Attached is the current Market Action Report for the month of September, produced by the Regional Multiple Listing Service (RMLS). This is the best local hard data available on the Portland Metropolitan markets. I have also included an couple of attachments for our core area, Yamhill County. One document looks at the current contingent sales (must sell first) and pending sales (accepted offer) as of 10/17/09. The other looks at closed sales for the past 30 days as of 10/17/09. Both documents sort the data first solely by price, and then by city/price. This gives you a chance to see what price ranges and locations are active. I can also provide more information about your particular interests, or more details on any area in Oregon, just let me know what is helpful for you.
Summary: Once again, every month in 2009 the market has improved. The qualifier is that while the direction is right, the progress is very slow and uneven.
• Inventory is now lower than it has been for two years. The combination of fewer properties coming on the market and increased sales have dropped us back to August of 2006 levels (immediately after the crisis started in our area). Reduction in supply will eventually contribute to price stability.
• Pending sales are up over last month and last year, and closed sales are up over last year and just under last month (likely just a seasonal effect).
• The $8,000 tax credit for those who have not owned a home for 3 years has contributed to fairly brisk sales in homes under $225k, allowing and motivating mostly first time home buyers. It remains to be seen whether this program will be extended. It expires on 12/1/09 so most people would have to be pending now to make that deadline. The program has cost over $15 billion but supporters argue that it is pulling the housing industry out of its depression, preventing more foreclosures, and causing a significant positive ripple effect in the greater economy (something the Cash for Clunkers program cannot claim).
• Historic low interest rates (under 5% this month) have helped many to purchase and to refinance into a stable loan averting default.
• This month, Yamhill County was also removed from ‘Declining Market’ status. This frees up money for loans, improves the ability to get a reasonable appraisal (less irrational!), and opens more options which should continue to improve our local markets.
• Prices are still unstable and have continued to decline during this year. The overall average depreciation for Yamhill County during the past 2 years is 15.3%. Some locations (Lafayette), and some price ranges ($400-600k), are much worse. Time has worn many sellers down to the point that they are dropping their prices precipitously and to no avail, and foreclosures and short sales have decimated valuations in too many neighborhoods. The appraisal system is still broken; arguably the cure is worse than the disease.
• The lack of buyers remains the biggest problem for us, but not just because too many sellers cannot sell their homes to buy others. We prosper because of out of state buyers move to our area. I am convinced that now, more than ever, we will see an exodus from bankrupt and volatile California (in particular), especially by early retiring baby-boomers, but for now they are still locked in their own crisis. However, conditions in the Golden State are improving as investors and others begin to buy the half-priced bargains there. When they come, however, they will also be 50% poorer and not so generous.
• Buyers remain exceptionally cautious (often the paralysis-of-analysis), or exceptionally aggressive about getting a ‘steal’. This is frustrating to sellers of course. There is still fear of another round of foreclosures, or another blow to the economy. Many buyers, and some commentators, believe our area is still overpriced. This is because we have not dropped commensurate with other west coast metro areas. My conviction is that they forget we have always been the best value on the west coast and we never had irrational appreciation comparable with the California markets or even Seattle.
• Those hurt the most continue to be the builders whose higher end inventories are stubbornly resistant to sales, in spite of amazing price reductions and below market financing opportunities. Their industry is also paralyzed as spec home loans are not available for them and buyers are not yet willing to buy and build. Those who own buildable parcels of land or city lots are also suffering disproportionately. There is a glut of these properties on the market and it is difficult to get financing to build.
Our Frustration: In spite of all the challenges and losses, the current conditions are ripe for good. Buyers can buy at exceedingly low prices, from good selection, at historic interest rates, in an improving market! I have not seen this kind of opportunities in my 54 years. Sellers, yes they are taking a beating, but would be happy to get out of this mess even if it means they get much less than they hoped, just to have to chance to ‘start all over’. For others, they can patiently wait for better days and it is good for them to be able to do so! In spite of all this and our best efforts, we cannot create buyers, and we cannot dictate when and what they will buy.
We have continued to do all we can to get our listed properties sold and have not stopped developing and testing new methods and venues. We also value our buyers like gold, and will put our expertise to work to get exceptional investments and dreams. One of our chief goals is to provide accurate and useful information and opinions so our clients can make the best decisions possible. Thank you for your loyalty and faith in us during testing times. We appreciate every one of you.