When the Portland Business Journal’s January 2013 Case Shiller Index headline is, “Housing recovery starts to look like a boom,” y’all better be paying attention. Long the messenger of doom and gloom Portland’s 8.3% year over year increase is something that’s hard to ignore. That said, the Portland index slid a little between December and January. The .55 point drop is expected during the winter months and small compared to December 2012- January 2013′s 2.8 point loss. It does look like Portland is poised to finish the usually weak winter months in a much better position than we have seen in years. I’d like to see 5-7% increases as we have to be concerned with creating a bubble if prices rise to fast. Also see my caveat below.
What does this mean to what we actually see on the streets? General consensus is that interest rates will remain low and that the Fed will act when unemployment gets down to around 6.5%. They are continuing Quantitative Easing measures which will help keep rates low. As the stock markets continue to charge forward, investors start to pull money out of bonds which cause rates to rise. Huge interest rates are unlikely but in reality rates have little room to go down and lots to go up.
Multiple offer situations aren’t unusual so having your ducks in a row when you’re ready to go is critical. We’ve got an (under priced) REO property with 40+ offers submitted. That’s a stark reminder that the listing price has no baring on the selling price. The market will determine the final price. Though 40+ offers is the exception, not the rule it is a very strong indicator that the real estate investor has returned to the Portland market. All of these offers are hard money or cash- no financing is being considered, even a rehab loan, as the bank wants as close to a sure thing as they can find.
It’s also worth filing this in the back of your mind: the Oregon Supreme Court is expected to rule on the legality of MERS transfers and that will determine how foreclosures are handled in Oregon. Banks have started filing judicial foreclosures which are more expensive (for everyone) and take longer. This has caused the percentage of REO sales in the market to decline and as they are typically lower priced properties the average price has increased. When those properties start coming to market we may see a decrease in average price even if the quantity of sales stays high or increases. I do not believe that banks are sitting on sell-able properties. Those in the shadow inventory have some sort of issue.
Since I was remiss in posting about the February RMLS Market Action let’s make note here that inventory dropped to 4.5 months and the February 2013 closed sales we more than we’d seen since February 2008.