Hood River Real Estate and Columbia Gorge Real Estate

Of dead cats and a recovery

As I sat down (late again! Damn!) to write this months blog posting, the headlines blared “July existing home sales down 27%!” or something like that. (Actually, in Oregon it was 29.8%. Come on. Round up! I mean seriously……)

Tell me something I don’t know.

What I do know, that many don’t is that we have bounced, and are busy again. Decent August, big September. The inventory, is quietly disappearing. Not the properties I would have thought, mind you, lot’s of stuff over $400, but some at really aggressive discounts, up to 10%, some more, most less. (See Justin Fox’s Latest) If there is a bottom, 10% off this years already lowered prices is probably getting there.

Its funny how fast my news cycle has become. I don’t read the electronic newspapers dropped into my inbox every morning, because I read it on the news feed already. My cycle has become quite instant.

But back to granularity. Here’s what a real instant cycle and granularity get you in the HR market. The aforementioned news headline is based on data from July. Since then, (these last three weeks) We have had a large jump in volume of transactions, while the newspaper titles are still promoting that we languish, Buyers moved in and went for it. My impression from seeing recent sales, is that these closings are going to set off a reset in valuation in some neighborhoods. Not much, but that rash of closings, (discounted) plus the winter, plus the increased restrictions on mortgage financing will push the prices a touch lower (5%-maybe 10%, a la fox), touch off a good bump in September (because of low rates) that will close into October, but not reset anything, and then the winter buyers will move in for their traditional late season searching. Someone should send a memo out to the Sellers, so they don’t get blindsided by the raft of appraisals that are not about to make it…….Weirdly, and (insert raft of external event caveats here) I’m thinking 2011 Spring could be alright.

So it boils down to this….

Sellers, you are close, but you aren’t there yet. Keep up with the recent closings in your market, because appraisals will be required to use them. One meltdown by your neighbor, and you are stuck. Be open to compromise, and renting you home and remember, in a declining market, todays price is the one you should seriously consider. Tomorrow’s price will most likely be lower. And regardless, they will not be recovering for quite some time.

Buyers: Hood River isn’t a suburb in Reno. Understand, that this is the place you are choosing to vacation in, live in, grow your children in, and a community to be a part of (not apart of) Leave something on the table, you are moving here for love of a place, because otherwise, Reno would be perfectly fine. Others are moving here, and have understood that. They are getting the deals, and great ones at that.

See you next month.

June Market Action is out. It’s posted here.  As expected, pending sales were waaay down, though still up for the year, overall. Days on market spiked in late April, then crashed through that date (offers rush in late April) expect that to rise steeply for July’s report.

Total inventory is slightly lower ytd than last year, given the quality of the inventory, (pretty good) I can guess at a couple of things. We might have chewed though the “easy foreclosure” properties and be delving into the “hanging on for dear life” inventory……I’ve also noticed the average ask for the most recent new listings have been over $500,000…..also, potentially indicative of something more sinister.

Good news this month comes from others, smarter than I looking deeper into the SD issue. It turns out, with limited early data arriving, that the average home value drop would have to be off 62% or more, before home owners decide that an SD is the way to go…..That’s a long, long way…..especially around here.  Score one for moral fortitude.

Interestingly, when you calculate the total home value in the US against the total mortgage debt outstanding, (and this calculation has been done by a couple of sources, so I’m mostly reposting) what apparently shows up is this tidbit….that given the value of the housing inventory in the United States, the indebtedness is too high, indicating an erosion of equity, which is an indicator of increasing foreclosure pressure. (We didn’t need a macro-economics calculation of tell us that, but anyway……)

That’s certainly a big picture view, to be sure, and includes the traditional wipeout zones,(CA, AZ, NEV and FLA.)  We are not one of those areas, but comes troubling data from a couple of blog sources that Oregon is the #3 foreclosure state in the country…..I’m not sure of #3 of what (per capita? Rate per 100?) I went and looked at Realty Trac’s heat maps for Oregon, and we show 10 foreclosures for June, (1 in every 891 units, which is a screwy calc, for a whole number of reasons…)……So, moderate. Not sure where this is coming from but……….Oh wait, I figured it out…. It’s from This Article…

Ok, now that I’ve read it….it’s #3 in the rate of filing….ummm..nevermind. That was totally overhyped. Late to the party, still on the steep part of the curve…..

Which brings me to my next point. The media, blogosphere and others are tweaking the scare-o-meter too much. Don’t get me wrong, It’s bad, it’s tough, and it’s going to be a tough and long, and hard road, but claiming we are #3 in the nation for foreclosures is just patently inaccurate, and it’s meant to scare people. Unfortunately, it’s working. (see: “birds on a wire” below)

Ok, back to Hood River.

Regardless, however, the price reductions have begun, as the sellers are seeing the Summer wane, and now pivot to a strategy for Fall. Rent or Reduce? That is the question. It’s about 50/50 now, but I know that buyers are out there, sitting, watching, and waiting.  I refer to it as a group of “birds on a wire” (Forgive me, anyone whom I’ve told this to in the last week) They will all sit there, until one of them makes a move, then they’ll all move at once…..The interesting thing is this, there are more birds than there are properties they are interested in, so when one moves, expect that all of them will move at once……just in a specific section of the market (I’m not telling what part, but you could easily intuit it.) but I can assure you they are there, and they are ready for the signal. Problem is, I’m not the guy in charge of the signal…..

So, expect soft pricing, and low rates for the rest of the Summer, with a random vaporization of a segment of the market around…..first week of august. Earlier if someone clues in and jumps on the best deal first (which happens to be one of my listings! Yipee!)

Lets all go get outside and on the water. Don’t have to worry so much out there……See you next month.

….Been a decent January for us, but there’s still trouble on the horizon. New disclosure laws went into effect, specifically Good Faith Estimates and a SLEW of new reforms. I am not sure at all that any of it helps, but after a long talk and some research, I can say this……I can see where they are wanting to head, but they didn’t get there with the current GFE and closing documents……

I think they’ll get there, but the revisions, can’t come soon enough.

Near as I can figure, a mortgage broker will need a worksheet on the front end to explain all the terms to a borrower. Then they will have the required GFE (which they can’t change much, and in some spots its just indecipherable, but I KNOW the people responsible for this already know this) and then they will have to have a settlement sheet to explain what the GFE really says and what the borrowers need to do in order to close.

Oh, and you can’t get a GFE anymore without an actual property, and an actual purchase price….so, you most likely have to get a “quote worksheet” when you get preapproved, do the deal,  get through inspections, and THEN fire up the mortgage brokers to quote rates and closing costs for you…..

Bottom line, If your Realtor can’t explain this stuff to you, get another Realtor. As of right now, I think I could explain it to you….but I honestly couldn’t swear it. Don’t fire me!

This and a few things will push out closings for a bit, and then they’ll snap back to the usual 30 days after awhile. Why, I just closed one today that too exactly 29 days….clean and simple. (actually they had the home inspection completed before the offer, so…..that was cheating a bit.

Banks are still defending their liquidity, and I’m finally seeing big media pick up on the fact that the banks are still playing a bit of a shell game.  They still have to lend, however, so they are being picky, picky, picky……

Our local bank bit the farm this week too. Not that it was a huge surprise, but…..it was a big surprise.

I fully suspect the home owner’s tax credit program to be extended, things are just not healthy enough yet. I suspect that the secondary market buying programs will continue as well, probably until the end of 2010.  That’s just me guessing, but I’m seeing a recovery, but not an improvement. (Recovery= market reassembles itself with moderately sane people in it trading at arms length. Improvement=anything resembling firming, like price uptick, volume uptick for multiple months, of heaven forbid, multiple buyers again. I can dream can’t I?)

There seems to have been another round of capitulation in the market too, in January. Price reductions have happened, but when there’s no market (or the sector is hibernating) there’s just no market. And it opens the door to the other scary question (what’s the value of a property when there’s no market?) I suspect this will continue until March, when all those discounted places will get snapped up, and we’ll have another round of firming, there will be an even bigger flush of new properties, and then….well, you get the picture.

Hey, at least stuff is selling.

About the kookiest thing to come out of the prior RESPA reforms (actually the HVCC) is the completely random lowest cost provider Appraisers. In a market where the HVCC is supposed to reduce the chance of coercion, I’m commonly asked by appraisers who are not from the local area what good comps are for their target homes. They don’t know or understand the market, and subsequently come up with some of the most random valuations I’ve ever seen. Apparently, being a local appraiser doesn’t count for anything anymore. It’s pretty hilarious, and a glaring flaw in the theory versus reality. I’m confident it will change over time, as a lot of the appraisers from out of the area have determined that the travel time is too great, and have given up.

And finally, check out the FB page for Copperwest. There are three good topics on there, including the morality of walking away, a recent report indicating that housing sizes are shrinking, but that the kitchen is still king, and…..the 2009 Home remodelers report, which tells you what you can expect to get out or any remodel by type and region, great stuff at Copperwest.com, and It’s going to be even Bettter Next Month!