“The market has slowed; houses are spending more time on market. If you list your home, be patient.” That’s become a familiar tone in the Portland real estate market in the last few months. There is some truth to that. January’s RMLS Market Action, the most current issue, says that Days on Market in December was up to 65, that’ significantly higher than December 2005’s 44.
There were only 2% few pending transactions so houses are still selling. Accurate pricing is more important than ever. The house across the street from us was pending in just four days (listed by our neighbor who is also a Realtor). There are more listings, an additional 500 added in December which confirms our previously anecdotal statement that we were much busier in December than previous years.
Graphic source: RMLS. Click to enlarge.
This is data for January which was before most of the credit-tightening started. It will be interesting to see what the data will be for this month (March).
I heard from a local mortgage broker on Friday that 80/20’s are getting very hard to do. They can get funding for the 80 part, but nobody wants to fund the 20 part. Though, they did say that 80/15’s were still doable with a high FICO. A lot of people who became accustomed to the idea that they could go into closing without bringing much if any money to the table are now finding that not to be the case any longer.
I believe that Portland realtors and sellers alike need to look realistically at what the market will bear with pricing strategies. The influx of people moving to Portland has diminished drastically, new jobs in the Portland area are in decline, mortgage companies can not do “creative financicing” any longer, and the economy is now moving into a recession. Inventories for many areas have tripled, and despite changing RMLS numbers constantly, the listings are stale.
Additionally, people who bought their homes at the top of the market in the last two years are unfortunately not going to be able to get their money back, should they be having to sell.
Justin: The best way to make your house more salable in this market is to drop the price at least 5% under comparables. If it still hasn’t sold after a couple of months, drop another 5%. Repeat until it sells. Larger increments may become necessary ( as in you might need to replace 5% with 10% in the above algorithm )
There is also pricing strategy. Think of a real estate price range……
I’m willing to bet that your answer wasn’t $ZZZ,500-$xxx,999. It was more likely $ZZZ,000-$XXX,000. If a property is priced at $399,999 and a buyer gives a price range of $400,000-$450,000, there is a very good chance that the property is going to fall outside the scope of the search. Even more likely at the upper end of a range since it is somewhat tacky in my opinion to send listings above the client’s stated range. The client needs to make the decision that what they are seeing in their stated range isn’t meeting their needs. Nine times out of then the favorite listing is the most expensive one.
“John Burns, a real estate consultant, reported today that 84 of the 100 largest metro areas in the country are overpriced. New York City; Washington, D.C.; Los Angeles; Seattle; Portland; Baltimore; Edison, N.J.; Nassau, N.Y.; and Naples, Fla., are ranked as the most likely metro areas to have a housing bubble, according to Burns’ “Housing Cycle Barometer.” This barometer is a calculation of the ratio between home prices and income levels and the ratio between mortgage payments and income levels.”
http://blog.inman.com/inmanblog/2006/08/bubble_trouble_.html
Much of the bubble has burst. No one is talking about the condominium glut in the Pearl, Downtown, Nob Hill, NW Industrial, Corbett’s Lair and even Forest Heights areas. And no one is talking about the huge number of *vacant* houses that are being offered for sale.
I predict, especially now with the end of the “creative financing” options, a lot more properties are going to be sitting until sellers are reasonable with their pricing. And I agree with the news that a record number of people are going to lose their place due to foreclosures (especially from those creative financing deals that were foisted on them by unscrupulous brokers).
I’m sorry. I believe that most buyers are more savvy these days. It takes more than fresh flowers or potpourri to not see the kitchen that needs a complete remodel or the family room with mold.
While a nice flowery smell is better than the odor of cat piss, it won’t sell a house, ever.
I deleted the comment prior to JJ’s last comment. It was just a cut and paste marketing spam.
Thanks for all the constructive comments.
The “subprime” factor is still a wild card — it would be great to see a count of fixed and adjustable rate loans issued in the Portland Metro Area from 2000-present.
With existing homes appreciating anywhere from 40% to 65.6% since 2003 I would guess there were a lot of people who used “creative financing” options to get onto the housing ladder. Especially since good paying (75k+) jobs are hard to come by here; Oregon lags behind the national per capita income by 11%.
Portlanders make less money, pay more taxes (4% above the national avg), have a higher cost of living, and have to afford homes that have increased dramatically in price. Save a windfall from a relative, I don’t see how most people have done it over the past three years without “creative financing”.