At seven months, nventory is at its lowest point since August 2007 which is excellent news.  I’ve argued all along that we won’t see the market bounce back until inventory gets under control.  We’ve now seen inventory rates right in the seven month range for three consecutive months, which should eventually help prices to bounce back.  At the moment, though, prices are still slowly falling.  The rolling 12-month review shows prices to have come down just under 10%.  The good news, though, is that’s been pretty consistent for quite awhile.  I would be extremely surpised to see another major price dip without some monumental outside issue that we haven’t yet seen.  Keeping my fingers crossed that we DON’T see such an issue.

Hollywood Farmers' Market

NE Portland’s favorite farmers’ market is back and better than ever.  The Hollywood Farmers’ Market reopened for business this past weekend with a ton of old favorites and a number of brand new offerings.  On any given weekend you can browse between 40 and 50 vendor stalls and choose between organic asparagus, micro-craft beer, flowers or you can simply grab an incredible lunch from any one of the numerous food stalls.   Yum!

Market hours are 8 a.m. to 1 p.m. Saturdays, May to October, and 9 a.m. to 1 p.m. Saturdays in November until Thanksgiving. Learn more at hollywoodfarmersmarket.org.

I’m sure this piece can be interpreted any number of ways.  It can simply be an ode to the city’s favorite mode of transportation.  It can be a call out to youth.  It can take a dark turn and represent the children who have been hurt (or worse) by careless drivers.  I’m not going to get into that, since interpreting art should be done by each beholder.   Instead, just enjoy Portland at its finest.

Anecdotal evidence says that home buyers must be prepared for multiple offers, if they aren’t prepared to act fast. A dozen “comparable” homes might be listed in a neighborhood, but it seems like one or two will really stand out and attract buyers. I’m seeing well-priced homes in close-in neighborhoods move very quickly, often selling for at or above asking price. It pays to know the market and to be prepared to move quickly when you find the right house.

RMLS just released the latest Market Action report for January real estate activity, so let’s explore what’s really going on.  My quick take away is that January was a mixed bag.  Sales were greatly improved as compared to January 2009, but inventory rose sharply from the previous month (Dec 09).  Interestingly, pending sales were up 35% from December, but closed sales fell by the exact same amount.  Even more newsworthy was the 87% increase in new listings.  Wow.  You can look at the huge influx of new listings as a positive sign that sellers are feeling better about the market and are excited about the opportunity to sell or you can look at the (in my opinion) negative aspect that all those new listings coupled with fewer closed sales led directly to the highest inventory rate since May 2009.  The last thing we need is more stagnant market with house sitting and not selling.  Average sales price for January 2010 was down 5% versus January 2009, which feels about right. 

Here’s an end of year wrap up showing appreciation rates for each county for 2008 versus 2009: 

Appreciation Rates by Count - 2009 vs 2008

Here are the highlights for Portland metro:

Portland Metro Real Estate Highlights

For a complete look at Market Action, simply click on the pictures for a full copy.

RMLS Market Action - January 2010

RMLS Market Action - January 2010

I want to make sure that we’re doing everything possible to find you the right house. I fully understand what it is you want and why you’re looking in certain areas. It’s true, though, that what you’re looking for happens to coincide with what most people are looking for. Namely a close-in house with soul (usually means a classic style) near cool amenities. Unfortunately, the price to play in some of these neighborhoods is rather significant.

Like we’ve talked about in the past, buying a house is always an exercise in compromise. Whether it’s price or location or style or size, every buyer has to compromise on something. That’s true at every price point, too, by the way. The trick is to figure out what’s most important and try to limit the compromise to the other categories. It might be worth your time to jot down a wants versus needs list. It might seem elementary and a waste of time, but I’ve found that they can often be really helpful. I have clients who want a fireplace, but need a larger yard (they have big dogs or do a lot of outdoor entertaining). Others need a second bathroom, but want a garage. Obviously it’s unique to each buyer.

In your case, your needs list might be something like:

• Cool close-in location near bars, restaurants, etc
• 3 bedrooms minimum
• At least 1 ½ bathrooms
• Price range
• Near MAX or bus line
• Style and soul
• Space for brewing and a teaching studio
• Etc

Your wants might include:

• Formal dining room
• Garage or Basement
• Walking distance to a park
• View
• Etc.

Where the exercise becomes useful is when you really put some hard, honest thought into it and decide whether a dining room, for example, is more or less important than a fireplace. Obviously your list won’t match up exactly with Laura’s, so part of the project is merging both your lists into a final master list that will guide our search. Sometimes it helps to kind of refocus on what’s important. The other thing it can help with is figuring out if you can actually find what you want at a given price. If, for example, you decide that your need is actually even more focused than living in a cool close-in location with amenities and is actually more that you only want to live in Mississippi, Hawthorne or Alberta (again, for example), then that will determine your strategy going forward. If you want a cool close-in location, then the strategy might be to figure out what that actually means and make a list of neighborhoods that fit the bill. There might be some neighborhoods that you aren’t currently really familiar with that, with a little exploration, you find you really like. If, on the other hand, it really is only a handful of neighborhoods, then the strategy might simply be to laser focus on those areas and just understand that it’s going to take some time and be ready to pounce when potential listings come online.

Also, once you come up with a list like that I can actually run a search and see if any houses that match your criteria have sold in the past six months or so within your price range. If a few dozen sold recently, then we know that all we have to do is keep an eye out and, sooner or later, the right one will pop up. If only a handful have sold recently, then we’ll know that it might be a long wait, but that those houses do appear on the market occasionally. If nothing that meets your criteria has sold in the past six months, then we’ll need to reassess the list and/or price range.

(http://dsireusa.org/)

The study looked at today’s spread premium as compared to the city’s fifteen-year average.  In cities where today’s spread was significantly lower than the average, the study went on to look at market expectations for the next five years. 

Portland, for example, usually has about a 62% premium for home owners.  However, that’s down over 16% now.  Additionally, Portland is expected to see home prices jump almost 20% over the next five years.  That represents an excellent investment opportunity. 

The main point is that if you plan on becoming a home owner in the near future, now is the best time to move.  With rental rates inching closer to mortgage payments and the prospect of significant real estate appreciation in the next five years, today represents the best value for home buyers. 

It’s all a matter of timing…

(…and don’t forget about the first time buyer tax credit that’s set to expire in a few months!)

You can find the actual stats here.

RMLS just released the Market Action report for December 2009, the last one of a rather, hmm, interesting year.  Take, for example, the fact that closed sales were up a staggering 53% in December 2009 as compared to December 2008 or that pending sales were up 41% over the same time period.  Wonderful, right?

Glass half-full: Yes, it’s excellent news and, hopefully, a sign of things to come.

Glass half-empty: Big deal, December 2008 was one of the worst real estate months on record.  It’s not much of a surprise and of little consequence that numbers were up from such an extreme low.

Conclusion: As usual the answer lies somewhere in the middle.  It’s true that the poor 2008 numbers skew the current numbers and, perhaps, over-inflate them.  Having said that, it still shows that the market is indeed rebounding and THAT is an excellent thing.

Now when comparing December 2009 to November 2009 both closed and pending sales were down (16% and 14% respectively). 

Glass half-full: First off, November was a suprisingly strong month so a little drop off is to be expected.  Additionally, we almost always see a big drop off between November and December as the holidays hit and the weather gets worse.

Glass half-empty: The first time home buyer tax credit that was set to expire at the end of November was artifically propping up real estate sales. 

Conclusion: While it is undoubtedly true that the tax credit helped prop up sales, the fact that it was extended through April 2010 should help homes sales balance back out in early 2010.  It is equally true, though, that Portland always sees a drop off in real etate activity as December rolls in.  Probably nothing to get too excited about.

The 2009 summary is rather interesting.  While the market felt much livelier and average market time did decrease, closed sales were almost exactly the same as 2008 (falling 0.9%).  Compare that to the nearly 10% drop in closed sales from 2008 to 2009.  However, new listings decreased nearly 20% (18.8%).  That means there were about 10,000 less homes on the market.  The lower inventory helped the market actually improve its supply/demand ratio while, interestingly, having almost the exact same amount of actual closed sales.  As I’ve preached for nearly three years, getting the inventory in balance is essential to getting our market back on track.  I’ve been extremely happy with the inventory figures since about July of last year.  Hopefully the inventory figure will just a bit more.  I’d like to see the inventory rate right around six months.

Average sales price was down 2.5% for the December 2009 vs December 2008.

Glass half-full: Knowing how bad the overall economy, nationally and locally, has been and knowing how hard many other communities were hit, I feel pretty good about a minimal 2.5% decrease.  If that represents a bottoming out of the market as we begin to rebound, then I’ll be quite happy indeed.

Glass half-empty:  Maybe it was a small decrease, but it was still a decrease and any decrease in home values in inherently bad for home owners (though home buyers would argue that point!).  Additionally, while the average sales price only dropped 2.5%, the median price was down 4.2%. 

Conclusion: I’m taking the high road on this one.  I think such a minimal drop, taken in context, is actually a pretty good thing.

Now for the entire year, 2009’s median prices did fall 11.2%.  Again, while this isn’t necessarily good news, when seen under the light of the nation as a whole, it’s not that bad.  Put simply, it could’ve been a whole lot worse.

In any case, click on the pictures to see the full Market Action report and to check numbers for your neighborhood.