April 2009 Market Action Report- Portland & Yamhill County

I have attached the April Market Action Report from the Regional Multiple Listing Service (RMLS). The report supplies good news and supports our contention that the market has changed direction and is in recovery. This month, before we discuss the report, I want to pause and acknowledge with empathy the toll exacted on our clients and our industry thus far.

The Effects Of The Past Two Years On Our Clients…

In our area we have been in a difficult market now for almost two years. In July/August of 2007 when American Home Mortgage suddenly went bankrupt, it was if we all were awakened by the jolt of a powerful earthquake. What could take down a skyscraper lender so quickly?

Builders particularly were hit hard as they were abruptly left holding large inventories of land and unsold homes in various states of completion. Since then new construction has virtually ceased and inventories remain high. Many builders and sub-contractors are out of business while others have refinanced themselves to the limit. Most have not made any money for two years. Lifestyle and retirement for many families have changed dramatically.

The sub-prime mortgage judgment day was followed by aftershocks of unusual size; some were earthquakes in their own right. By the end of 2007 we entered an economic recession and every company fell back into conservation mode. In 2008, the economy cracked under the weight of oil prices rising to historic levels, effectively stealing money from every wallet in America. As these temblors began to dissipate, an enormous jolt hit which was felt around the globe. Seemingly overnight, the financial markets and the banking sector apparently were on the verge of collapse.

Following every crisis, paralysis results while people assess the gravity of the situation and consider the risks in the immediate future. By the 4th quarter of 2008, the whole US economy seemed to slow to a standstill.

We have clients who have had their homes and land on the market for 2 years. This is exceedingly frustrating, painful, and consequential. Some of our clients have been forced into short sales and foreclosures because they did not have the luxury of time. Current job losses and slowdowns have added insult to injury and remain a chief concern. We hear firsthand what hardships and inconveniences this causes our clients and it weighs very heavy on us every single day. If we could do anything else to cause sales and relieve suffering we would do it in a heartbeat.

Our industry has also been devastated. Recently an auto re-possessor told one of our clients that Realtor® vehicles were their most numerous targets. Many Realtors® and mortgage brokers have been forced out of business; many agents have cut back on services or cut out advertising altogether. It is common to find Realtor® homes on the market along with our client’s homes for sale.

Although we (and an increasing chorus of industry professionals) believe the bottom of the housing market is past, there remains a lot of destruction to clean-up. The market is going in the right direction but price stability still eludes us in many price ranges. Increasing numbers of distressed sales, and new regulations requiring these properties to be used as legitimate comparables in appraisals, continue to push prices down in some neighborhoods. We find we need to reassess the pricing of all our clients’ properties; the research usually dictates price reductions to remain competitive. We commonly we hear, “we must sell this summer; we cannot carry this through another winter”. Sales will be a win-win-win.

The Good News:

In the first 4 months of 2009, inventory has been reduced by 9 months.

Pending sales are up again at a very high percentage (13.9%) over March

Closed sales are up 10% over March

The $8,000 tax credit for first time homeowners (or those who have not owned a home in 3 years) has created demand and competition especially for homes under $250k. Many buyers, to their surprise, are running into multiple offers and walking away empty handed.

Although this week we saw the lowest numbers for housing and apartment starts since records were kept, in the west the numbers went up significantly, bucking the national trend

Home prices on average in the Portland metro area have retreated to levels in 2006 (not as bad as you may be led to believe)

The National Association of Realtor’s affordability index shows homes as affordable as in 2004. Realty Times reports, “Thanks to record low mortgage rates and declining home prices, 55 million families – or half of all U.S. households – can afford today’s $200,000 median-priced new home, according to figures released by the National Association of Home Builders (NAHB)…. Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance.

Interest rates are historically low (4.375% for 30 yr fixed) is not uncommon

Yamhill County is down on average 9% from two years ago. Were any of you thinking 30%? It just feels like that and the media portrays that image.

It is an exceptional time to buy (perhaps will not be seen again in our lifetimes)

It is a time for sellers to have hope that stability and change are coming; there is light at the end of the tunnel

We are glad to discuss the market conditions with you and help you understand the value of your property or one you might want to buy.

Sellers, please know that we are enduring the challenges with you and will be faithful to do what we said we would do for you, which is promote your property far and wide so no one can possibly miss it, and then present it is its best light. We will negotiate for your best interests. Call or email any time.

Best Regards,

Randy
Randy McCreith, Principal Broker
Bella Casa Real Estate Group
The Marshall Building
207 NE 19th Street, Suite 100
McMinnville OR 97128
503-310-9147 Cell
1-866-281-6653 Fax
[email protected]
www.TheBellaCasaGroup.com