Distress Properties Comprise 30% of Portland Real Estate Sales

Portland’s multiple listing service RMLS has published a small study on the magnitude of distress sales in the metro area–distress sales meaning short sales or bank foreclosures. This measure is also something that I’ve started tracking in my monthly reviews of Portland real estate activity.

Portland Real Estate Distress Sales chart
Click for larger view.

In short, distress properties made up 24% of new residential listings and almost 30% of actual sales in 2010. While those numbers are small compared to the smoking crater markets like Las Vegas, Phoenix, or Detroit, distress sale pricing impedes the value of all non-distress homes and is a major contributor to the continued pricing slump in the area.

Additional facts from RMLS:

  • Short Sales were 11.8% of new listings, and 8.9% of sales.
  • Bank Owned properties were 12.3% of new listings, and 20.4% of sales.

While pursuing short sales can yield fruit, you have a much higher likelihood of closing on a bank-owned foreclosure property (aka REO, or real-estate owned). You can search for those opportunities on my Foreclosures search page.

Portland Metropolitan Area Median Home Prices, 2000 – 2009

I put together a graph showing Portland-area median sale prices by month from 2000 through 2009.

The smooth curves show annual growth rates between 3% and 6% (from bottom to top) if you had purchased the median-priced home in January 2000. From 2000 through early 2004, home prices rose consistently in the 3 to 4% range. Then you can see the bubble pricing taking effect, jumping the growth curves and peaking in the summer of 2007.

The mid part of 2009 showed a plateau of $250,000 for a few months in a row, but even with homebuyer tax rebates and low interest rates, prices have continued their descent. Prices are now roughly equivalent with those of early 2005.

Click for a larger image.

Again, this is just a broad look at median pricing for the metro area in general (Portland, its suburbs, plus Yamhill and Columbia counties). I suspect the closer-in neighborhoods would fare better than the outlying areas, but that’s just an educated guess.

The question remains. When federal stimulus and interest rate support programs expire, what will happen to the market?

NY Times Charts Case-Shiller Numbers for Portland and U.S.

According to the Case-Shiller report, home price declines are easing throughout most of the country, including Portland–down 5.4% from the previous year.

The New York Times releases another of their nifty interactive graphs to compare markets. Be sure to click on Portland in the list.

Link to NY Times chart.

Federal Housing Support Ends Soon. Then What?

I’ve been pondering how the housing market will fare as federal support programs wind down.

First, the Federal Reserve will discontinue its purchase of mortgage-backed securities, which has artificially kept mortgage rates down. Then, the homebuyer tax credits will expire at mid-year, leaving the housing market to fend for itself.

How will it do?

The New York Times hit that subject today, and while Portland is no Elkhart, Indiana, I do worry about the second half of the year here.

…it is uncertain whether the government can really pull back without sending housing markets into another tailspin. “A rise in rates would kill us all by itself,” Ms. Swartley (Elkhart Realtor) said.

The Obama administration has offered few ideas about reforming the housing market. Proposals for the future of Fannie Mae and Freddie Mac, the mortgage holding companies taken over by the government at the height of the crisis, were supposed to be introduced with the president’s budget this month. They were not.

The government programs, however crucial, are distorting the market. The tax credit produced sales last fall, but some lenders here say it has troubling implications.

Troubling, indeed. Read the full NYT article here.

Photo by pfala, used under Creative Commons license.

2009: Reflections in the Rear-View Mirror

I’ll probably do a ‘looking ahead’ post soon, but 2009 was an interesting year (for me anyway) and I thought I’d share a look back.

I changed agencies right around the turn of the year. I didn’t really talk about it at the time or since, because I don’t think most consumers really care. But it was a good change for me and I will share more about why soon.

The start of 2009 really scared me. From November 2008 through January 2009, homebuyers just plain disappeared. With the economic turmoil at the time, I didn’t blame them, but I wondered if I was being prudent by staying in the industry (so did my family!). But around mid-January, my phone started ringing heavily, and soon I began to wonder if I would need an assistant or partner to help me.

Whereas 2008 was more of a ‘listings’ year for me, in 2009 it was all about buyers. I showed over 600 homes through the year. My auto miles increased by around 10,000 miles over 2008. Most buyers wanted to be close-in — near transit or bike commute routes. That meant I didn’t spend as much time in the suburbs this year.

As an agent I had my best year ever in terms of clients and transactions, but it was also the most expensive year I’ve had, too. I earned a number of referrals from other agents and partners, who all received a sizable portion of my compensation. I’m working a strategy to earn more business ‘organically’ and raise my bottom line to something more manageable.

I did not close even one short sale transaction. All of my offers expired after at least 8 weeks of waiting for an answer from the lender. My buyers did not want to wait. In one case, the prospective home had a rain gutter overflow along the foundation wall and seep into the brand-new basement, causing a 4-foot high mold bloom in the sheetrock. Even though the bank offered an additional $7,000 discount, my clients walked away.

Every bank-owned property (REO) that I wrote an offer for (many) had multiple offers, and the winning bids were usually cash transactions with minimal inspection contingencies and quick closing timeframes. My clients, with their FHA financing (usually) had no shot, even if our offer was slightly higher than the cash bid.

Tighter lending standards and underwriting reviews added considerable friction to the process. Every transaction I had where a mortgage was involved was delayed by no fewer than 3 days, sometimes a week or more. In a couple cases, I had clients in moving trucks with no home to put them in. Everyone survived, but it wasn’t fun. Let’s just say I enjoyed working with clients in all-cash positions!

Around mid-year, one of my clients volunteered to participate in HGTV’s “My First Place”. While it was mostly a fun experience being on camera, it added tens of hours to the process of actually viewing and buying a home. At times I just wanted to take my clients aside for some productive, un-filmed conversation and advising. They started out looking at single-family homes, but ended up with a cool, modern-style condo — which shook up the storyline for sure. I’m not sure when the show will air, but I will let you know.

Late in the year, I was appointed to the RMLS Board of Directors and will be heading up the Technology Committee for RMLS. Looking forward to both of those roles and working more closely with the staff there.

On the downside, I damaged a potential client’s car in October to the tune of $550. My associates have urged me to tell that story here, so expect a post about that sometime. Worst Realtor day, ev-ah!

Things look good going into 2010. I have activity and transactions in escrow, even an offer to be written on New Year’s Eve. My business is more balanced between advising buyers and sellers, which I prefer.

The market will probably be stable through the first half of the year, but rates are predicted to rise and government stimulus programs will expire. And we need jobs, but that’s fodder for a New Year’s post.

Thanks for indulging me today, and for reading re:PDX this year. I look forward to the New Year. How about you?

Portland Real Estate Market Activity – October 2009

Low interest rates and homebuyer tax credits apparently fueled a late summer / early fall increase in home sales, according to the latest statistics from the Portland Realtor® association.

Over 2,000 homes sold in October — the most since August of 2007, the height of Portland’s real estate market in term of housing pricing and activity. The sold home total was on par with the best months of Portland’s peak housing season — May through August.

Pending sales, or homes that received an acceptable offer and opened escrow, logged in at 2,079 for the month, up 64% over October 2008. That indicates that November’s unit sales result will likely be higher than normal, too.

At the same time, the number of new listings is shrinking, which has resulted in a 6.5-month supply of housing inventory, the highest absorption rate since August 2007. Available inventory stands at a little over 13,000 homes — the lowest inventory in two years.

The average sale price slipped to $283,000 from September’s results, but the median sale price grew 1.5% over last month. Both average and median are still down 19 to 20% from peak pricing of 2007, and 10 to 12% from a year ago.

Here are the numbers:

Market Summary

  October
2009
September
2009
Last Year
October 2008
Median Sale Price $245,000 $241,400 $275,000
Average Sale Price $283,500 $290,100 $324,300
Closed Sales 2,009 1,800 1,465
Pending Sales 2,079 2,286 1,268
New Listings 3,443 3,599 3,605
Active Listings 13,101 13,667 16,257
Total Market Time * 135 days 131 days 127 days
Inventory (in months) 6.5 7.6 11.1

Below is activity by market area. Please note that the median and average sale prices are year-to-date, and the appreciation numbers are a 12-month average compared to the previous 12-month average. Total market time is the number of days between the date it went on the market and when it received an acceptable offer.

Market Report by Area

Area YTD Avg.
Sale Price
YTD Median
Sale Price
12-Mo.
Appreciation
Total Mkt
Time*
Lake Oswego / West Linn $488,300 $395,000 -14.50% 201
West Portland & Downtown $427,000 $352,600 -12.00% 146
NW Washington County $372,200 $350,000 -7.60% 122
Tigard / Tualatin / Sherwood / Wilsonville $317,800 $287,900 -11.20% 141
Northeast Portland $289,200 $255,000 -10.70% 97
Milwaukie / Clackamas $286,800 $260,000 -10.60% 143
Oregon City / Canby $282,100 $249,500 -10.70% 180
Hillsboro / Forest Grove $247,100 $228,000 -13.00% 153
Southeast Portland $243,400 $216,000 -11.60% 105
Beaverton / Aloha $241,400 $225,000 -11.00% 126
North Portland $235,400 $230,000 -12.00% 84
Yamhill County $231,000 $210,000 -13.80% 190
Gresham / Troutdale $221,900 $210,000 -15.60% 168
Columbia County $196,800 $186,500 -11.60% 126

Making Sense of Recent Housing Statistics – It’s All About Timing

In this weekend’s New York Times, Robert Shiller, author of the Standard & Poor’s Case Shiller home price index, believes the recent housing rebound is more of a bounce than a boom.

His conclusion:

Given the abnormality of the economic environment, the sudden turn in the housing market probably reflects a new home-buyer emphasis on market timing. For years, people have been bulls for the long term. The change has been in their short-term thinking. The latest answers suggest that people think the price slide is over, so there is no longer such a good reason to wait to buy. And so they cause an upward blip in prices.

At the moment, it appears that the extreme ups and downs of the housing market have turned many Americans into housing speculators. Many people are still playing a leverage game, watching various economic indicators as well as the state of federal bailout programs — including the $8,000 first-time home-buyer tax credit that is currently scheduled to expire before Dec. 1 — in an effort to time their home-buying decisions. The sudden turn could signal a new housing boom, but is more likely just a sign of a period of higher short-run price volatility.

Full article here.

National Index Improves, Portland Follows Trend

July’s Standard & Poor’s Case-Shiller home price index shows continued month-over-month improvement across most index cities. Of the 20-city index, only Seattle and Las Vegas showed monthly declines.

In Portland’s case, the home price index improved 1.1% over June’s number, which was up 1.0% over May’s result. This is consistent with the multiple listing service reports that show prices basically flat through most of 2009. The index pegs Portland’s July 2008 to July 2009 comparison at -13.9%.

Below is a chart of Portland, Seattle and the overall index. The green trace is San Diego, which some readers use as Portland’s bellwether city for forecasting purposes.

Recent real estate reporting by Portland’s daily paper

This weekend featured a fair amount of front-page reporting on Portland’s housing market by The Oregonian, the area’s only daily newspaper. Worth reading if you don’t get doorstep delivery.

Q&A: Advice for navigating the housing downturn

Columnist Ryan Frank touches on a number of consumer questions regarding the housing market. And, scroll to the bottom of this story for more on how current home buyers are faring in the current environment.

Is PDX housing hitting a false bottom?

Ryan Frank follows up his article with a sundry rundown of housing information resources.

Modifying loans creates credit mess, not relief

Brent Hunsberger of The Oregonian’s money beat shares the perils of a couple local consumers seeking loan modifications, when proactively solicited by the lender. Caveat emptor.

Case-Shiller Numbers Begin to Settle – Portland Ranks Mid-Pack

Those looking for a glimpse of blue sky amid the cloud layer covering the housing market may catch a peek today, based on April 2009 results of the Standard & Poors Case-Shiller Home Price Index.

The index shows that price declines were slowing in the 10 and 20-City composites. On average, major metro areas have seen 18% annual decreases in home values, but the month-over-month declines are slowing.

By comparison, Portland registered a record 16%, one-year decline in home values. The result is a little better than the overall average, and ranks 8th in the 20-city survey. April’s -0.6% decline over March was better than March/February’s -2.1% dip. Home prices in Portland are now comparable to those of May 2005. Nationally, prices are closer to mid-2003 vintage.

From David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s:

“While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions. We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here. The stock market bottomed in March and measures of consumer confidence have turned upward. This report shows that these better spirits are also appearing in the housing market”

Case-Shiller Home Price Index – April 2009

(Sorted by 1-year % change)


Metropolitan
Area
April 2009
Level
April/March
Change (%)
March/February
Change (%)
1-Year
Change (%)
Denver
122.17
1.50%
0.10%
-4.90%
Dallas
114.39
1.70%
0.10%
-5.00%
Boston
146.45
0.40%
-2.00%
-7.70%
Charlotte
118.69
-0.50%
0.30%
-10.00%
Cleveland
98.07
1.20%
-0.90%
-10.50%
New York
170.33
-1.70%
-2.60%
-12.50%
Atlanta
105.36
0.30%
-1.50%
-14.80%
Portland
146.85
-0.60%
-2.10%
-16.00%
Seattle
149.38
0.20%
-2.00%
-16.80%
Washington
167.30
0.80%
-1.30%
-16.90%
Chicago
122.30
0.00%
3.10%
-18.70%
San Diego
144.43
-0.10%
-1.50%
-20.00%
Los Angeles
159.37
-0.90%
-1.40%
-21.30%
Tampa
140.41
-0.70%
-2.70%
-21.30%
Minneapolis
108.63
-0.70%
-5.90%
-22.10%
Detroit
69.92
-1.50%
-4.90%
-25.40%
Miami
145.77
-2.00%
-3.60%
-27.30%
San Francisco
118.46
0.60%
-2.20%
-28.00%
Las Vegas
112.39
-3.50%
-3.80%
-32.20%
Phoenix
104.45
-2.20%
-4.50%
-35.30%
Composite-10
150.34
-0.70%
-2.10%
-18.00%
Composite-20
139.18
-0.60%
-2.20%
-18.10%

Full details can be found at www.homeprice.standardandpoors.com.

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