I have a different take on what’s happening in Portland Real Estate.  I’m not writing to be a cheerleader for buying real estate, to express wishes for a strong recovery or to reassure you that The Jackson Group is still here and selling homes as before – though all are true!

My intent is to take the hype and sensationalism out of the conversation and show you the truth, in your neighborhood, in numbers and graphs.  Forget the headlines in the newspapers or the painful videos on the evening news and take a look at the data for your zip code in the charts and graphs attached.  You’ll see information that is confirmed by actual sales data rather than pundits’ impressions or broad statistics, such as the country and state numbers that are not relevant to you.  What the numbers here show are hyper-local details that more specifically reflect your own individual neighborhood – and the news, whether expected or not, is telling.

For example, in many of our inner Portland area neighborhoods the drop in the number of sales mostly occurred in 2008 and since that time sales have been relatively stable.  That tells us the demand for housing has adjusted and is stable again.   The number of sales, for the most part, stopped tumbling in 2009 and is either flat or slightly higher today.

On the other hand, prices are still falling, though at a lower rate of decline.  The drop in the average home price was the most significant from 2007-2008.  The fall was especially severe in neighborhoods where the overall value is generally higher.  And in those ‘high-end’ areas the decline has continued more steadily.  This includes the areas of Lake Oswego and the West Hills of Portland where the loss in value over 4 years is in the range of 27%-38%.  In areas where the average home price in 2007 was near $500,000 or less, the decline in value over the 4 year period is most often less than 15%.  This confirms a reality that we have observed anecdotally, that once the price goes above $525,000 the probability of a requirement for higher equity or a jumbo mortgage changes the level of demand.  This puts greater downward pressure on the price of those high-end homes.  In areas where the average price is below $500,000 the rate of decline in home values has slowed dramatically.

So what does all this mean to our clients?  Find your zip and compare the numbers here to what you may have thought based on the conversation in the national and local press.  Are you better or worse off than you expected?  If you are surprised by what this tells you, good or bad, give me a call and let’s talk about why.  Is there something about your home or community that sets it apart?  Maybe. Either way I welcome a conversation with you to assess your specific situation, especially if you have reason to move in the near future.

While the challenges are significant, the market shows signs of steadying.  More importantly, house by house the resale possibilities vary based on specific house and neighborhood conditions.  We have successfully sold and moved many clients through this “shifted” market and we have become well schooled in the new rules and peculiarities of home sales today.  If you are ready to move, don’t let the headlines stop you from calling us for a precise assessment of you situation.

We have several new offers in real estate to add to our services for home buyers and home sellers.  We are successfully selling and negotiating “Short Sales” with lenders on behalf of our clients who have more debt than current value.  If you need help with this situation, we have it for you.  As well, we are engaging more and more with real estate investors who want to take advantage of the adjusted market and accumulate rental real estate.  With a 20-25% down payment there is very favorable conventional financing available for qualified investors. There are many properties on the market now for investors to consider that are well priced and cash-flow positive.  This may be a good time for some to begin or add to a real estate portfolio.

To help our investor clients I am offering an investor seminar monthly for the entire year.  The first one will be Thursday, January 20th at 6pm at our office in The Pearl.  Please join us, all are welcome.  If you have questions, or to register for the session, please send us an email at Becky@thejacksonfiles.com or call the office at 503-416-4177.

Good wishes to you for 2011,

Becky Jackson

If you would like a more detailed look at these charts- please email us at becky@thejacksonfile.com

Foreclosure- the option that everyone should try to avoid and only use it if it is your last resort. A foreclosure on your credit history can drastically affect how you can borrow and spend money in the future. It can lower your credit score up to 200-300 points. It is not the choice to take unless someone has lost everything else and has no other options.

Renting- a homeowner might need to change their thinking about their home.   Real Estate is a long term investment. During the fast days of 2003-2007, people were buying and selling so quickly because the market was shooting up so fast. Those days are gone and so real estate appreciation has slowed to a steady level once again. The value of your home WILL go up again but it might not be at the level you purchased for quite some time. If you can consider a rental and stomach covering the additional amount of the mortgage, taxes and insurance- then you might not lose your equity, it would have no affect on your credit and you could move and rent another home that is within your budget. You might have to change your thinking about her mortgage payments- think of it as a payment into an IRA. You might have to tighten your belt a bit but at least you won’t lose your equity.

Short Sale- we are doing a lot of short sales now. Short sales are a good option for home owners that have lost a lot of equity and now owe more in their mortgage than the home is worth. The paperwork and length of time it takes to get a reply from the bank takes a lot of patience so you have to be prepared to make it wait once you submit the paperwork. The bank assigns you a negotiator and then you work with them to lower the loan pay off amounts and release the debt deficiency. Often, there is none or very little affect on one’s credit score. The bank is usually more willing to work with people that are in some type of financial distress- job loss, income reduction, etc. But I have seen sellers will high net worth’s have success with short sales. If you are considering a short sale- you will need a real estate agent with short sale experience that can assess your situation and see if a short sale is a viable option.

Loan Modification- this is also an option but a difficult one to obtain.  Your bank might be willing to work with you to modify your mortgage to decrease your monthly payments if you are in a financially distress situation.  Contact your mortgage holder’s loss mitigation department for more information.

What I have seen a lot of in this ‘recessionary’ market is that buyers have become even more demanding than they ever were before.  They almost have an attitude of entitlement – like it is their turn to be the winners in negotiations.  They take it for granted that they are going to get a good buy and wait and they have no compunction about making low offers and standing firm.

The problem is that with all the choices and the many houses on the market these buyers are often successful with their posture, and if they are not it is not uncommon for them to wait on the sidelines for a better deal on the next one.  Sellers- do you want to wait for a better market or sell now in the market you have?  All homes for sale get “priced” in the marketplace, and the ones we see selling are priced at very compelling values.  Otherwise, there are many houses on the market that are waiting for something to change.  And the problem is that we have learned that change in this market has mostly been moving lower, not higher.

Value seems to be the primary focus of current buyers and can you blame them?  With the present fear in the financial market- everyone is acting more conservative with their investments. Property condition has become secondary to property value.  Perhaps this market has allowed buyers to seek more potential in their home’s condition rather than the appreciating value of the home.

By Becky Jackson

The Atwater Place auction was  fun and crazy.  I have renamed the auctioneer “Accelerated Chaos”!  They have their systems, and they are working with many newly-hired and un-trained people, but there were so many confusing and contradicting rules and statements going into the auction and a million small, redundant steps for everyone to follow.  Seems like they wanted to foster chaos along with the hype.

The auction was active, fast – but not uncomfortable, and sales were generally well above the minimum bids, consistent with recent market results and at substantial discounts from the recent price lists.  Many of the sales were at prices which can be negotiated from developer price lists if a buyer is brave enough to ask and push for it, so in the end we reach the real market price, one way or another.  Sellers can set asking prices, but Buyers determine value by offering and paying what they will.  Tonight 40 people offered and agreed to buy which made a vigorous market happen where there had not been one before.  Some may have paid a bit more than they expected, having gotten caught up in the bidding, I don’t know, but the overall average is a sales price of $291/SF, a substantial discount from most current price lists on A-grade new condos.

There appeared to be numerous willing bidders for all units, except the penthouse which had no offers, and which is fully valued at their ‘minimum’ in my opinion and validated by the buyers tonight. There were also very few bidders for the two townhomes, which is consistent with current market demand for townhomes and reflected in the much lower price/SF for those homes.

This auction was certainly not a cheap process to pursue, but it did lead to sales of 40 homes in a months time – a significant jump in velocity for condos sales for sometime.  Now, the challenge is how they follow that up and sell another 100+ high end homes with the same level of urgency!

Here is the latest march-2009-market-action report from the RMLS. This is the monthly summary of the real estate sales statistics for our region published by the Regional Multiple Listing Service.

In February both the increase in sales and the decrease in listings relative to last month (January) had a positive influence on the amount of inventory for the Metro area. Inventory now is just over 16 ½ months, down from the record breaking high of 19.2 months in January. While this is both good news and a positive change, we are still in a market that is hugely biased in favor of buyers due to high inventory and very low demand. Until this imbalance changes we can only expect that pricing pressure will continue to be on the downside. This means that for selling listings our strategy must continue to hold to these tenets: very competitive pricing, excellent condition and showing preparation, showing convenience for buyers’ brokers and multi- focused marketing strategies for reaching all possible prospects. We also keep clients well informed by offering regular reports on the number of showings for properties and feedback from the brokers or buyers about those showings, plus the competitive picture specific to each listing.

Another report we provide is the “market analyzer” which shows market demand and inventory absorption in a specific property area and type, among other things. This report is key to understanding why pricing much be considered in terms of demand as well as property comparison. For example, we may be able to determine that a property is priced competitive to all other listings, but still have sales challenges because there simply is such light demand.

For buyers we provide all the same detailed information for the areas and specific properties that are of interest in their home search.  Knowledge is power!

Our intent is to provide legitimate statistical information that i useful to you for taking care of your plans for moving.  We know that a big decision like buying or selling a home cannot be done without the analytical information possible to help with those decisions. There are a lot of good things about our business that are emotional and subjective – we need to have personal and emotional connections to our homes. Added to that ‘emotional connection’ I welcome the ‘proof’ of statistics to help us with strategies and decisions. This is true for both buyers and sellers alike.

As always, if you have any questions or want to discuss something specifically, please give us a call at 503-416-4177.

Becky

“Priced right and lookin’ good “ is the mantra to attract one of the savvy buyers looking to take advantage of a buyer’s market!

Check out the full story market-action-2162009 and find the numbers for your area of Portland.  And call us if you have questions interpreting this real estate market.  503-416-4177

Becky