory “problem” would go away. Let’s look at that. A lot has been said on this blog that you have to have a willing and able buyer. It’s true for the seller too. Maybe the cost of putting your home on the market is too low, basicly there is no cost. Nobody gets paid until it closes and if it is overpriced or trashed, it won’t get shown much so it won’t be too interuptive? It only takes one buyer as the saying goes.

Realtors are often too eager to take on any listing that will get a sign up. Some of it is pure greed- get your listing then beat you up for price drops until it eventually sells. Other times, and more honestly, the market just isn’t what it used to be and regardless of the effort put into marketing it, the price has to come down to compete. At some point, the seller may become unwilling even though the home is still on the market. The slowing market has brought a lot of sellers closer to the zero equity point. The two conversations that we have been having lately is that sellers may want to consider pulling it off the market and renting it out if they can’t get what they need out of the property at this point. The other is considering price drops. We use the data collected from our Internet marketing to show that the property is being seen but they are not converting to people walking through the doors. Just because a seller was willing and able when the property was listed doesn’t mean they are today.

If each licensed Realtor in RMLS canceled one listing, inventory would drop overnight by roughly 1/4th…

We’re not debating whether you should or shouldn’t be in the market right now, we’re talking about what sellers need to think about when they want or need to be in the market. Price reductions are a feature of this market. The fear is under pricing and leaving money on the table so there is a natural tendency to overprice because the market isn’t easy to predict. The question is how much and how often?

What is the best strategy? Consumers tend to think in ranges. Some websites (RMLS.com, Yahoo.com) let you select the range by entering the actual digits of the range. Have you ever talked to someone and have them say my price range is between $301,000 and $317,000? Other site have drop down boxes with fixed ranges (Realtor.com uses progressively bigger ranges as price increase). Other than the monetary difference, there isn’t a lot of difference between $331,000 and $337,000. It is less than a 2% difference and does not change the pool of buyers that are looking at the price. There is a difference between $321,000 and $327,000 though. Same percentage but we’ve moved past one of the thresholds so the buyer pool changes because the home will be returned to buyer using a different set of criteria.

The hard part is when you look at $25,000 increments on Realtor.com in the $200k price range. You’re talking 10+ percent to get between thresholds.

How would you price it?

Headline News reported that Goose Hollow in Portland, Oregon is Money Magazine’s number one place in the nation to retire. On Money’s website, I find 35 top locations but two Portland entries are the Pearl District and Goose Hollow. It may just be that the website hasn’t caught up wit the news feed.

Added 10/24/07:
CNN video clip of the Pearl Distrcit and Goose Hollow.

OK, I’ll bite but here are the rules. I am not going to particpate in the discussion. I said my part in the previous post. If it gets nasty, I’ll shut it down. The Secretary of State website states:

Measure 49: MODIFIES MEASURE 37; CLARIFIES RIGHT TO BUILD HOMES; LIMITS LARGE DEVELOPMENTS; PROTECTS FARMS, FORESTS, GROUNDWATER.

The complete text of Measurre 49 is here.

The Yes on Measure 49 campaign is here.
The No on Measure 49 camaign is here.

Regardless of your view, VOTE!!!

This is not the post you expected. I don’t want to turn this blog into a politcal platform. Yes, ORA has taken the side of anti49ers but I am not going to get into whether I agree or disagree with them. I can say that I wish they hadn’t taken a side. There is a lot of discussion over on BlueOregon. Kari, one of the editors, is my son’s godfather. Enough said on the topic.

RMLS Market Action hit my inbox just a few minutes ago. It is, as they say, ain’t that pretty. Inventory is up significantly to 8.6 months, levels not seen since January 2001 (8.5 months). January 2000 hit 10.1 months and we may take a run at that as the “winter slowdown” takes hold. History says the market slows in winter months. One note on the “what is a buyer’s market” question is that once upon a time I was told that six months was the balance between buyer’s/seller’s markets.

It is interesting that even in a cooling market that the number of new listings really didn’t change year on year for the month. The obvious concern (or joy for some) is the drop in pending and closed sales. Will price drops on existing listings will help move them? Are new listings hitting the market priced appropriately? There seem to be plenty of able buyers in our market and there are willing buyers. It is a question of when the rest will become willing? Rhetorically, it will be when prices drop more or when they decide the market has reached an equilibrium and the time to buy.