Portland Housing Blog, PMI, Transparency
Posted on July 5, 2008
Filed Under bubbles, Portland, blogging, Real Estate | 3 Comments
Mainstream media love to denigrate blogs and bloggers for their lack of journalistic integrity and oversight - compared, say, to The Oregonian. But blogs are held accountable by readers and other blogs, and the good ones earn credibility by immediately correcting errors of fact. Thus I trust Glenn Reynolds infinitely more than anything I read in the New York Times or Newsweek.
Two days ago Clint at the Portland Housing Blog - a bubble blog whose denizens measure their success on the failure of others - published excerpts from PMI, an issuer of mortgage insurance. In it PMI ranks the risk that housing prices in given market areas will be lower in two years, 1 the highest risk, 5 the lowest. The list that Clint published correctly had Riverside, CA at the highest - 95.5% - but the Portland Metro area not far behind at 79.7%, still a solid 1 and just ahead of the Phoenix area. That, to me, was insane.
But when I searched, it turns out the real number for Portland is 8.7%, a low risk category 5.
I’ve emailed back and forth with Clint several times and have absolutely no indication that the post was intentionally deceptive. A couple commenters said they’d seen the original and it did say 79.7 - though no one challenged it - and had apparently been corrected. That’s entirely believable; if it had indicated 8.7 from the beginning there’s no way the post would have been written since it wouldn’t have fit the hysterical bubble paradigm.
What bothers me is this: Thirty eight hours after Clint acknowleged the mistake - buried in the middle of 65 comments - the post stands as originally written.
So, Clint, if you’re reading this: You’re a nice guy, but your credibility is at stake. I’d suggest an update.
June Median Price for Pending Sales Ties All-Time High!
Posted on July 3, 2008
Filed Under Portland, bubbles, Statistics, Selling Real Estate, Buying Real Estate, Real Estate | 6 Comments
And so it goes.
The actual headline will be more like this: “Median price up From May 1.6%, Down Only Slightly - 1.2% - from June 2006. Portland Real Estate Market Much Better Than Most of U.S.!”
But.
Here are the prevailing price trends; blue is pending, green the actual sold price:
Clearly the gap between list price and sold price is widening. Sellers are accepting lower offers. That’s good, especially for discerning buyers. Because this - the number of closed sales…:
…defines a what has been and continues to be a serious problem. Even as month end numbers catch up, we’re still going to be down 35%+ YoY in unit sales, what is a stronger predicate of a healthy market than median price.
In the year ended June 30 - Terradatum numbers pulled from the MLS - there were 8870 fewer closed sales in the Portland Metro area than the year before, or a difference of about $2.5 billion. There’s enormous pressure on prices, and they’re going to have to come down to accommodate. In June we’re at $290k; when we’re at $255k, I think sales will begin to increase. How long that takes depends on sellers.
More June numbers:
Month’s Supply of Inventory: 8.5, same as May. (~10 Months as calculated by MLS).
New Listings: down 21%.
Expired listings: up 37.8%
Pending Sales: down 23.0%
I’d be derelict if I didn’t point out one more thing:
All real estate is local.
Dr. Kempe, I Presume
Posted on June 13, 2008
Filed Under Diversion, Excellence | 4 Comments
It’s easy now to look back at last Saturday and forget the car troubles ninety miles south and two hours shy of the graduation ceremony, or the steaming tall Pike Place Roast delivered to my lap two minutes before walking in the door. All that matters is, after enormous dedication and hard work, Baby Kelly is now a Doctor of Medicine. As I write, she and her sister are in New Mexico, on the way to New Orleans and LSU Medical Center, where she’ll spend at least the next five years studying General Surgery.
Love my girls!
May Numbers; On Being Accustomed to Food
Posted on June 12, 2008
Filed Under Portland, Statistics, Real Estate, General | 1 Comment
Something I admit but can’t fully reconcile:
There are two parts of being a successful real estate agent: Doing the job an agent is hired to do, professionally representing clients in the buying and selling of real estate. I’ve said before, good agents earn every cent of what they’re paid: that’s testified to by the fact that the large majority of buyers and sellers hire agents to help them through the transaction maze, the market at work. At this part of the job, I’m very good.
But at the other, I’m lousy: “Generating leads” in the vernacular. I didn’t believe it when I was told three and a half years ago that successful agents spend 90% of their time in that process. I didn’t try to establish a farm, possibly because I still think the term pejorative. I haven’t cold-called FSBOs, don’t hobnob just for the sake of hobnobbing, and - perhaps worst - don’t spend three hours a day on the phone asking for referrals. Simply, I haven’t spent nearly enough time selling myself, instead relying on the job I do for clients to produce more clients in a geometric progression. And until six or so months ago, it worked: Even in limited numbers, buyers and sellers were eager to, well, buy and sell.
But - I don’t think this is a secret - all that’s changed. Buyers are toeing the sideline waiting for prices to go down, sellers waiting to list until prices go up. I just closed on a transaction where the first time buyers were able to get a 100% loan, but their credit was impeccable; for the most part first time buyers face much more restrictive borrowing standards. With fewer first time buyers, sales are affected all the way up the chain. Financially it’s been a miserable six months.
So. Figuring food is somewhat important to my future, it’s back into the shoe business until things sort themselves out.
I’m keeping my license active, but will work in coordination with my brother John - also with RE/MAX, in the business for twenty years - so there are no gaps in representation. Even though the real estate industry is changing - we still spend waaaaaayy too much time worrying about what’s best for agents and too little worrying about what’s best for the customers - I love the business, and will keep this blog going, though it may seep a little more often into the overtly political.
===
Not unrelated, here are May numbers. I’ll post charts when I have time. Per Terradatum, Portland Metro Area:
Median Price: $287,348. Down 3.4% YoY; up from April so down 4.2% from peak.
Sales: YoY Down 36.7% in units, 39.3% in dollar volume.
Pending: YoY Down 25.1% in units, 28.2% in dollar volume.
Months’ Supply of Inventory: 7.9 months, down from 8.2 months in April, up from 5.0 months YoY. MLS figures will be about 9.5 months.
New Listings: Down YoY 13.5%.
Expirations: Up YoY 43.6%.
A (Real Estate) Tale of Two Cities and Four Zip Codes
Posted on May 13, 2008
Filed Under Portland, Lake Oswego, bubbles, Statistics, Builders, Buying Real Estate, Selling Real Estate, Real Estate | 7 Comments
For those who still doubt that all real estate is local, I thought it would help to compare two areas with approximately the same number of listings (detached single family). The first - the southeast zip codes of 97202 and 97206, encompassing Woodstock, Eastmoreland and Sellwood - has 438 active listings; and the second - the Lake Oswego zip codes of 97034 and 97035 - has 497. Note both the areas are included in the MSA used by Case/Shiller, the Portland Metro designation used by RMLS, and even the Bubblers’ favorite Housingwatch region, which is so addled it includes among its cities the metropolises of Wankers Corners [sic], Helvetia and Interlachen, but excludes the possibly more significant cities of Canby, Wilsonville and Oregon City. (In fact LO is included three times: Lake Oswego, Oswego and Lake Grove.)
Lake Oswego
LO is to Portland as Bellevue is to Seattle, Beverly Hills to LA, Scottsdale to Phoenix. It’s gorgeous, has fabulous schools, surrounds, as you might guess, a 415 acre lake, and is home of Oregon’s most expensive real estate.
Five or six years ago the area went nuts. With very little available undeveloped land within the city limits, builders were buying older homes for teardowns and rebuilds, or buying odd shaped lots and subdividing them into flag lots. With the cost of land already high and getting higher - LO had one of the highest appreciations in the state during the runup - added to which was the cost of site prep, it seemed impractical to put a $350k home on a lot that had cost $300k. So we had a steady increase of new million dollar homes, an increase that slowed only recently.
The consequence now is 4500 sf homes on 6000 sf lots; new million dollar homes built between two 1950 teardowns; $1.2 million homes crammed so tightly on flag lots that a Suburban can’t maneuver into the garage. Lake Oswego has some, well, issues:
Total active inventory: 497.
Median price (active): $749,000.
Months’ Supply of Inventory: 11.7 (Terradatum)
New construction active: 97, 19.5% of total.
Median price new construction: $1,249,000.
MSI $749,000 + : 23.5
MSI $749,000 - : 7.9
I think it’s safe to say we’re somewhat over built in the million dollar range; over $1 million new construction accounts for 42% of the inventory. The prices are going to have to come down to move, but builders, at least so far, have been anchored to their costs.
A strong buyers’ market. It’s going to be a relatively slow recovery.
[Although, JP, we’ve had four consecutive months of increased pending sales. Isn’t that, by your definition, an upward trend?]
Southeast Portland: Eastmoreland, Sellwood, Woodstock
Much older established neighborhoods, much of it early to mid twentieth century. Much more affordable price points.
Total active inventory: 438.
Median price (active): $277,000.
Months’ Supply of Inventory: 3.9
New construction active: 37, 8.4% of total.
Median price, new construction: $269,000 (!)
MSI $277,000 + : 4.2
MSI $277,000 - : 3.7
So we have a strong buyers’ market and a moderate sellers’ market within eight miles of each other. This can be repeated in neighborhoods and at price points throughout the area. Broad based indices are not adequate, in this market or any other, to base vital buying and selling decisions; you need to go deeper.
AREIL.
While we worry about declining real estate prices, there are villages in Africa worried about their next meal.
Posted on May 7, 2008
Filed Under Diversion, Relationships, General | 1 Comment
One of the things I love about Lake Grove Presbyterian Church is the amount of time, talent and giving that goes to worldwide mission outreach programs. One of those is a now ten year partnership, through Worldvision, with a federation of sixteen Wolof villages in Senegal. Not mission in the sense of “here, let me give you some money, now convert”, but a real relationship. We send typically one team a year - sometimes two - to work with the village elders, and have had villagers visit us. Wonderful people: Colorful, quiet, understated (until they dance to 12/8 rhythm beat on a djembe) and enormously gracious. We’ve helped them dig bore holes so they have immediate access to clean water, built two schools, and helped fund a hospital.
The picture above was one I took when there in 2004. Several months earlier we’d sent $10,000 in rice - their diet staple is rice and millet - because drought had caused massive crop failure. The adorable little girl sitting in my lap was at the very least healthy because of it. In every village we were greeted with waving rice bags, and their gratitude - genuine and immense - was one of the most humbling experiences of my life.
They’ve just been through another serious drought. And this time the effect is worldwide; there have been food riots in nearby Dakar. The price of rice has tripled.
So we’re holding a benefit concert this Saturday, May 10, 7:00 pm (map), free and open to all. There will be a free-will offering, all of which will go to the food relief effort.
The very good news is the music - mostly African, gospel and spiritual - will be terrific. With all due humility our choir is superb, but with us will be professionals on piano, bass, drums and percussion. Dorcas Smith - who’s sung with us often and has sung with the Oregon Symphony for the Gospel Christmas - is one of the premier gospel talents in the region and will be featured. Even if you don’t come for the relief effort, you’ll be thoroughly entertained.
I know it’s tough, but forget about real estate for a couple hours! Promise, you’ll be glad you did.
Thank you!
UPDATE: Yes, thank you! In the final tally, the concert raised $19,262.83. Half of that will go to direct food relief, the other half split between seeds for this year’s crop and the tools necessary to expand into a diverse venture - forestry - so there’s less chance of devastation during drought. 4000 people now have real hope.
April numbers: There’s somethin’ happenin’ here, what it is ain’t exactly clear…
Posted on May 3, 2008
Filed Under Portland, Statistics, Selling Real Estate, Buying Real Estate, Real Estate | 19 Comments
I said before I people and situation watch, because that can give early cues before the numbers catch up:
Nationally the DOW just went over 13,000 - up 13.5% since January - unemployment went down when it was expected to go up, and fresh $600 checks are taking some of the mental agony out of $3.60 gas prices. As headlined on Drudge, traders are betting on the dollar’s gain against the euro for the first time since December, 2005. The Fed rate is now at 2%, Prime at 5% and a 30 yr fixed mortgage still under 6%.
Locally - and I fully admit it’s anecdotal - buyers who’ve been tire kicking for six months are writing offers, some very low but being looked at seriously by sellers. Our office processed seven new sales last Monday, and the pace has kept up. I’ve had more activity on my listings than any time in the last four months (about two months later than the usual spring pickup), and we have an accepted offer on one from young first time buyers, exactly the people who drive the rest of the market.
That’s notto say we’re at the end of anything; it may be a blip, but this is how trends start. The April numbers for the most part are tough. Closed sales will end up down over 40%, continuing a not-very-pleasant trend. But closed sales reflect the market as it existed in February and March; more timely pending sales, though down YoY 24%, are at a number higher than any month since August. The bestnews is the YoY median is down about 3.5%, and down 8.3% from the peak last August (Wait! Is it possible that has something to do with the uptick in activity??). It’s at best a general indicator - all real estate is local - but my very best guess (for you, Git) is that it’s going to drop another 5% before we’re done.
Here are the numbers; note they’ll adjust somewhat for the next week or so. As always, click on the image for a two page pdf:
Median Price (sold):
Pending Sales:
Total Homes For Sale:
As prices are trending down, so is supply.
Month’s Supply of Inventory:
7.3 months, based on pending sales; RMLS calculates based on closed sales, and will be likely be over 10 months.
All. Real. Estate. Is. Local.
Decorum
Posted on May 2, 2008
Filed Under General | 3 Comments
For the third time I deleted a comment yesterday. The first two were easy - one accused someone else who’d commented here of being active on a gay porn site, the other was a typically hysterical lefty rant - this one took a couple seconds to decide.
I’ve said I’ve been through all this before, and I have. Dowding quotes is old hat, cheap and lazy, but it’s also transparent; once links are established readers can and will make up their own minds, and repetitive explanations are unnecessary and a waste of time. Pertinent to the deleted post: Back in the days of 4800 baud modems, commenters used to cut and paste dictionary definitions - notably irrelevant to the conversation at hand - hoping to cleverly insult their target without the burden of having to actually think. Now, the super clever link to Wikipedia entries instead, but the intent is exactly the same: go after the person, not the argument; ad hominem. And I know, again from experience, once ad hominem arguments start, they escalate.
So they won’t start.
It’s simple, really. Please: Attack ideas, not people. “That’s a stupid idea!” is legit - though you might want to follow up with why - “You’re an idiot!” is not, and will be deleted no matter who the target.
For those steeped in the real estate doldrums
Posted on April 28, 2008
Filed Under Diversion | 2 Comments
LAUGH, and the world laughs with you…
HT Bob McCarty via Hugh Hewitt
Housing demand; market inertia, addendum
Posted on April 27, 2008
Filed Under Selling Real Estate, Buying Real Estate, Real Estate | 34 Comments
Git reminded me what I forgot in the last post: what will reverse inertia?
There are many who blame the media for much of the downturn, and think it’s the media that can pull us out. Emphasizing the negative froze buying; perhaps emphasizing the positive can inspire the thaw. Wrong on at least two counts:
- People are infinitely smarter than that. They hate spin, and know it when they see it. Puff pieces - see NAR - not only don’t have a positive effect, they infect the credibility of those in the business who do try to tell the truth.
- The mainstream media - especially, say, The Oregonian - do have a vested interest in the proper spin, but it’s directly in favor of the real estate industry. Builders and brokers are among the last consistent revenue streams, and keeping them (us) happy is critical.
[The biggest problem in the mainstream media, at least locally, is they have no one writing or speaking about real estate who knows anything about real estate.]
Keeping the shoe analogy alive, here’s Git:
With “motivated sellers” it’s like having to sell at least one pair of shoes a day - when there are few buyers you may have to drop the price to sell a pair - that resets the market price for all inventory.
When retail inventory languishes, retail has a: sale. The entire run is marked down. It’s a psychological (think: inertia) factor almost as much as economic: when people see ’sale’, they’re more likely to buy.
In housing it manifests as auctions, REOs and short sales. As I’ve said before, the human condition insists that if someone else is on the losing end, I must be winning. (Warning: it’s not true in all cases. Short sales especially are dicey.) I don’t think we’ll ever hit what’s happening in California, where a third of all new resales are foreclosures, but when a significant percentage here are REOs, prices will drop accordingly, investors will reap reward, and all sales will tick up…
keep looking »
