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Thanks
To all my family, friends (both virtual and real), clients, and re:PDX readers,
I hope you will all pull yourself away from the news of bailouts, recessions, layoffs, housing slumps (and today, terrorism) to cherish a day with your family and friends in the beginning of a season that will certainly highlight our real blessings unlike any before.
A Busy News Day
Before the nation falls into a tryptophan-induced coma, there sure was a lot of real estate and mortgage chatter today.
First, the September 2008 Case-Shiller study reports home values down 17.4% over 12 months in its 20-city sample. Portland was down 8.6% from a year ago, and another 1.3% from the August numbers–the 7th ‘best’ ranking in the study. Home prices in Portland are down 9% from the peak of July 2007. According to the numbers, the Portland area has given back all value earned since February 2006. Read Case-Shiller report here.
Then the FHFA (Federal Housing Finance Agency, formerly OFHEO) put out their numbers, showing Portland down only 2.64% for Q3 vs. the same quarter in 2007. There are significant differences in the two studies, but I don’t have time to highlight them. (Here are some reasons why the Shiller and OFHEO numbers differ.)
Finally, mortgage rates reached the year’s lowest levels upon news of the Fed’s $500 billion buyup of mortgage-backed securities from Freddie, Fannie, and Ginnie. I heard from my normal list of trusted lenders, then from another half dozen of which I have never met, that rates had plummeted today. Can’t blame the latter for the spam–good news is hard to come by. I heard conventional and FHA rates could be found as low as 5.25% APY.
(Note to local lenders who send 2+ megabyte newsletter attachments with rates, I heard this first from Rhonda Porter in Seattle, via Twitter. Check it out. My email inbox will thank you.)
Photo by toddheft, used under Creative Commons license.
NAR Releases Q3 Numbers
The National Association of Realtors released their 3rd quarter numbers. The nationwide median price is down 9% from the 3rd quarter 2007.
A handful of metro areas showed some appreciation, but in the Portland metro area, prices are down 9% from their August 2007 peak. The map below is consistent with what has been reported here.
From their release:
Four out of five metropolitan areas recorded lower home prices in the third quarter from a year earlier, while existing-home sales fell in 32 states from the second quarter, according to the latest quarterly survey by the National Association of Realtors®.
In the third quarter, 28 out of 152 metropolitan statistical areas showed increases in median existing single-family home prices from the same quarter in 2007; four were unchanged and 120 metros experienced declines.
The Clock is Ticking for FHA Changes
Anyone considering a home purchase or a refinance using FHA programs needs to be aware that HUD has announced that changes are coming January 1, 2009. I’ve received notes from several local lenders and want to pass them along.
Loan Limits
HUD has posted 2009 loan limits for FHA loans, and in the Portland metro area, those limits are falling from $418,750 to $362,250 on a single-family residence. Counties affected are Multnomah, Clackamas, Washington, Yamhill, and Columbia. The higher loan limit was a temporary program from Stimulus Package earlier this year, but HUD has set the limit at 115% of the area median price. Note that higher loan limits are available for 2-4 unit properties.
Down Payments
FHA loans are popular for their 3% minimum down payment, but that changes to 3.5% in January. That takes a down payment on a median-priced Portland home at $275,000 from $8,250 up to $9,625.
Cash-Out Refinances
Although no date has been set for this change, the loan-to-value ratio for FHA refinancing with cash out will fall to 85% from the current 95% level. So, on median-priced Portland home of $275,000, the max loan amount would be $233,750.
More at the FHA homepage.
Photo courtesy of The Rocketeer, used under Creative Commons license.
Portland Real Estate Market Results – October 2008 Final
Final numbers for the Portland metro area real estate are available today from RMLS. My thoughts about the results:
A one-month rise in median and average pricing: Well, it’s a small sample (only 1,465 homes sold in the month), so I’m not surprised to see the prices tick up. The median and average sale prices were up 3.0% from September. But one month does not make a trend.
Declining Inventory: Slowly, ever so slowly, homes are selling, expiring, or being withdrawn. The metro area ends the month with 750 fewer homes on the market than in September. Still at the pace of sales shown last month, there are over 11 months of housing inventory available.
Warning Signs: Pending sales, down to just 1,248—a 25% drop from a month ago. Although part of the seasonal pattern, there were also 10% fewer sales compared to last month.
Central neighborhood continue to outperform suburbs: North, Northeast, and Southeast Portland markets show the shortest market times (< 100 days) and the best price stability. North and Northeast Portland, along with Lake Oswego / West Linn, and Downtown / West Portland show 12-month rolling average appreciation when compared to the previous 12-month period.
October 2008 Market Activity, vs. September 2008 and October 2007
| October 2008 | September 2008 | October 2007 | |
| Median Sale Price | $275,000 | $267,000 | $287,000 |
| Average Sale Price | $324,300 | $315,300 | $341,800 |
| Closed Sales | 1,465 | 1,640 | 1,866 |
| Pending Sales | 1,268 | 1,705 | 2,098 |
| New Listings | 3,605 | 4,200 | 4,597 |
| Active Listings | 16,257 | 17,006 | 15,567 |
| Total Market Time * | 127 days | 129 days | |
| Inventory (in months) | 11.1 | 10.4 | 8.4 |
Here’s how Portland’s various market areas break down, year-to-date:
| Area | YTD Avg. Sale Price | YTD Median Sale Price | 12-Mo. Appreciation | Total Mkt Time* |
| Lake Oswego / West Linn | $550,500 | $453,700 | 3.6% | 187 |
| West Portland | $482,900 | $395,000 | 5.0% | 155 |
| NW Washington County | $405,500 | $376,500 | -0.7% | 129 |
| Tigard / Tualatin / Sherwood / Wilsonville | $356,300 | $325,000 | -3.9% | 147 |
| Northeast Portland | $324,300 | $283,800 | 2.0% | 89 |
| Milwaukie / Clackamas | $323,200 | $285,500 | -5.4% | 133 |
| Oregon City / Canby | $316,200 | $282,000 | -4.8% | 162 |
| Hillsboro / Forest Grove | $281,900 | $259,900 | -5.0% | 113 |
| Southeast Portland | $278,200 | $245,000 | -2.2% | 96 |
| Beaverton / Aloha | $275,600 | $250,600 | -4.2% | 121 |
| Yamhill County | $269,000 | $225,000 | -4.7% | 118 |
| North Portland | $268,400 | $252,200 | 2.2% | 91 |
| Gresham / Troutdale | $260,500 | $245,000 | -5.7% | 142 |
| Columbia County | $228,600 | $214,000 | -8.9% | 148 |
Source: RMLS, November 2008.
* Total Market Time – the number of days from when a property is listed to when an offer is accepted on that same property. If a property is re-listed within 31 days, Total Market Time continues to accrue; however, it does not include the time it was off the market. The old Average Market Time measured the days a listing number was active–not taking into account re-listings.
Oregon Holds Head Above Water in Negative Equity Study
The question is, “For how much longer can we dog-paddle?”
So far, Oregon is faring better than most states in housing value-to-mortgage ratios. In a study published by CNN Money, Oregon ranks 44th in the nation in mortgages that are ‘underwater’ — or when more is owed on the mortgage(s) than the home is worth. Only 7.5% of homeowners in Oregon are underwater on their mortgages. For now.
A couple factors come into play. One, the price decline that bubble states have been suffering from has come late (and mildly, so far) to Oregon. And, local lenders apparently have been somewhat more conservative in their loan practices than in more speculative states like Nevada, California, and Florida.
However, with softening prices, high inventory levels, some local job cuts, and a general real estate malaise in the Portland area, more owners could find themselves getting close to the dangerous water level. It doesn’t mean imminent foreclosure, because many can pay their bills and weather the negative equity–but it’s certainly a precursor to defaults.
Just be glad you’re not in Nevada.
Top 10 states with underwater loans
| State | # of mortgages | % underwater |
| Nevada | 609,577 | 47.8% |
| Michigan | 1,145,572 | 38.6% |
| Arizona | 1,287,076 | 29.2% |
| Florida | 4,248,470 | 29.2% |
| California | 6,461,981 | 27.4% |
| Georgia | 1,456,327 | 23.2% |
| Ohio | 1,905,000 | 22.0% |
| Colorado | 1,045,773 | 18.3% |
| New Hampshire | 144,479 | 17.2% |
| Texas | 2,721,638 | 16.5% |
Top 10 states with the fewest underwater loans
| State | # of mortgages | % underwater |
| New York | 1,554,607 | 4.4% |
| Hawaii | 201,188 | 5.6% |
| Pennsylvania | 1,413,181 | 5.7% |
| Montana | 87,181 | 6.9% |
| Connecticut | 678,766 | 7.4% |
| Alabama | 238,978 | 7.4% |
| Oregon | 641,820 | 7.5% |
| Washington | 1,273,659 | 7.6% |
| New Mexico | 186,844 | 8.2% |
| New Jersey | 1,748,179 | 9.3% |
Source: First American CoreLogic
Lending watchdog Mr. Mortgage adds his inimitable analysis of the negative equity tide.
Some will say, “Be patient. It’s only a matter of time” before Oregon’s numbers catch up. And they may be right, but it’s nice to be at the bottom of some lists for as long as you can.
Photo by charl22, used under Creative Commons license.
Sneak Peek at October 2008 Portland Real Estate Market Results
An early look at October’s results for Portland’s real estate activity may surprise some.
Closed sales were down about 22% from a year ago, but running ahead of the year-to-date pace of roughly -30%. The median price will actually come in above last month’s result (+3%), as will the average sale price. The 12-month comparison will be down about -5% for the median, and -4.2% for the average, but isn’t sliding to oblivion.
These numbers are bound so shift a little before RMLS scrubs and locks them down for the month. The full report is due around the 14th of November, but unless there are some serious discrepancies in the database, I see pricing on a bit of a plateau prior to the winter housing hibernation.
The bottom? Don’t even say it. But better than expected.
Photo courtesy of Black Dog Photography, used under Creative Commons license.
New President Elected. So What’s Next for the Housing Market?
Later tonight, we’ll finally break the tape, finish the race and elect a new President. (Just in time for the holiday rush, right?)
My close-to-the-vest theory has been that one factor (of many) affecting the housing market is the uncertainty of the Presidential race, and that after tonight, a percentage of fence-sitters will move forward and take advantage of the current buyer’s market with some reduced anxiety.
Inventories are high and interest rates are still historically low. I was taken aback today to hear a local lender talk about the aggressive 100% and low-down programs still available, dispelling the myth that loans are only available to the creme-de-la-creme of borrowers.
I am entirely prepared to be completely wrong here, too. Portland-area employers (Tektronix, Columbia Sportswear, Vidoop, Jive, and Freightliner to name a few lately) are letting employees go. The banking crisis is not settled. The stock market is twitchy, at best. And we’re still at war.
So, what do you think?
