Portland Home Tracks

So what happened?!?!?!? On the second week of March 14 of our listings got multiple offers. One had 7, one had 5 and the rest about 2.  All are pending. It was a whirlwind. And somewhat unexpected!! Our inventory dropped to 6.5 months of listings and the buyers suddenly came out! This is what we call the seasonal push! We peak in May and June for the most number of pendings of the year and close the most number of homes in August. We have started the upward movement of the bell curve for Oregon. So we are now trying to close 8 short sales (this will take many months) and 8 traditional sales on the board.

Our whole office is busy. We had a record 193 buyers who registered on our website last month and we are searching for  another buyer’s agent. Cindy Nelson, our buyer’s agent, sold 3 last month and is working with about 14 more buyers for the next month or so. Know anybody who’d like to join a team? If you’re a seller you need to consider getting on the market soon to catch the wave. April is a month with both Easter and IRS day. Both days will slow to crawl and there will be a slight hesitation after April 17th for a few days as buyers recover from the shock of their taxes. But within a week they will be back out and gobbling up the inventory.

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Let’s determine if you have an equity position. If you have purchased in the last 6 years then there is a chance that most of your equity has been absorbed through depreciation. The Portland Oregon Real Estate Market has lost about 34% of its’ value. 6.7% of that was in 2011. The predictions of the future show that we still have 5 million foreclosures that will be in 2012 and short sales abound. That being said we will see continued pressure for a downward movement on pricing. The forecast is that we will not stabilize until 2014 or 2015.  It would be safe and conservative to say that if we begin new appreciation it will probably not exceed the national average of 4%. (The average from 1900 until today). Expect our market to drop another 5-10%..before the turn.  That would mean we have 40-45% loss before we start up again. At a 4% increase per year after 2014 it will take another 10 years to get to 2008….(2024).  Life  changes…and decisions to stay or sell may come into view. Get the facts…Call us and we’d be happy to do the numbers and help you in this challenging market.

We are looking at another similar year as 2011. Expect about 19,000 closed sales with 35,000 listings. All cash buyers comprise 25% of our transactions. It should take about 145 days to find a buyer. There are currently about 5,000 real estate agents in Portland. There are maybe 1,000 agents locally that actually make a decent living. Most of the sales go to these agents. Pricing looks like it is back to 2003. So more and more homes are beginning to slip value under their mortgages. In 2011 we had 23,000 homes resell , 1200 lots sell, & 2930 condos. Our net population growth was 1% in Oregon.  The largest problem we have is family formation. It is measured by low or no employement. In other words children & parents are living more together than starting new households. People are bunching up in rentals. The goal of housing for the government was to make it more affordable. They wanted to move homeownership from a consistant 65% to 70%.  So the government put pressure on the banks to lend to as many as they could. When we reached 69% the housing market crashed. Lenders had given mortgages to people who could not afford them and interest rates reset. Right now it is equally expensive to buy as rent. But rents appear to be rising. 2011 saw about an 8% increase. What is the advantage of buying? Lock in your rate! And your payments!! The average home in Portland is $220,000. I remember when it was hard to find one under $300,000!! The affordability index is at 14%…incredible!! It only takes 14% of your income for the payment!!  When inflation hits….and it will..having a home can be a blessing…with fixed payments..

We are seeing a rise in apartment rents by about 8-10%.  This was reported in the Willamette Week December 7, 2011. Portland has the lowest vacancy rate in the United States of the 10 major cities at 3.2%. Foreclosures are adding to the tension of housing needs.  In single family homes we are seeing $100 to $200 more per month. Families that lose their homes to short sales and foreclosures are finding rentals reasonable compared to their previous mortgage payments of $2000 to $3000 per month. Rents in the Portland Area have been stagnant for 3-4 years. Landlords have felt the pressure too. Taxes have increased per year and yet they can’t raise their rents sometimes because they would not be competitive. My belief is that we will see even more rent increases in the next few years. It is apparent inflation will hit & costs to turn over a home will require more net income to landlords.