Portland Real Estate Blog

Has the change in market conditions changed what is selling in the Portland housing market?  I thought we'd take a look this morning at four price ranges from this year and last year.  I used January of this and last year as our time frame.  I searched RMLS areas for North, Northeast, Southeast and West Portland.  The "total" in the graph is the total residential sales for those areas, not the entire RMLS market.

We see that closed sales are down across the board but that the lower price ranges have done "better."

There's little doubt about the downward pressure on the real estate market. Senator Jeff Merkley held a forum over on BlueOregon yesterday discussing the mortgage crisis.  (Needed) new lending rules appear to have really hurt the sale of the $600,000-$800,000 homes.  I think it is because these were the "stretch" homes for a lot of buyers that regardless of the details of their loans qualified then and not now.  With conventional loan limits in the $417k ($625k in high cost markets, of which Portland is not one) and 20% down, anything over $500,000 is probably coming straight from cash in the bank.  The cycle becomes vicious once those are in and want/need to get out can't because those that want/could get in can't or don't want to.

Two articles in the last coupe of days worth noting about the national and local real estate markets.  The first, Realty Times is very BUY NOW.  I've said it before so will say it again, "buy now" campaigns don't make me happy.  The decision to buy is personal and individual. 

Get off that Fence!   by Denise Lones

I've been saying it for months, and I'll say it again.

 

NOW is the time to get off the fence and buy!

And you're doing a huge disservice to your clients if you don't make sure they hear that message loud and clear!

Why am I so convinced that the time is now?

Well, it's a combination of things. Regardless of whether you're building a new deck, or whipping up a batch of cupcakes, you need the right ingredients in order to ensure success. For the buyer considering a purchase, the right ingredients are at hand.

She lists of her reason (low mortgage rates, the bottom of the market may be near, the First Time Buyer Tax Credit, seller's are motivated). Realty Times is an industry media outlet. 

The second article is from Forbes.com and was posted under the real estate section of MSN.  It ranks Portland as the number four market in the country.  They based their methodology on Case Shiller but then looked deeper.  Detailing it here would require a complete cut and paste of the fairly length article so I'd suggested reading it over on MSN.

Bonus article:  how badly do some areas have it?  Read this one about Maricopa in Arizona in the Wall Street Journal:

For the first time, the Campbells figured, they could afford their own home, though that meant moving to Maricopa, about 20 miles from Mr. Campbell's store. They scraped together a $50,000 down payment to buy a new four-bedroom home in Maricopa, for $250,000. It came with black granite countertops, cherry kitchen cabinets and a pool in back.

Today, Ms. Campbell figures, the home is worth perhaps half what they paid in 2005.

Even that might be optimistic. Along a nearby highway, young men hired by a local real estate brokerage wave red signs touting "Homes From $69.9 K."

I spent the night on the sofa.  I didn’t do anything.  I’m not in trouble.  Regular readers know that we’ve moved out of our nearly 5000 SQFT historic home for a 1054 SQFT apartment.  It’s a six month experiment that came about in an unsolicited manner; our house is a corporate rental, fully furnished through June. We’ve been here for about a month now.

My parents are visiting for three nights so now its four adults, one toddler and one dog in less square footage than one of the floors of our house.  One of the things that I find hard to believe is that we left a fully furnished house behind.  We’ve brought with us and purchased a minimal amount of furniture and the condo does not feel under-appointed.  We would need very little of the furniture that remains in our house if we were doing this “forever.”

1054 SQFT is probably the smallest we would be comfortable in with a toddler and sixty pound dog long term.  It certainly helps that we have a large outdoor space and eleven foot ceilings with glass walls (I have previously written about cubic space in condos versus square footage).  1054 SQFT without views, high ceilings and outdoor space would feel much smaller.  Each foot of ceiling height adds about 10% to the cubic space.  It doesn’t help that I work mostly from here so that eats up some additional space for office related space.  I’m sure that the same square footage would be very large for some others with a similar sized family but we’ve come down more than 75% from what we had (which I have always said was too much space for us).

We do like the lower cost of living.  It’s less expensive to have 1054 SQFT.  I don’t feel that we have sacrifced on much of anything other than size.  Both dwellings are high quality in locations we enjoy. I think it would be easy to defeat the downsizing by wanting too much of what you had previosly. I can see that we would have a hard time with some of our art, not only would it not fit in in style, it woudn’t fit in the space.  Dining room table with ten chairs?  Not happening here.  This is one part of the “practice” downsizing that I am glad we didn’t have to undertake.  There is a lot of stuff when we return home that we won’t have missed.  Some of it is stuff that would never be missed, some of it is just the stuff you have to have to fill the space.

The main things to consider when lokking at a smaller space appear to be making sure that they core things you did and enjoyed before still work in the new place.  I don’t want my parents staying in a hotel when they visit as much of the time they would spend with us and their grandson would be lost.  The sofa I am on would be better suited as a sofa bed to make that work.  I’d like a nook or space that could be “office” rather than a desk at the foot of the bed.  Our ability to cook and entertain works with smaller numbers; no way our holiday/client appriciation party is happening here.  Overall, the sarifice of space has been very doable.

Case Shiller was released this morning for December 2008. Portland continued its decline to 158.5, down 13.1% from this time December 2007.  That's down 15% from the peak in July of 2007.  The 158 figure drops Portland to September 2005 levels.  The Dow Jones closed yesterday at 1997 levels yesterday.

On a national basis Forbes reports:

The report's 20-city home price index is down a record 18.5% in the 12 months ending December, and the 10-city index is down a record 19.2% over that same period. The 20-city index fell 2.5% in December from November, and the 10-city index fell 2.3% in December.

PORX is the Portland Index, CSXR is the 10 City Composite and SPCS20R is the 20 City Index.  Click on the chart for a larger image.

According to Hillsboro police, a Realtor was arrested last week after using his ActiveKey to gain access to homes listed for sale.  One seller came home to find the Realtor in his living room having a cocktail!

The ActiveKey is a coded cellular device issued to each Realtor (for a fee).  By entering a personal code, the lockbox will open.  It immediately sends out a message that the lockbox has been opened notifying the listing agent of the time and person opening the box.  There are pretty heavy fines for “loaning” your key out and it would almost surely cost the Realtor his/her license too.

In this case, it appears that they system did exactly what it should.  There is some question as to whether the individual should have passed the background check in the first place.  It didn’t take much effort to track where he had been.  Unlike what the picture suggests, one Realtor won’t be feeling the freedom.

I just received and email suggesting that the Craigslist posting advertising our property for rent is a scam.  They are right.  There is an individual using the email address solomonandy18@(deleted).com as their reply.  A Google search of the email  address reveals two other Craigslist ads with the same reply email (one in Stockton and the other in Kansas City).  It's not clear how the scam works  but I have heard that similar postings get the victim to send a deposit to hold the house.

***added at 8PM: received a phone call from someone that had followed up with the ad, "We are missionaries living in England.  Mail $650 and we will send you the keys."

The Obama’s stimulus package has altered the the First Time Buyer Credit to
be a true credit and not a loan that must be repaid.  The two images here show
how the IRS defines who is and is not qualified to take the credit in 2008 and
are taken directly from IRS Form 5045
for 2008.  IF YOU HAVE ANY QUESTION AS TO WHETHER OR NOT YOU DO OR WILL QUALIFY
ASK A TAX PROFESSIONAL.  This post is not tax advice.

Just after 8 o'clock yesterday I received and email from a past client that started like this: "Well, this mornings article in the Oregonian was terrifying."  He knows there is an oil tank on his property that has not been decommissioned because it was tested when he bought it but as it is hard to access the test results we only parital.  Good reason to be scared after reading the article titled New EPA and Oregon rules double costs for home oil tank cleanup.  The headline is really quite alarming.  It's accurate too but the headline is blanket statement but the quote below in the story qualifies:

I talked via email with Phil Brewer, President of Alpha Environmental.  He confirms that my assessment is accurate: "If you had a straight decommissioning or contamination below 2500 ppm, you still have the same clean up now that you had prior to the rules changing.  If you have more than 2500 ppm you have a 50/50 chance of a bigger cleanup than you had prior to the rules changing."

 Phil Brewer adds:

With new rules, the outcome isn't always clear what the outcome is going to be but the consensus is that some, not all cleanups, are going to be more expensive. 

The photo is of a decommissioning in progress where the was contamination.  The top and bottom of the tanks is removed, leaving the walls in place to maintain soil stability. 

RMLS Market Action reported the highest level of inventory in recorded history this month.  Inventory is calculated by taking the current number of active listings and dividing it by the number of closed sales (14,006 listings/732 closed sales).  In January 2006, there were 6.2 months of inventory.  Between March and September of 2005 inventory never got above two months.

If you are a seller, the competition is plentiful.  Buyers have lots of options when looking at property and as there are fewer buyers in general they can be picky.  Nobody's perfect, we had an agent that couldn't get the door open at our property this week, we're having the lock worked on tomorrow.  It's not broken but nor is it easy to open (mortise locks are counter intuitive to start with).

Even getting to the front door proved challenging this week.  We made appointments to show a buyer property over the weekend with more than 24 hours notice.  Three of the owner occupied properties would not allow their house to be shown.  For one reason or another, it wasn't convenient for them.  Unfortunately, it wasn't convenient for the buyer to reschedule so those houses were not shown.

Once you get them in the door, you've got to give them a reason to stay.  Antidotely, we are seeing buyers want houses in move-in condition more than they are wanting projects.  I think there are numerous reasons for this but much of it is financial.  In an era of loose lending, buyers could purchase the hose for less out-of-pocket.  Now qualified buyers are putting more money down on the purchase and therefore have less access to cash for projects.  If the seller has already done the project, the value is in the property and the project can financed into the purchase.  This assumes that the buyer sees the value in the projects the seller has done. Blanket statements don't cover the whole buyer spectrum but this appears to be the current trend. 

It's a buyer's market so sellers need to consider what they need to do to outshine the competition.  That doesn't necessarily just mean on price. 

While the snow fell, inventory soared to a record 19.2 months.  The total number of active listings appears to be about the same as it was in January 2008 but the slow in sales (732 in 2009 compared to 1085 in 2008) means the listing will take longer to sell in this market.  The 732 closings was the lowest since records started being kept in 1992.

How bad was December for real estate?  January's pending sales increased 52% from the previous month.

From the "Real Estate is Local" theme, the following chart shows some interesting correlations.  North and West Portland performed the best in change in average sales price from the previous year.  West Portland is the only reporting area with an, albeit small, increase.  Hillsboro/Forest Grove was the only area that reported a increase in pending sales.

The Affordability Index is at the same level that it was in June, 2005.

Total Time on Market (previously calcualted differerently as Day on Market) is 152.