Unless you were stuck under a box in your basement this week it would have been hard to miss the news and outlooks on the national and Portland real estate markets and that recovery may not occur until late next year. The National Association of Realtor’s report at the beginning of the week:
Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.
It was grim but expected news. Sales have slowed and housing inventory in Portland is now over 10 months as reported by RMLS. The pessimist says that the economy sucks and the market has nowhere to go but down. The optimist says this is a great time to buy because interest rates are the lowest they’ve been in 50 years and real estate is a market; it doesn’t just stop in harder times which means there are deals out there to be had. Both perspectives have an element of reality to them. In any market the goal may be to buy a the bottom but only a small portion actually succeed. Timing is everything but not so much for a long term investment.
Without becoming overtly political here, Oregon’s economy, and therefore real estate market, is going to be tied to the creation of jobs and the building of consumer confidence. We’ve got until November to determine whether Chris Dudley or John Kitzhaber is going drive that as our new governor. I’m undecided as of now. We’re going to hear a lot more about a statewide real estate transfer tax in the future too.
Most of the above doesn’t answer the “what now?” question. We’re seeing sellers with a much more pragmatic outlook regarding pricing and reacting to feedback. They want or need to sell for a reason. This week’s Portland Tribune article has a grim quote that you could probably replace “Lake Oswego” with “Oregon” and not be far from the truth:
“If you paid a half-million for anything in Lake Oswego in 2007, you’re ‘under water,’ ” Stewart says. That’s the term for people who owe more on their mortgage than their home is worth.
Sellers have to counter that sentiment and its element of truth by making their property the one that shines amongst the competition. Advising on the positioning homes in the market is how we spend a lot of our time these days. Maximizing curb appeal and overcoming showing objections is as important as pricing itself. Buyers are more attracted to move-in-ready properties than the appeal of making some money with sweat equity now more than ever. Sellers that react to the market have the most success. There is a grim reality that some of those under water sellers can’t wait out the market or don’t have any pricing flexibility. We just had a short sale go in foreclosure that had an accepted offer and two backups offers. The two banks were unable to come to terms and now the first mortgage holder is the proud owner of a home and the second got nothing of something. It won’t be surprising if the first nets less after the foreclosure sale than they would have under the short sale.
Real estate remains dynamic and individual. Each property and situation is unique. Deciding how to proceed is something that can only be arrived at looking by looking at the all the available information at a given moment.