You know, you can tell alot about people by which of the Star Trek versions they like. Old or new, Movie or not, Voyager or not.

While I’m partial to Voyager, I’m quite conversant with the Kirk/Pickard timelines. Relevant to Real Estate in Hood River, is the…Time warp, or warping or reality that they often encountered. (although the best version of this is in voyager, but i digress….)

Our market used to have some pretty traditional markers in it. Move out of town, price adjusts. View, price adjusts. quality construction, price adjusts…..

Now, we are really begining to see prices that are breaking away from what would bew considered normal……. There are warps in the valuations in the market, and some of them are looking like good…no great values……..

When you consider that over 80% of the economists are saying that prices need to adjust another 20% before we hit bottom, you are beginning to see some properties go there, while others continue to support the current floor. Those further discounted properties are looking like great values today, although they may not be in the future, but even in the worst case scenario they’ll be at Par……

Just our luck, Leavening mood, into the Maw of the the New Credit Future….

….You really should go back and read my posts from a year ago. It’s hilarious.

Well, here we are, deep in the correction. I rolled over last night and for a brief moment in that semi-lucid state, felt what it would be like if the rescue package didn’t go through. It was scary. I got up, and have been sitting at my computer since, attempting a pithy write up that makes light of what is truly an unmitigated disaster.

I think the Bailout is morally wrong. I don’t care anymore, but enough is enough. That sentiment could cost me my business, but I’m certain people will still need to buy houses, and in what is becoming “no place for old men” our services will still be in demand. (That last quote, by the way was apt, and first used to describe the tearing off of the roof that was last week in the Financial Times. It’s sticking.)

Now, something positive about Hood River…..Let’s see. If you’ve read my last couple of posts, they’ve been observations about why Hood River, and the Northwest is different, but ultimately may still suffer the same fate as the rest of the country. If the people now running fannie mae and freddie mac view the Northwest as “overvalued” because more people want to move here than ever before, well that would just be unfortunate. If some new ratio test related to multiple times median incomes artificially marks us down…..well, I’m uncertain what I can say about that one, but I think it might be in the offing.

The funny part is this, “Underwater Lock Down” is in full effect, and our inventory is shrinking. Properties are selling, and prices are being supported. We’ve found a floor in this part of the country, because we are becoming, and still are a desirable place to move to. In Hood River County, prices managed a 1% increase, with some downtown neighborhoods still posting strong positives.

Now, next month, you are going to see a drop in value, as the late seasonal mark downs finally close, but overall, this was not that tragic. This big question now is “where’s the liquidity going to come from?” Because going forward, it’s going to be tough. There’s alot of mistrust out there, and it will be very, very difficult to apply regional and local standards to a nationalized product (mortgage secondary market) when it’s EXACTLY a regional feature that differentiates our market…..

What’s that all boil down to? That’s the pithy line I’ve been looking for. Last year it was “get it gone” I think now I’ll point out that there’s still alot of “Here, Here” and that when you come to buy a place in our area, remember that we are not a suburb in Nevada, We are Hood River, the place many people want to move to now that things are getting scarier, and scarier. Problem is, in a rush to nationalize our standards, you may no longer be able to.

I’ll see you next month.

Defiantly,

Maui

More thoughts…….

There’s a Case/Schiller index (I think) that points to the Northwest as being “overvalued.” Now, I’m going out on a limb here, but the reasoning they use to point out why the Northwest will go down in the future is because “traditionally, the Northwest trails the United States by up to 24 months”

Now, that can often be considered true pre-2000, but I find it hard to believe, in this era of desktop underwriting, and 24 hour news cycles, that the Northwest could be that far behind…………

The fact is, in our area at least, those crazy financing vehicles never caught hold, and didn’t penetrate as deep into our marketplace as in….say, Arizona or Nevada. Prior to the run up, the Northwest had a very low valuation of housing as a whole, the lowest on the West Coast, if I remember correctly. (I remember that Idaho had alot to do with lowering those values BTW)

Further, cultural shifts have tended towards Northwest strengths, over and over and over these last few years. Outdoor recreation, return to Stewardship based resourced economies, and Regionalism, all play to Northwest strength.

Will I go so far as to say Case/Schiller is wrong? No. I will go so far as to say their lexicon might need to change. Additionally, we have seen a correction, we are just not seeing that gaping maw that is consuming others.

As for Hood River? We don’t have those endless rows of cookie cutter housing, and our inventory isn’t large, and it’s shrinking…..I know there are many people out there who think the bottom is going to fall out, and if the mortgage markets freeze up, it most certainly will, but in that case, no one will be able to buy anything. Then the pundits will be correct, but not able to buy anything.

Hood River is not a suburb in Nevada. The Northwest is not Nevada, looking at a national framework that doesn’t consider the tack the Northwest has chosen makes us look like an outlier, to be certain, but not necessarily, wrong. (I would use the term “overvalued” here, in the place of “wrong,” but im still not 100% sure. I’m just sayin…..)

…I’ve been posting for a couple of years now, and First started mentioning this breakdown now over a year ago. The scope of this, however……..amazes me.

I heard a story a couple of days ago, about the lending market just….stopping last week. No reason, other than fear and uncertainty. Just stopped.

If the ability to borrow money to buy a house goes away, the theoretical value of your home is zero. No market, no buyers. For someon who has to sell, that’s a tough place to be in.

And thus, the post. Your home’s value right now, has nothing to do with the actual value of your home. It has everything to do the Buyer’s ability to get a loan to purchase your home.

Things are so fluid now. These posts are going to be short, quick, and, well….fluid……

Hang on!

****This is a repost of an entry from last year. It explains why people keep on showing up, expecting a bloodbath, and then not finding one. Remember, the reason so many people love Hood River is because, by and large, we move along at our own, simple, easy pace. This can hurt us in times of expansion, but is very helpful in times of contraction.****

…Ok, My phone rang immediately upon that last post with a disgruntled Blog reader. This is what an “underwater Lock Down” is.

In Hood River, your average person buys, or owns a house. They get caught up in some of the market run up hype, but not in the way you might expect. Usually, they take out their new found wealth in the form of a refinance at the higher valuation, but they do not sell. Many of them don’t do sub prime but some do. (Figure more than 60% don’t) and here’s what happens.

Market corrects, but the total negative impact on these people is that their payment is high and they’ve lost money….but only if they sell their home.

They decide that it’s easier to sit tight and pay a couple hundred more dollars a month and wait for the market to recover…..so, they drive their cars a little longer, go out to dine a few less times per year, and generally trim back a touch….but they don’t sell.

What does this mean to Real Estate? The these houses do not come to market…..which is effectively a return to the Real Estate market of 1996-2001………general upside pressure, limited inventory, very little speculation…..

More or less…………….

Check our website. We just turned on streetview, and satellite view through google. Now you can see your property from space, or from just in front of the property itself.

Our Website is probably the single most useful tool in the Hood River real estate market at the moment! Click here to check it out…..

Or:

http://www.copperwest.com/