…In the months ahead, millions of other adjustable-rate mortgages like Colombo’s will reset, giving them a higher interest rate as required by the loan agreements and leaving many homeowners unable to make their payments. Soaring mortgage default rates this year already have shaken major financial institutions and the fallout from more of them, some experts say, could spread from those already battered banks into the general economy…

http://www.katu.com/news/business/11787801.html

So Ron, what is your take on this article? I really cannot see how one can separate the housing market from the economy.

I do not wish rough times on you all but I hope your significant others have more secure jobs, maybe in health care?

bearlee

Anybody know how much economic activity in Portland was driven by Real Estate (or related activities like building and mortgage brokering) over the last 4 or 5 years? I’m guessing it was a substantial contributor to the local economy – with that going away, what happens? And with credit getting even tighter, a lot of that activity is bound to go away.

http://housing-watch.com/regionview.aspx?city=Portland&pct=50&g=m

http://www.housingtracker.net/askingprices/metro/Oregon/Portland-Vancouver-Beaverton/

Both sites pull directly from the MLS and both are showing YOY depreciation – small for now – but you can clearly see the trend.

Portland is going down just like every other market – just we arrived late to the party and will be late to leave. My best guess is PDX will be down 20-30% by the time this thing is over – bringing prices back to historic normals when compared to income. Before anyone scrams un-possible – it was possible to double in 3 years – it can surely backtrack half ot that in the next 3 once credit dries up.

Check out the action on FRE and FNM today – another brutal credit tightening is in the making.

For a peak at where we’re headed look at what’s happening in California – they are about 18 months ahead of use.

It’s just that I’ve been waiting and waiting for the offset timeline to finally catch up. The slowdown (as I see it) started last fall, but the month-to-month pricing has increased in almost every market area. Small increases to be sure.

So, we’re all speculating…even the economists that are paid to make forecasts in our local area (and say that appreciation is irrational as I heard quoted this week). The appreciation numbers are 12-month rolling averages vs. the previous 12 months, which on one hand, may mask some issues, but on an apples-to-apples basis with other national markets, appear stronger.

With respect to other measures, I would like to do more analysis on the RMLS data but my sample sizes are so limited (per RMLS rules).

The prices in real estate are sticky, sellers are reluctant to lower them. This is exactly the way we would expect to see a slowing market behave. And it is how the market behaved, generally, in many of the places where prices have turned down. (Not saying we should expect a giant price correction here, just that we are following the general trends with an offset timeline).

I suspect you will see that the average is increasing because there are fewer entry-level and mid-level homes selling and you have a larger ratio of jumbos among those homes still closing. It doesn’t take much with the drop in volume to have illusionary avg. price increases. Statistics is unfortunate that way.

Something else I haven’t seen anyone bother to calculate off the latest RMLS data: how many new homes were listed, and how many listings expired or were pulled? We are in the slow season, so it makes sense that in a over supplied buyer’s market that existing home listings among those who are not forced to sell will decide that now isn’t the time, and pull back rather than discount their asking price.

cheers.

The appreciation column is for Average sale price.