Eight months of good news for housing in the greater Portland area! The trend of good news continues in our local housing markets.

What exactly is improving?

1. Volume

• The number of buyers in the marketplace who are searching and buying in a wide, balanced, range of pricing shows promise of breaking up the log-jam of houses for sale.
• The number of new pending sales is at a level not seen since our housing crisis began in the summer of 2007.
• The number of closed sales is the highest in 5 years for April (excepting the tax credit deadline in April of 2010 which was artificial).

2. Time on the market (DOM) is down 18.3% compared to last year.

3. Inventory is down to a 4.7 month supply, last seen in June of 2007. This affects supply and demand and causes pricing to firm up.

4. New housing starts are up as conditions now allow builders to address very low new home inventories.

Market Action Distressed Sales 1 Qtr 2012

What is still challenging?

1. The recovery is uneven and unpredictable; think of fits and starts. This can be frustrating for many sellers.

2. The strength of the recovery is in Portland. While felt even in our suburban and rural markets, it will take some time yet to fully radiate to us.

3. Pricing, on average, is still down, but it is definitely flattening out. Median and Average prices are down just 1% from a year ago. Actual depreciation is somewhat higher than that but it indicates that we are on the bottom (at least now).

4. The recovery may be fragile and vulnerable to some worsening economic conditions (thank you, Europe) and who knows what effect the elections in November will play. If this trend survives the elections, it will be at least a fairly strong recovery.

Market Action Report – April 2012

Market Action Report - April 2012

Market Action Home Sales Report April 2012

Market Action Home Sales Report April 2012

The best news is the Affordability Index which is a quarterly report on the last page of the Market Action Report. Head and shoulders above every year for 10 years, this is the most affordable time to buy real estate in Yamhill County. Buyers do not miss this opportunity if you can afford to take advantage of it!

See the attachments for the report plus a distressed properties report and reports for Yamhill County specifics. Note that the inventory number for our large rural county is still 9.85 months, but that is also improving.

Above all, thank you to our Sellers for patience and for entrusting your property to us. We take our work extremely seriously and make sure our tasks are always fused with personal concern for you personally and your needs and goals. It is more than a job to us!

We find particular joy and satisfaction in helping our buyers right now. Those who can buy are likely making some of the best investments they will see in their lifetimes. It is a wonderful reward to see a buyer close a property at costs lower than they ever dreamed possible! Remember, however, that your interest rates affect your monthly payments profoundly. Mortgage interest rates are tied to the bond markets (long-term lending). When the economic news is bad, investors flee to bonds for safety and interest rates fall. Right now, interest rates are at historic lows (well under 4%) which reflects fears about the economy. But be forewarned, when there is economic recovery and better expectations for the future, money flows to stocks and other investments and bond rates must climb to attract investors. That means mortgage interest rates will climb with continued good news. It is not controlled by the Federal Reserve or anyone else; it is the financial markets’ natural ebb and flow.

Your referrals of your friends and family, co-workers and neighbors, to us are precious. We will take excellent care of each and every one of them as we aim to please both you and your personal connections.

As always, glad to have your thoughts and thank you to many who send relevant information and links.

Best regards,

Randy

These Home Sales Reports for Yamhill County for the past 3 months (1st Quarter, 2012) focus on residential sales which closed during those months.

Home Sales Report Yamhill County January 2012

Home Sales Report Yamhill County March 2012

Yamhill County  follows the trends in Portland, but we do not do as well as Portland. Look at our median price map on the Market Action Report and you will see we are still the lowest price area of the metro area. Also refer to the article “A Receding Marketplace” and you will be reminded of our challenging dynamics. “Days on Market’ (DOM) refer to how long a listing is active before getting an accepted offer. This is achieved by taking total inventory number dividing it by the sales of that month. Whereas Portland as an average is now 5 month of inventory, YC is currently at 10 months of inventory! We are starting to see some of the good signs being experienced in Portland but we have a long way to go.

The better side of the coin is that we are a tourist area for the locals every weekend and even international travel during the good weather months. When California and Arizona’s housing markets are buzzing, we get many of their people looking to escape to Oregon’s wine country. In the past they came and bought our rural properties because they were so low-priced. They will do that again, but next time they will come with half the money they used to have or less.

Is this the beginning of the end of the Buyers’ Market? View or download the full Market Action Report – March 2012 here.

Summary of the Portland metropolitan market:

1. Pending sales are up 12.8% over last March; 7.7% up from February, and year-to-date pending sales are up 18.2% over 2011.
2. Closed sales are up 4.9% over last March; 34.2% up from February, and year-to-date pending sales are up 12.2% over 2011. This is the highest number of closings in the 1^st Qtr since 2007 (pre-crash).
3. Average price and Median price are still down but less than .5% in the former and 1.4% in the latter. We currently compare with pricing in 2004 and early 2005.
4. Inventory is low (5 months), well down into the ‘normal’ range (<6 months) and many homes are selling very quickly. Average time on the market for the 1^st Quarter is 135 days down from 165 days last year same time.

Anecdotally, we are amazed at seeing lower end homes in Portland predictably get multiple offers and sell above asking price. One bank-owned property we helped a client with had 16 offers on it. Another client lost a home after offering about $25k above asking price. Homes can once again go pending within days of listing. What happens in Portland spreads to our areas. We are seeing some of the same and we are seeing good activity including offers in every price range and for every type of property including new construction and luxury/higher priced homes. This week we sell a buildable small acreage property; very rare for 5 years!

Yes, it appears that the buyers’ advantage is dissolving right before our eyes. A return to a balanced market is healthy for both buyers and seller and industry professionals. For buyers right now, the handwriting is on the wall. Buy this year because next year could be very different for choice, and price, and interest rates if the economy follows the housing markets up. Last week I heard Dave Ramsey (no slouch on money management and also still a practicing Realtor®) say on his national radio show that he is buying every good real estate deal he can find right now.

Some important qualifiers:

• Recovery will likely be very uneven with fits and starts, ups and downs in the short term. Improvement is starting at the bottom where there are more houses and more bargains but it will move up. With many sales, the log-jam of inventory begins to loosen up, the seller becomes the next buyer, and this multiplies as sellers are set-free to move on.
• Buyers should take this seriously but not panic. Realize that as people become aware that properties are selling, there will be many who are currently sitting on the sidelines who will once again enter the market and try to get their property sold. We also still have a lot of future bank-owned inventory (or all stages of foreclosure) which will be hitting the markets, affecting the numbers, and continuing to offer great deals.
• As I write this, the national news is much more negative than our local markets would indicate. Remember the maxim, “location, location, location”? That includes within it, “local, local, local. National averages tell you little about your challenges or your opportunities. ALL MARKETS ARE LOCAL- right down to the neighborhoods.
• Right now I am telling our sellers that we have the best odds of selling their properties than we have had in 5 years. That is hopeful news. It needs to be tempered with this:  Our numbers for the volume of sales are better but they are still much lower than ‘normal’. That means that the market is still very competitive and the buyers are still attempting to cash in on a buyers’ market to pick-up bargains. Prices are still declining but the rate of decline is slowing to a crawl. The return of balance is good but we are way off from a sellers’ market!
• We are still vulnerable to an economy which seem to be struggling to recover and also suffers from fits and starts. In 5 years we have been hit with multiple crises not just one. We all hope for no more economic tsunamis.

As always, glad to have your thoughts. As always we greatly appreciate your trust of us and our services and thank you for referring your friends, neighbors, family, and co-workers to us.

Best regards,

Randy

Every six months or so I attempt to delve deeply into the dark underworld of selling lots and land in this housing depression in order to update our clients. Our clients who own buildable parcels of land believed they had some of the best investments in real estate, and they did at one time, but they have become the most disappointing to them and the most difficult of properties to sell. In a former article we analyzed the dynamics of this market niche and the challenges we now have.

In another recent article we noted some very good news in the new construction sector; see Is There a New Construction Renaissance?

If you have followed our monthly Market Action Reports with its commentary you know that we are very encouraged with the housing market’s performance since September of 2011. We now have more than a sign of something good, we have a trend of good which we are optimistic will continue. Our sales numbers are double a year ago, we have more showings, and we are dealing with more offers than in any similar period in almost 5 years.

At the end of this first quarter, I cannot say that there is much that will inspire you but perhaps a bit that will give some hope. In Yamhill County, which is over 700 square miles, there have only been 16 sales in the last 12 months for land over 3 acres. Sales ranged from 5 acres in Willamina for $100k, to 203 acres for $855k (vineyard potential) in Carlton. However, there are currently 4 pending sales and that is a significant improvement consistent with what we have seen in the overall market. What is still foreboding is that there are still 88 active listings to compete with and at the current rate of sales this is another 5.5 years worth of inventory.

Looking longer, in the past 5 years there have been 75 Lots & Land properties of more than 3 acres sold. That is 1.4 properties per month. Since the financial meltdown at the end of 2008, there have been 50 sales or 1.3 ppm. By contrast, In 2012 so far there are already 6 sales or 2 per month plus 4 pending sales. There is some improvement and movement in the right direction and better hope for this year.

What does it take to sell today?

• Everything is about value right now. In the same way that builders had to let go of the past and deal with today’s realities in order to build again, so the sooner our properties can be price competitive for today’s market the sooner it will sell. Competitive pricing does not mean being the lowest price but being the best value.

• Being competitive is tough! With 88 choices competing for 16 sales (as demonstrated during the past 12 months) it can seem hopeless. However rural properties are also about the appropriate location for a buyer and the aesthetics of the property. Keep the property in good shape ready for someone to buy and build immediately.

• Patience: Our clients have been unbelievably tolerant of this market and patient awaiting a return to normalcy. Loyalty to us has been encouraging. We believe this year is a good opportunity but next year perhaps even better. We are trending in the right direction but no one thinks things will move rapidly. We are glad to have your property available for the buyers as they begin again to trickle into the market place.

We are happy to review pricing and we renew our commitments to you with each listing extension. Attached you will find all the current data for the Yamhill County markets and we can custom do the research for you specific to your property just for the asking.

Download the PDF of this article

Best regards,

Randy McCreith

* These rates are available with a 660 minimum fico score, based on a 1% Origination fee and 45 day lock using approved lenders and subject to loan approval

Courtesy of Naida Paris, Mortgage Broker

For our Clients and Friends,

For buildable lots and land to begin to sell again, we need the new construction industry to awaken. Below is an article of such an awakening and I think you will find some encouragement even as I have.

I have also provided an overview of the market at the end of the first quarter of this year and looking back 12 months. There is a lot of data to peruse. I have focused on parcels from 3 acres and larger for the data in this email.

I think there is light at the end of the proverbial tunnel. I would love your thoughts and response as always. Let me know what else we can do for you.

Randy

We are approaching five years since the bottom dropped out of the housing industry. Housing has suffered the severest blow of all sectors in the economy. The hardest hit segment of the housing industry has been new construction and selling buildable lots and land.

Is all of that about to change?

There are some builders who are building new homes as fast as they can be constructed; they are all selling as pre-solds, and they are producing acceptable profits for the builders and the lenders. This in spite of the fact that re-sale home pricing in general is below the cost to build. Through our representation of Forest Glen, a gated luxury community in McMinnville we have been exposed to builders such as Tom Liesy of T. A. Liesy Homes (www.taliesyhomesnw.com ) who is successfully building and selling in Happy Valley (Sunnyside/Clackamas area). Happy Valley has been our own version of California’s disastrous housing crash with losses in excess of 50%.

What is happening to change things? Is this a lesson and a pathway for the recovery of new construction and to the restoration of sales for buildable lots and land? I think it is. Here is what we are learning:

1. To invest well, one needs to buy well:

Happy Valley (and Bend etc.) was the focus of wild speculation until 2007. The price of land was at an altitude which is head-spinning. Today all that land has been through foreclosure and/or bankruptcy and lenders have sold this off at bargain rates to anyone willing to risk building. In our area First Federal sold Forest Glen lots at $43k per lot, down from $280k for some lots at the height of the market. Lots were subsequently sold to builders at wholesale prices above that but still at prices allowing the builder to become competitive with re-sale homes. Lesson one: the price of the land is fundamental to making sense of building at a time like this.

2. To sell well, one must provide great value and incentive; more value than the resale markets:

Builders must forget about the past and understand that almost everyone related to our industry has taken losses of at least 30% and commonly up to 50% (and for some more). Buyers today can and do demand high quality, good space, and desirable amenities for a low price or they will not buy. What will you do? Meet the market demand or sleep it off for the rest of the decade? Builders who find ways to become successful now are growing their reputation and market share now, and are well positioned for greater profits in the future as recovery matures.

3. Is there money available for buying land and for new construction right now?

Yes, but not through normal channels. The builders who are successful are using private money which is also known as hard money. It costs more but it is readily available now rather than waiting for conventional financing to loosen up years from now when it is too late to play catch-up. Remember, hard money is also at historic lows. You will not get today’s amazing sub 4% financing for the project, but most builders are not strangers to the 7-10% they have paid in the past. Think bigger picture; someday in the not too distant future, 7-9% will be the norm for everyone.

Some buyers will still come in with cash to purchase the lot or parcel, and some already have construction-to-perm lending set-up, but for most people today that is an overwhelming task. Today’s successful builders build the home on their own dime. When the construction is complete then the transaction can close with the buyers’ traditional financing with whomever they choose (just like buying a re-sale home). Helping buyers avoid the nightmare of new construction financing is not only crucial right now, it is a huge value for the buyer and that is the heart of the issue of getting them back into the new home market. With just earnest money down, their ‘pre-sold’ home is completed and the buyers get their own loan at historically low interest rates (recently as low as 3.6% for 30yr fixed) with their favorite mortgage broker or bank.

4. No Games; No Gimmicks Allowed:

Before the crash, builders often partnered with preferred lenders for a cut of the profits of the loan. Pressure (often flagrantly unethical pressure) was put on the buyer to use their in-house lender so the builder could have another income stream.

We all remember the days of builders (particularly the national and regional builders) pricing the basic home and then hard-selling all the amenities. With every amenity came a huge mark-up and of course no credit for the fixture that was already factored into the price!

Tom Liesy welcomes buyers to get their own best financing to complete the sale when the construction is complete. He offers his buyers his contractor’s discounts with his vendors on any upgrades beyond his already generous amenities and then does not take builder mark-ups for these upgrades. Any personal choices and changes to amenities and are strictly between the buyer and the vendor. Welcome back, Trust!

5. How can this be model be profitable?

I am certain the public would be shocked at the profits builders were making in the heady days now a long time ago. There was a lot of room for adjustment before pleading poverty. Today, the only way a builder will be able to plead poverty is to remain in the past and stay unemployed for the foreseeable future. Entrepreneurs always find a way to meet market demand with good supply. Determination and creativity can overcome any challenge…

And hard work and intelligent strategy! One must become efficient. Systems and the people to carry out those systems efficiently, are always key to increasing profits and achieving success. Tom can build any home in 75 days. Does that mean it is cheap and poorly constructed? Not if the builder is demanding high standards and the same drive for efficient profitability from his sub-contractors. If the system is thorough and self-policing for quality, then it is a win-win for buyer and builder.

A good sales force is also crucial. The builder should focus on what he is expert at- building quality homes offering the best value to the marketplace and achieving well-earned profits. Select Realtors® can add their expertise to build the brand (the builder), market the project (the neighborhood, the development), create demand, advertise and promote each home, and then manage the entire sales process from farming for prospective buyers to closing happy owners and gaining their referrals for future sales. Even in times of strict accountability for every dollar spent, effective marketing and sales adds value and creates profits.

In the past, builders could not ‘afford’ to pay Realtor® commissions; this myth has been forcefully debunked as former profit margins came to light. Yes, builders could just put a sign out and sell their homes. Today, successful builders partner with competent and proven marketing and sales professionals to create demand and to go out and find buyers. Today builders also need any Realtor® to be willing to bring their clients to talk with builders knowing they will be paid for their services.

There are no longer excuses for the new construction industry to stand idle. Visionary leaders and hard working entrepreneurs are already proving in our markets that it is time for the public to again have options for buying new homes. Bold builders who are willing to face reality straight-on are showing that new construction can compete with the historic low prices of re-sale real estate and win more and more buyers. These pioneers will be tomorrow’s great success stories.

For our clients selling buildable lots and land, the revitalization of the new construction industry will overflow from developments to the countryside.

This is good for all of us!

Randy McCreith, Principal Broker

Randy McCreith

This Friday, April 6th, at Bella Casa Real Estate Group’s Newberg office from 5-9 pm, we will be featuring the superb art of Yamhill County artist Daryl Nelson.  We hope to see you there!  We snagged a video interview with Daryl from the The Arts Alliance of Yamhill County from August of 2011.  Come and meet Daryl and experience his artistic talent yourself!

On the first Friday of every month the very best of local art is on display – all in one centralized location! You’ll see talent that has been encouraged and developed by our very own landscape – the vineyards, the mountains, the buildings, the people… It’s nothing short of inspiring. And although the art is the reason we gather, it gives an opportunity for tasting fantastic local wines and engaging with others our community. You won’t be disappointed if you do come out for a few hours. You’ll be surprised by how much fun it is and impressed by everything that Yamhill County has to offer.  We look forward to meeting you at Bella Casa Real Estate Group!

Sellers, don’t let pet odors derail your home sale!

We’ve heard specific feedback from buyers that pet odor is a major turn-off, even if the property fits what they’re looking for. So…

Air your house out. While you’re cleaning, throw open all the windows in your home to allow fresh air to circulate and sweep out unpleasant scents.

Once your house is free of pet odors, do what you can to keep the smells from returning. Crate your dog when you’re out or keep it outdoors. Limit the cat to one floor or room, if possible. Remove or replace pet bedding.

Scrub thoroughly. Scrub bare floors and walls soiled by pets with vinegar, wood floor cleaner, or an odor-neutralizing product, which you can purchase at a pet supply store for $10 to $25.

Try a 1:9 bleach-to-water solution on surfaces it won’t damage, like cement floors or walls.

Got a stubborn pet odors covering a large area? You may have to spend several hundred dollars to hire a service that specializes in hard-to-clean stains.

Wash your drapes and upholstery. Pet odors seep into fabrics. Launder, steam clean, or dry clean all your fabric window coverings. Steam clean upholstered furniture.

Either buy a steam cleaner designed to remove pet hair for around $200 and do the job yourself, or pay a pro. You’ll spend about $40 for an upholstered chair, $100 for a sofa, and $7 for each dining room chair if a pro does your cleaning.

Clean your carpets. Shampoo your carpets and rugs, or have professionals do the job for $25 to $50 per room, depending on their size and the level of filth embedded in them. The cleaner will try to sell you deodorizing treatments. You’ll know if you need to spend the extra money on those after the carpet dries and you have a friend perform a sniff test.

If deodorizing doesn’t remove the pet odor from your home, the carpets and padding will have to go. Once you tear them out, scrub the subfloor with vinegar or an odor-removing product, and install new padding and carpeting. Unless the smell is in the subfloor, in which case that goes next.

Paint, replace, or seal walls. When heavy-duty cleaners haven’t eradicated smells in drywall, plaster, or woodwork, add a fresh coat of paint or stain, or replace the drywall or wood altogether.

On brick and cement, apply a sealant appropriate for the surface for $25 to $100. That may smother and seal in the odor, keeping it from reemerging.

Place potpourri or scented candles in strategic locations. Put a bow on your deep clean with potpourri and scented candles. Don’t go overboard and turn off buyers sensitive to perfumes. Simply place a bowl of mild potpourri in your foyer to create a warm first impression, and add other mild scents to the kitchen and bathrooms.

Control ongoing urine smells. If your dog uses indoor pee pads, put down a new pad each time the dog goes. Throw them away outside in a trash can with a tight lid. Remove even clean pads from view before each showing.

Replace kitty litter daily, rather than scooping used litter clumps, and sweep up around the litter box. Hide the litter box before each showing.

Relocate pets. If your dog or cat has a best friend it can stay with while you’re selling your home (and you can stand to be separated from your pet), consider sending your pet on a temporary vacation. If pets have to stay, remove them from the house for showings and put away their dishes, towels, and toys.