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

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

View the full analysis of October’s real estate market performance in the Market Action Report for October 2011 (this includes Yamhill County, Oregon).

• Similarly to last month, sales activity in the Portland Metro area showed improvements in closed and pending sales this October 2011 compared with October of last year.
• Closed sales went up 14.1% in October 2011 compared to October 2010.
• Pending sales saw a rise of 15.1%, while there were 22% less newly listed residential properties.
• Inventory: at the month’s rate of sales, the 10,012 active residential listings would last about 6.8 months.
• Average sale price in October 2011 declined 6.5% compared to October 2010. Median sale price also fell 6.7%.
• Month to month, comparing September 2011 to October 2011, closed sales fell 7.1% from 1,586 to 1,474. Pending sales saw a slight increase of 0.9% from 1,861 to 1,878. New listings were down from 2,501 to 2,433 (-2.7%).

Buy. Sell. Be Happy.

Randy McCreith, Principal Brok

View the full analysis of September’s real estate market performance in the Market Action Report for September 2011 (this includes Yamhill County, Oregon).

• Sales activity in the Portland Metro area showed improvements in closed and pending sales this September compared with September 2010, and the inventory level remained much lower than the same month in 2010.
• Closed sales grew 13.4% in September 2011 compared to September 2010.
• Pending sales were also up 17.5%, and new listings dropped 29.5%.
• Inventory: at the month’s rate of sales, the 10,666 active residential listings would last about 6.7 months.
• Average sale price for September 2011 declined 4.2% compared to September 2010. Median sale price also fell 3.8%.
• Month to month, comparing August 2011 to September 2011, sale price activity was mixed.. Average sale price went down from $271,800 to $268,200 (-1.3%) while median sale price increased from $225,000 to $230,800 (2.6%).

Randy McCreith

Bella Casa Real Estate Group

Buy. Sell. Be Happy.

For the week of July 18, 2011 – Vol. 9, Issue 29

QUOTE OF THE WEEK…”There is no right way to do the wrong thing.”–Anonymous

INFO THAT HITS US WHERE WE LIVE…Increasingly, the wrong thing for consumers to do is to stay out of the housing market. In many locales, owning a home is now less expensive than renting. Rents are rising and vacancies falling, according to a report that tracked leasing data across the country. For the second quarter, rents rose in all but two of 82 markets, while vacancies dropped in 72 of them, sending the vacancy rate to 6%, its lowest level since 2008. Another report showed rental listing prices up 6.7% nationally in June versus a year ago.

Meanwhile, national average mortgage rates got pushed down some more, thanks to the prior week’s disappointing jobs report. And the Mortgage Bankers Association reported demand for purchase loans was at about the same level as a year ago, although down a tad from the week before.

BUSINESS TIP OF THE WEEK…Creativity, productivity and efficiency come in waves. When your productivity surges, roll with it. Switch projects to stay motivated. But when creativity ebbs, simply take care of the boring stuff that needs to get done.

>> Review of Last Week

DEBT WORRIES WOBBLE STOCKS…The word of the week was “debt” as investors worried about both Italy’s sovereign debt problems and the inability of the politicians in Washington to get to agreement on raising the U.S. debt ceiling.With these uncertainties, stocks wobbled off their high perch and all three indexes sank for the week, the broad-based S&P 500 down 2%.

The FOMC Minutes from the Fed’s last meeting revealed a divided committee. Some officials feel the central bank “might have to consider providing additional monetary stimulus” if the recovery remains slow. Others think inflation threats could cause them “to begin removing policy accommodation sooner.” Tracking inflation, the June Core Consumer Price Index (CPI) was up a little more than expected, but consumers weren’t that put off, as June Retail Sales were up a tick for the month and up 8.1% from a year ago.

For the week, the Dow ended down 1.4%, to 12480; the S&P 500 was down 2.1%, to1316; and the Nasdaq was down 2.4%, to 2790.

European debt worries and disappointing economic news sent investors to the safe haven of the bond market. Successful Treasury auctions showed these folks weren’t worried about U.S. debt. The FNMA 4.0% bond we follow ended the week UP .09, at $100.28. National average rates on fixed-rate mortgages, according to Freddie Mac’s weekly survey, are at or near lows for the year.

DID YOU KNOW?…The Federal Open Market Committee (FOMC) has 19 members, including seven Federal Reserve board members in Washington and 12 regional Fed bank presidents. Two Fed board seats are currently vacant.

>> This Week’s Forecast

HOME BUILDING, HOME SELLING EDGING UP…Tuesday’s June Housing Starts are forecast up slightly from last month, although still not near pre-downturn levels.Building Permits, foreshadowing starts a few months out, are expected to be flat. Wednesday, June Existing Home Sales should also be up, but not quite back to the 5 million annual rate.

Weekly Initial Unemployment Claims are predicted to remain above 400,000. ThePhiladelphia Fed Index should show manufacturing in that region improved over last month. Finally, the June Leading Economic Indicators Index is expected to be up for the month, though at a lower rate than before.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of July 18 – July 22

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months…Fed Chairman Bernanke still feels the recovery needs all the help it can get, so economists expect he’ll keep the Funds Rate at its super low level a bit longer. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

This information is provided compliments of:

Randy McCreith, Principal Broker

By now everyone has heard that 2011 is not a good year for real estate sales! It is not a good year for the economy, the unemployment rate, or for consumer confidence. New construction remains a dead industry the likes of which have not been seen since the Depression. Speaking of the Depression, recently I read that the rate of decline in home values is greater than during the Depression. Next month in July, we hit the 4 year anniversary of the bottom dropping out of the housing industry. Last week, on a business show I listen to on the radio, the normally optimistic and upbeat host gave voice to what I have thought too many times now, “It is getting hard to be optimistic anymore!”

Those who hold to negative predictions about our future seem emboldened to be all the more gloomy. I hear their narratives and they are reasonable in light of what is going on. Yes, it could happen and they very well could be right. If so, the current conditions should paralyze anyone. The news and information media picks up on these perspectives and we get showered with depressing forecasts and disheartening anecdotes. As if compulsory, the media then salts in stories which show good signs of recovery; perhaps to limit liability and relieve guilt for sending their readers to find the nearest bridge?

What is certain is what has already happened. A couple of weeks ago at our brokerage meeting we looked back to see where we are now by comparison with the past. To illustrate, we used Yamhill County for our study. Since 2007 the sold volume/number of homes sold has dropped 37% (from 1258 in 2007 to 796 year-to-date). The dollar value of those properties dropped 52% (from $354 million to $175 million). The average sale price is down 23% and the median price is down 22%. The short sale/foreclosure industry was almost unknown to most people and Realtors®; today it is the dominant force driving values affecting all of us.

If you need to sell, we just need to find one willing buyer for your property. Last month 84 residential properties did sell in Yamhill County. Yours could be one of those. If you need to buy, the task is easier but it still must be accomplished with caution and foresight. Your needs and our job have not changed because of a different kind of a market, it is just a greater challenge.

Best regards,

Randy McCreith, Bella Casa Real Estate Group

Buy. Sell. Be Happy.

QUOTE OF THE WEEK…“Always remember that your own resolution to succeed is more important than anything else.”–Abraham Lincoln

INFO THAT HITS US WHERE WE LIVE…Our resolution to succeed in the real estate market was given a bit of a boost with the National Association of Realtors (NAR) report that existing home sales were up 8.3% in the first quarter over the fourth quarter of last year. Plus, on a quarter-to-quarter basis, sales rose in every region of the country. Year-over-year, sales were virtually flat, slipping just 0.8% to a seasonally adjusted annual rate of 5.14 million homes.

This was nonetheless balanced with some disappointing data. Year over year, existing home prices dropped 4.6% nationwide, to a median of $158,700. Median prices dropped year over year in 118 of 153 metro areas, but rose in 34 of them. This drop in median price came because more sales were in the lower end of the market. In spite of this lower price skew, first-time buyers only made up 32% of the market, versus 42% a year ago when the federal homebuyer tax credit spurred sales.

BUSINESS TIP OF THE WEEK…People like doing business with someone they can relate to. Try sharing some of your childhood or teenage experiences. The other person may bring up some of their own. Trading personal anecdotes, people feel like they’ve known you for years even though you’ve just met.

Review of Last Week

A BIT OFF…Like yesterday’s fish, stocks didn’t seem very appealing to investors who can’t seem to stay confident in the economy, as the Dow and the S&P 500 dipped for another week. Sure, the tech-driven Nasdaq didn’t drop, but ending flat clearly isn’t very bullish. Commodities came back some and the dollar rallied. Problems included April Retail Sales which were up 0.5%, but the big gains were from service stations and supermarkets, reflecting rising gas and food prices. For consumers, inflation was up 0.4% in April and up 3.2% for the year.

Weekly jobless claims were down by 44,000, but still firmly above the 400,000 level they were under up till a few weeks ago. But earnings for S&P 500 companies in the first quarter were up an encouraging 20% compared to last year. And the total return for the S&P 500 index itself is also UP almost 20% over the last year. So stock prices are tracking earnings growth exactly. Part of that growth clearly comes from exports, which in March almost hit their all-time high of July 2008.

For the week, the Dow ended down 0.3%, at 12,596; the S&P 500 was down 0.2%, to 1,338; and the Nasdaq ended flat, at 2,828.

Mixed results in the bond market, with shorter dated maturities gaining slightly and longer ones losing a tad. Safe haven buys driven by continued Euro, Middle East and Japanese nuclear concerns were discouraged by inflation worries. The price of the FNMA 4.0% bond we watch ended the week down .10, closing at $100.04. Freddie Mac’s national average rates for conforming mortgages fell once more and although some worry rates may head back up, they’re now below levels of a year ago.

DID YOU KNOW?…Bricks are the oldest manufactured building material still in use. The ancient Egyptians first built with bricks over 7,000 years ago!

This Week’s Forecast

BUILDING NEW HOMES, SELLING EXISTING ONES…Tuesday we get a read on home building in April. Housing Starts are expected to be up a tad and Building Permits down just a smidge, indicating no major drop in activity a few months out. Thursday’s Existing Home Sales are also forecast up for April, staying above the 5 million annual sales threshold.

The health of manufacturing in May is projected to be down a bit in both the New York region’s Empire Index and the Philadelphia Fed index. The Leading Economic Indicators (LEI) Index is expected to be flat for April.

The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of May 16 – May 20

Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months…Fed Chairman Ben Bernanke maintains he sees nothing wrong with Fed policy, so some economists expect these 0%-0.25% rates to be with us until the middle of next year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

QUOTE OF THE WEEK…“I see that the path of progress has never taken a straight line, but has always been a zigzag course.”–Kelly Miller, American sociologist

INFO THAT HITS US WHERE WE LIVE…Last week’s reports showed the progress of the housing market recovery is definitely on a zigzag trajectory. Zigging upward were new home sales, UP a strong 11.1% in March, hitting the 300,000 threshold annual rate. The supply of new homes dropped to 7.3 months and the inventory fell again, to its lowest level since 1967. Also zigging UP 5.1% were March Pending Home Sales, which measure contracts on existing homes and point to continued gains in existing home sales come April and May.

But the path to progress in the housing market recovery zagged downward in the pricing area. The FHFA index of prices for homes financed with conforming mortgages slipped 1.6% in February. The Case-Shiller index of home prices in the top 20 metro areas dropped 0.2% for February (seasonally adjusted). But observers were expecting a bigger decline. The good news for buyers is that home prices are now down to 2004 levels and there are phenomenal deals to be had in many markets.

BUSINESS TIP OF THE WEEK…Don’t hire a person just to fill a position. Instead, evaluate candidates on their ability to contribute to the team you’re putting together to build your business.

>> Review of Last Week

THE MONTH ENDS STRONGLY…Once again, investors on Wall Street sent stock prices higher and the Dow Jones Industrial Average wound UP 4% for April, its best monthly gain since December. This happened in spite of the still slipping home prices covered above, plus a preliminary Q1 GDP reading of just a 1.8% annual growth rate. But consumer inflation is up only 1.8% versus a year ago and Core PCE prices, which exclude food and energy, came in just 0.9% up over the past year. Consequently, the Fed, as expected, kept the Funds rate at its rock bottom level coming out of their FOMC meeting on Wednesday.

That meeting was followed by the historic, first-ever press conference by a Fed chairman. Ben Bernanke used this event to tell the world he doesn’t see the need for any policy changes or a hike in the Funds rate. Investors approved of this steady-as-she-goes attitude from the Fed and were further buoyed by more good news on corporate earnings. Around 300 of the S&P 500 companies have now reported their Q1 earnings and 74% delivered upside surprises. Overall, corporate earnings are now forecast to go up 16% this quarter, way better than the original 11.5% estimate.

For the week, the Dow ended UP 2.4%, at 12,811; the S&P 500 was also UP 2.0%, to 1,364; and the Nasdaq was UP 1.9%, ending at 2,874.

Bond prices moved higher, reacting positively to the tame inflation report and the slowing economic recovery reflected in the lower GDP growth number. The price of the FNMA 4.0% bond we watch ended the week UP .97, closing at $99.17. Higher mortgage bond prices signal lower mortgage rates. Freddie Mac’s weekly survey showed national average rates for conforming mortgages at historically low levels, falling for the second week in a row.

DID YOU KNOW?…The Pending Home Sales Index reported last week is based on sales that are under contract but have not yet closed. A score of 100 equals the level of contract activity in 2001, the first year data was compiled for the index. In March the index was at 94.1, up from 89.5 in February.

>> This Week’s Forecast

HOW’S BUSINESS? HOW’S JOBS?…From beginning to end, this week features answers to those two burning questions. Monday’s ISM Index for April is expected to show a slight slowdown in the growth of manufacturing, although the expected reading is still well above 50, indicating expansion. Wednesday’s ISM Services is forecast to show the same level of continued growth in that sector of the economy, which provides about 85% of our country’s jobs.

How the economy is doing creating those jobs will be reported in Friday’s Employment Report for April. Another 183,000 jobs are expected to be added, fewer than in March, but the unemployment rate should hold at 8.8%.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of May 2 – May 6

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months…If anyone doubted it, Chairman Bernanke said it himself at last week’s historic press conference — rates will stay at their current rock bottom level “for an extended period.” Many economists are taking that to mean till the end of the year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

Article compliments of:

Randy McCreith, Principal Broker

March 21, 2011

View the full Portland Metro Market Conditions Report with all graphs.

This monthly market analysis is a commentary and commentators have much more latitude than pure journalists. With that in mind, I want to give a quick update on the numbers in the monthly report and then comment on other market conditions beyond the numbers. Regardless of the cable channel you watch for news and commentary, half the people cheer in agreement and half the people jeer at the ‘liar’. I expect no better treatment!

The Numbers…

Improved closed sales and pending sales in February confirm we did have a good start to this year. Looking in the first chart of pending sales, you will see that we are tracking a bit better than 2009, but worse than 2010 which was artificially improved by the tax credit. Inventory is lower than the past years (good for sellers) but this seems to be caused by seller reluctance to list their homes, rather than by the rate of sales (not as positive).

Our average sales price and median price is down between 8-10% from a year ago. Definitively now, our prices in the Portland metropolitan area on average are where they were in 2004 (this is amazing). The good and the bad! This seems to well illustrate a continuing condition where we get encouraging and discouraging information mixed. Sales numbers may be improving but values continue to drop. We long for the days when the good news becomes predictable and a trend.