The More You Buy, The More You Save!

Red Tag Sale, Everything Goes!

OK, that’s really not where I’m going with this.  The last thing I want to do is sound like a bad TV pitchman.  However, there is some real truth in the concept that there might well be value in selling at “loss”, but buying at a discount.

For nearly two years I’ve been trumpeting what a perfect market this is for the “trade up buyer”.  The logic is impeccable, even if it’s an emotionally difficult pill to swallow.  If the market is down 10%, for example, across the board, then simple mathematics says that if you sell your $250,000 house at a 10% discount and buy a $350,000 at that same 10% discount, you’ve made out with $10,000 net gain.  Right?  Not to mention that you’ve traded into a house you prefer, be it larger, nicer, in a better neighborhood, etc.

The math is simple, even if the decision is not.  People are very tied to their homes in a way they’re not tied to anything else they own.  Homes are more than just houses, which are simply sticks and bricks.  No, homes have emotions, memories, etc.  But when a potential buyer/seller can see the value and get beyond the emotion, they soon realize that today is the day of the Trade Up Buyer.

For further reading, click here for a CNN Money article on the same topic.

Stable But Not (Yet) Recovering

RMLS released April’s Market Action report and the numbers are consistent with the recent trends.

If you’re a potential home buyer, you’ll be ecstatic to hear that Portland housing is at its most affordable point since December 2004. Have I mentioned that now is an incredible time to buy, especially if you’re a first time buyer? Affordability takes into account housing prices as compared to average income. While this economy has been no fun for most of us, there is a silver lining if you have stable employment and want to buy a home.

Put simply, the market is slowly improving. We’re seeing incremental increases in sales activity (as measured by closed sales) and slow decrease in housing inventory. As I’ve been saying for quite some time, it is my contention that the housing market will not fully stabilize and begin its recovery cycle until inventory comes back down to a reasonable level. April’s inventory was at eleven months, meaning at the current rate of sale there are enough houses on the market to last eleven months. I’d like to see inventory absorbed and a monthly figure of seven or eight. That would bring us closer to balance. Still, the decrease from twelve months to eleven is a positive sign.

In a sign that prices are beginning to find their equilibrium, housing prices stayed just about the same in April, as compared to March.

When we compare April 2008 versus April 2009, we see a similar trend of stability. Prices are down roughly 10% compared to April of last year. Sales volume is down about 18% and new listings are down 28%. Those figures are very similar to what we’ve been seeing since February or so. Again, the signs point towards a stability, though not yet recovery.

OK, here’s what you’ve all been waiting for, how much have prices dropped? The twelve-month average shows a 7.4% drop in prices. All things considered, that’s pretty good. Portland has been lucky to avoid the true crash that markets hit places like Detroit, Phoenix and Las Vegas.

For a closer look at your part of town click here. h

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Government Hard at Work to Protect YOU!

Before I get to the really important news of the day, let me pass on some real estate industry info. Mortgage rates ticked up today. While rates on 30 year fixed loans remain below 5% for the eighth consecutive week, they did tick slightly up today: 4.84 from 4.78. What does this mean to you the consumer? Honestly? Not much.

The real question is simply does this signal a slow and steady interest rate climb? It’s really way to early to say. It’s clear that rates will climb eventually. There’s no doubt about that. It’s matter of when, not if. Personally, I expect rates to remain ridiculously low for the time being.

Unfortunately, while the low rates have led to record refinancing rates, they have not led to as many purchases as hoped. It’s not too late, though. Time to take advantage of the low rates, buyers’ market and first time buyer tax credit!!!

OK, on to the really important local news.

CHEERS!

The Oregonian is reporting that the House has passed House Bill 3122 allowing bars that serve full 16 ounce pints to affix a sticker saying so. No more will you order a pint and receive a 15 or 14 ounce beer.

With Portland’s status as micro-brew king of the world, this is a wonderful step to keep the city lubricated. So maybe this isn’t as important as, say, universal suffrage, health care reform or the like, but it’s a nice step in the right direction. Afterall, we all want to get what we pay for.

Especially when it’s beer that we’re paying for! CHEERS!

http://www.oregonlive.com/politics/index.ssf/2009/05/house_says_yes_to_honest_pints.html

Realtors are ALWAYS working…

“Do I need a Realtor to buy a newly constructed home?”

Do I need a Realtor to buy a newly constructed home?

I’ve answered this question so many times over the past year, I finally decided just to blog about it.

Here’s the simple answer, “Yes! By all means, yes! Please, please, please get some good representation!” OK, maybe that’s going a bit overboard, but you get the drift. As with any real estate transaction, you never “need” a real estate agent. This is technically true. However, I highly recommend getting some good representation on any purchase. This is especially true for new construction.

Why? Shouldn’t buying a new home be easy? What’s to know? What could go wrong? Ugh.

Many people mistakenly think that just because a home’s new, that it’s perfect. This just isn’t so. There can be just as many problems with new construction as with homes built in the early 1900s. In many cases the issues are different, but that just underscores the importance of working with an agent who understands the pitfalls of new construction. In general, new building regulations and codes have assured us that new homes will generally be extremely structurally sound; however there is often a massive drop off in the quality of finishing work. Hardwood floors installed poorly. Wet basements. Shoddy drywall installation. Cheap materials. The list goes on and on.

Honestly, potential finishing work issues are just the beginning. Builders often offer so-called discounts and upgrades if buyers forego the use of a real estate agent. Why might this be? They’ll tell you that they make more money if an agent isn’t used, but intuitively it feels a little less straight forward than that. Many builders will “require” you to use their in-house lender. Again, deep discounts will be promised, but are rarely found.

Also, in this economy with a slow down on new homes sales, many builders are filing for bankruptcy. There’s little recourse after a builder enters bankruptcy protection.

Look, buying a new home can be an excellent choice. Prices are low right now and amenities are high. I don’t mean to scare you off the new home market, there are just a few things to be aware of. Here are some quick suggestions:

• Work with a buyer agent
• Have a home inspection – DO NOT WAIVE YOUR RIGHT TO AN INSPECTION
• Get a follow-up inspection on any repairs
• Be pre-approved for financing
• Schedule a final walk-through
• Understand your home warranty

I believe the vast majority of builders are great people who truly do their best to sell quality homes. They’re human, however, and mistakes happen. It’s important to be smart when buying any home and new homes are no exception.

March Market Report – Some Good News

RMLS just released the March Market Action report and there are some positive signs.  March definitely was an improvement over a very slow February.  Sales grew nearly 40% as compared to February.  Probably more important, honestly, is that inventory dropped to the lowest level since October 2008.  In my opinion, the market will begin to stabilize and then improve as inventory reaches more “normal” levels.  Inventory for March 2009 was at 12 months.  I’d like to see that down to about 8 or 9 months, but it feels like we’re on our way to a stabilized market.

The average sales price is still down versus last year, but not nearly as much as many would expect.  The 12-month sales price is down 5.7%.  When many parts of the country are seeing 25% and great depreciation, Portland’s relatively tiny 5.7% has to be seen as good news.

Market Action – February 2009

RMLS just released their February Market Action report and it is definitely a good news, bad news scenario. 

The good news is that the Portland Metro market is much improved over the all-time slow January 2009.  However, the market is still significantly down compared to February of last year.  All the major categories of listings dropped from Feb 2008 to 2008.  Closed sales were down almost 40%, pending sales were down 30%, and new listings were down 20%.  Having new listings down is actually a very good thing, though.  In my opinion, the market won’t really start recovering until some of the inventory gets absorbed.   Our inventory is currently rated at 16.6 months, which is down significantly from last month’s 19.2 figure, but way higher than the 6 month figure I believe signals a balanced market.  What this boils down to, of course, is that Portland is still experiencing an incredibly strong buyers’ market.  That’s great news for most of my clients, but it is obviously of great concern to many potential home sellers.

The good news is that a well-priced home in a good location will still sell.  More than ever, though, now is the time to put your best foot forward.  It is not the time to overprice your property with the hopes of negotiating down to what you consider a fair price.  My advice for potential sellers, get your home in the best possible condition and make sure it is ready to show and show well.  That first impression is everything.  Make sure the pictures are perfect and show off your property’s best qualities.  Most importantly, price your home right! 

For the entire Portland Metro market, home prices were down 13% compared to February 2008.  However, with such a small sample size, that number is probably a bit inflated.  As I’ve mentioned continuously, though, real estate is inherently local.  The national numbers, while interesting, do not directly affect Portland.  The same can be said of Portland Metro itself, though.  What’s happening in Beaverton or Happy Valley is not necessarily what’s happening in SE Portland.  Not to put too fine a point on it, but SE Portland can even be broken down to Hawthorne, Sellwood, Ladd’s Addition, Lents, etc.  The local trends are what really matter.  With that said, here are the appreciation figures:

·         N Portland          -1.2%

·         NE Portland          -1.2%

·         SE Portland          -5.9%

·         W Portland          -1.9%

The market graph is pictured below, but I’d be happy to email you a complete Market Action report if you’d like.  Just email and let me know.

As always, I continue to hold my biweekly Home Buying 101 workshop for first time home buyers.  It’s laid back, but extremely informative.  If you or anyone you know would like to attend, contact me for scheduling.  My business is built on referrals, so if anyone you know is thinking about buying or selling, I would very much appreciate the referral.