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Foreclosure in Oregon

J0314330_2This blog proves that there is little agreement about where the Portland real estate market is heading. The range of thoughts runs from double digit depreciation to low single digit appreciation. The latest Case Shiller report places Portland as on of the top three markets. The Oregonian reported yesterday that through September Oregon had the third lowest rate of defaults on mortgages. Our team had a very successful January but Realtors are leaving the business in droves.

For each good thing in our market there is a negative. Subprime lending cannot be ignored. Government bailout plans could help the masses or a select few depending on what the politicians finally agree to. Interest rates are dropping but can those that need to get out of the resetting ARMs qualify for them? The rates on Jumbo Loans (over $417,000) have remained largely unchanged; since they are nonconforming, the secondary mortgage market isn’t as keen to buy them.

My thought (be nice in your comments) is that the market will advance somewhere in the low single digits (average price, not median). Even if the market is softer, there may, depending on your situation, be tax advantages to balance some of that out. Maybe not, I’m not an accountant and you need to talk to one.

18 Comments on “Foreclosure in Oregon

  1. I’m against using tax payer money to bail out banks and financial institutions – and the people that tried to get something for nothing.

    Property foreclosed means opportunity for investors that will buy and resell – so in the long run everything will work out just fine.

    It’s an election year so politicians are trying to out do each other to appear the most “compassionate” – while screwing up our economy, giving away $$$ they don’t have, and abusing their authority.

  2. I want to say up front that I have a vested interest in home prices declining around PDX simply because my wife and I would like to continue living here and afford a small place of our own.

    Having said that, I don’t believe prices in PDX will decline significantly and will likely continue to increase despite rising inventory.

    Part of it will be because of politicians and other interested parties will do everything they can to ensure housing prices don’t decline through legislation and bail-outs. The main reason however, I think, will be the fact that house prices are *so much higher* to the south and north of us that folks selling their houses in those places could take a *signficant loss* and still come out ahead up here.

    And they’re moving here…I see more and more CA plates on the road every single day…

    It won’t be people like myself or my wife buying here. Just this year, I lost my job at the VA and had to take a job making almost 20K less. I’ll be honest with you…it took me from 60K to 42k overnight. I mean seriously, tell me what we could afford for 132k (3x our current income) that isn’t complete sh*t or so far out that the transportation costs would eat us alive in terms of time and money spent?

    This probably sounds like sour grapes, but the face of Portland is changing. This is not a working-man’s town anymore, but a fancy little toy-city for money-handlers, software engineers, lawyers, and doctors….most of whom lived to the north or south

  3. PDX_Renter,

    Portland prices will come down. They already are. Despite what the NYTimes writers say who are paid by the Portland Visitor’s Bureau, this is not a bastion of wealth. Prices are just sticky on the way down. Until one needs to sell there’s no reason to set a price. And I believe a lot of potential sellers are seeing what the spring holds. With the speculators gone and the funny loans a thing of the past, prices will drop if people need to sell. They have to.

    As for this being cheaper than Seattle or San Fran, Providence is cheaper than Boston or New York and prices are still lower in Providence. They always will be because it’s Providence. Yes, Providence went up fast but it too is coming down.

    It’s not sour grapes to want housing to remain affordable. Yes, realtors and those who already own can be elitists. They can afford to be. But unless prices drop, they’re out of a job. There’s just not enough people making 100K+ to buy all these 800sf bungalows for 329K. Sure, the homeowners and RE people want us to celebrate their good fortune and support their lifestyle of living beyond their means [see the Oregonian article from Sunday about foreclosures in high-dollar Portland neighborhoods-that’s the part that was cherry-picked here to focus on Portland having low foreclosure rates-for now] but the you-know-what is moving quickly towards the fan. 46% of loans made here in recent years were no-interest or neg am. Not a good harbinger for the future.

    Go to this blog and see the chart of Portland appreciation. That should make you smile!

    http://tinyurl.com/yvsp7f

  4. Charles-
    Your comment “My thought (be nice in your comments) is that the market will advance somewhere in the low single digits (average price, not median).” is interesting.

    Historic real estate appreciation should be inflation rate plus 2-3%. In this environment, that is achievable. BUT, we also know that iventory is high and will continue to grow in the PDX metro area, including close in Portland. More supply will lower prices.
    Portland does not have a history of, nor an ecomomy that can handle wage compensation needed to buy at current prices. If we look at a 10 year picture of housing prices in the the Portland metro area, we see 15 years of appreciation packed into 3 years.

    I hope we do stay flat or appreciate in the single digits, but our current data makes a strong argument against it happening.

  5. I’m not sure that I’m right for Meebo as I keep missing conversations:

    [18:07] meeboguest706877: Charles- it’s only a matter of time that P-town joins the rest of the states and goes to negative amortization- as a prospective buyer- the most refreshing news would be to meet a realtor in Portland who is willing to face this fact.

    The only way I can answer that is that I disagree with the author’s market forecast. I think there may be a misperception that my survival as a Realtor is predicated by an appreciating market. That’s not the case. Houses will sell regardless of market conditions. Of course it’s easier in an up-market but I don’t need to puff my market opinion to survive.

    Let’s sing together now the chorus line to this blog: Every one’s situation is different. What might be the right market for you to buy (or sell) in may not be the right market for the next person.

  6. Great commentary on the site- It’s difficult to argue with Naysayer and Frank as they are speaking the “frank” truth of what the future most likely holds.
    Because Portland is one of three markets in the entire US still holding on does not mean that Portland will buck the national trend.
    What I would like to hear is a realtor who is willing to look at the market (in Portland and elsewhere) and make an honest judgment of where things are heading instead of an overly optimistic unreal call based on the hopes of someone in the biz.
    That’s not too harsh, is it?

  7. Credit continues to tighten . We’re actually probably getting back to normal lending standards about now – as compared to the crazy-loose lending standards of the last few years. Of course things will continue to tighten as the banks are kind of desperate and feeling a bit burned right now… I’ve been saying this for a year now: credit availability is key to where prices are headed. If there are less borrowers who can qualify and more houses… well you get the picture.

    It’s interesting that the Oregonian article seems to suggest that foreclosures are starting at the high end here. Usually, things start lower. Still, I suspect that a single foreclosure of a $1Million house is about as bad as 4 $250K homes going into foreclosure… certainly looks about the same to the banks.

  8. TiP: a thought for Still, I suspect that a single foreclosure of a $1 Million house is about as bad as 4 $250K homes going into foreclosure… certainly looks about the same to the banks.

    There are a lot more buyers that can suck up the four $250k houses than there are for the single $1M home. I wonder what the actual ratio is. On the books they probably look the same but I expect the $1M house is harder to get off the balance sheet.

  9. Thank you for reminding me to be humble, PDX_renter. I was, and still am quite a bit like you.

    I lived and rented in LA for all my life. I made $80K a year. In the face of $800K, 2 bedroom shacks, I chose to leave. I chose PDX. I too lost a signifigant part of my income to come here.

    But also consider this. Many of those people who bought in early have sucked the equity out of thier homes for frivilous reasons (vacations, Jetskis, etc.) with the unreasonable expectation that prices will go up forever. They won’t and they can’t. Who can pay those prices? So I ask you, what is worse, being a renter for a bit longer, or losing your home because you owe $800K on a house suddenly worth $600K?

    Bubbles usually “pop” far faster than they are created. News stories from the WSJ and Business Week are projecting this will be over by 2009, with declines approaching 25% in some markets. It is an epic moment to NOT be a homeowner.

    So laugh as Rome burns! You of all people should welcome this reckoning. And it’s coming mighty fast, IMHO.

  10. Charles-

    I’d suggest you are not meeboguest706877’s guy. In fact, meeboguest706877 may have a very difficult time finding an agent to work with.

    I wonder, however, when he is looking to make the purchase. Really sounds like he is not in the market today.

  11. We had a real boom here several years ago for about 3-5 years. That drove the house prices up and everyone started selling and it was a frenzy.

    I see alot of long time residents moving out of FL due to higher house insurances after 2004 hurricances and taxes and ARM foreclosures.

    I don’t see a different type of person moving into our community just more the same people moving from the North to the South some to retire and some for a second vacation home and some to live.

    There are some great homes for sale now and prices are good and interet rates are good. For a person with equity in there home it’s a good time to move. They just passed a portability tax law which will allow people to move downsize or upsize there home. People very much wanted this tax law passed.

    I think Florida will recover as it is a place where people will always come to vacation, live. Great beaches, weather, theme parks.

  12. Great sales pitch Orlando. I just spoke to an old high school friend who just left the Orlando area after trying it for 2 years…hated it..here’s the line from her email, just got it last week:

    Yes, Florida and Orlando suck. The weather is really only nice like 3
    months of the year, otherwise it scorches your pubes off! The crime is

    horrendous there. No one speaks English. We are happy to be back to
    our nice little home in Des Moines.

    After I stopped laughing I realized Florida is a great place to visit in the winter and that’s it, oh, and a great place to catch a flight to the Caribbean.

  13. I remember attending a lecture about an issue in Orlando that raised concerns about the stability of the community. The issue was that 75% of grade school kids change schools once a year due to moving within the community. On investigation it was determined that this occurs because people move every year to take advantage of the free month one often gets when signing a new lease. Since the economy there is largely low-paid service work, people find it advantageous to move and get this “bonus month” because they get paid so badly.

    Doesn’t that just fill you with pride on being a Floridian or an American? Doesn’t that make you want to move there and be a part of the fast food/theme restaurant/hotel industry?

  14. i don’t understand why people not speaking english makes a place “suck”.

    i lived in the mission in SF for 6 years. pointing and smiling was a language there that we all shared. it was really very fun.

    “is the carne cookie REALLY filled with meat?” no way to find out till you pointed and purchased one.

    ANSWER: yes it is! mmmmm…. BBQ cookie!

  15. George, as you are the manager of another Realtor’s blog, I don’t think your comment is appropriate or makes a any sense.

  16. i suppose i get pithy around 4:30.

    i was responding to a quote above. it says “Orlando sucks”, and lists “No one speaks English” as a contributing factor.

    NOW ON TO THE BBQ MEAT COOKIE. some clarification. next time anyone is in SF, please head to 22nd and south van ness, head into Pan Lido.

    there should be a rack of little orange/yellow sugar coated cookies. point to the one marked “carne”. say “uno”.

    i think you’ll see why “No one speaks English” can be a rewarding experience.

  17. PDX_Renter said:

    “Go to this blog and see the chart of Portland appreciation. That should make you smile!

    http://tinyurl.com/yvsp7f

    I’ve updated that data, and this month was worse as expected. I’m confident in predicting that the median price will be lower in 2008. I”m not making any predictions about average prices, as I believe the average is too variable.

    But I’m also extremely curious as to how much the foreclosures and lending issues will drive prices. I’ll be watching.

  18. This blog is great. You are providing valuable information to all homeowners. I would also recommend the following guys http://mortgagebuyerbasics.com/ they really helped me out of a sticky foreclosure situation. Some of the services they provide are loan modification/loan restructuring/ loan refinance. The guy who worked out my forbearance agreement was excellent.

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