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.

Greece, Contagion and the words “Strategic Default”

Interesting uncertainty has quietly crept back into the market. I’m thinking that the heated buyers market that suddenly cooled had something to do with the tax credit, and the fact that everyone is waiting to get done with school, and into the Summer. I polled my brokers, and they are still seeing buyers show up, but everyone is early in the cycle, so it looks like summer buyers to me. I’ve been distracted with County Budgets and such, I’ve not been working the market like my brokers…..Who by the way, along with me, make up three of the top ten agents in the market this year. That makes 2/3 of our Brokers in the top ten……And our market share continues to grow……I’ll take it.

Couple other things happening in the market these days, the new phenomenon of “jingle mail” now has a slightly more serious moniker, (which means its becoming more widespread, and less novel) called “Strategic Default”

Now, there’s foreclosure, and it can be caused by a lot of things, not any of them good, but here is one that really, really scares me. SD isn’t a default because of a catastrophe, it’s a default because of choice, essentially, a business decision.

Let me be critical for a moment. Strategic default is a symptom of denial. It says you care more about your standard of living than you do your neighbors, It’s like having a campfire in a national forest, in august, and then falling asleep while it’s still going. If this takes off, it could lay waste to whole neighborhoods due to markdowns, and that could take a long, long time to recover from… Have I made my point clear?

There, now that I’ve said it, let me turn the coin. Strategic default CAN be a reasonable option for people in the right situation, for the right reasons. Like I mentioned a few months back, when this first came to light, it doesn’t sound right when a person makes a decision to strategically default, but when a company does it, often times they are rewarded for making a “shrewd business decision” (I’d hate to be on the receiving end of anything being referred to as a “shrewd business decision” these days) I don’t think there’s much of a difference between the two except for perception.
What’s really unsettling here, is this. Where does this thread stop? (see Contagion, below)

And there’s more! Compliments of Realtytrac. (www.realtytrac.com) Guess where 50% of ALL FORCLOSURES IN THE US ARE? ….You have to go no lower than #5 to encompass the top 50%. Can you imagine how bad that must be? Even with decreasing numbers of foreclosures, it’s still a scary set of numbers. Imagine if the word CONTAIGION crept into the discussion. Strategic Default leads to neighborhood contagion of SDs…..

This brings a whole new light to the phrase “keeping up with the Jones’” Thank goodness I don’t live in California.

That’s it for this month, keep an eye on inflation, which, according to Paul Krugman might not be the right thing to look at. He says we could be more Japan than Greece. I think I might take that over rioting over enforced austerity measures……

This choppiness is looking all so May of 2008……….

(postscript- Volume has just shot up, way up. New listings, New buyers, most in the higher ranges……whiplash! Also, so very 2008)

Happy almost May!

Our weather here is still stuck in spring mode. I’m hoping it will get warmer soon, but who knows. My Web cam is still screwy. Time for a new computer, says my wife. A Mac!

What I do know about is how busy things have been. People are clued (or have clued, as this is the last day, wait, is that even a word?) into the tax credit, and Sellers and Buyers have sharpened their programs to get stuff moved. In fact, lots and lots of stuff has moved, though if you thought you were going to offer on a short sale and make it under the timeline, you woefully misjudged.
Last month, all eyes were on the quality of the inventory, and I have to say, there were some very, very nice properties that came (and went) to and from the market. We have written a number of deals that will qualify, and some of them have been very good bargains.

Lending and underwriting has also improved, and we are back around 30 days for a deal, perhaps a touch longer. Buyers have returned, however gingerly, to a position of “risk-taking” given they are well compensated, which is an improvement from a few months ago, where a buyer asked for such a discount as to make the purchase almost failsafe.

This STILL doesn’t mean prices are going up anytime soon. All the short sales that have gone under contract will only lead to a fresh set of underwater houses to come on the market. I suspect we’ll have a version of this for about the next year. I would have said two, but I’ve been really surprised at the speed that last batch cleared the market. They will have a dampening effect on the market however, especially in sieverkropp and the Westside addition near fox hollow.

The majority of the action is well under the $400,000 range, but some of the Summer buyers are coming up early to get a jump on things. I’ve gone from showing piles and piles of property under $300,000 to a bunch over $400,000 in just the last week. That’s a decent sign.

I’ve been noticing that as the market re-forms, there are different players this time around. I’m also noticing, that while conditions improve for some, hurt, and duration, and general stress abound…..There seems to be a lot of it in transactions these days…..

So, short term outlook? Weak until memorial day weekend, given the tax credit hangover and the upward pressure on interest rates. Probably a little firming through the summer, with what appears to be decent amounts of inventory clearing, and softness in the fall, firmed up in late October by the bargain shoppers, depending on interest rates, which could be the big, big uncertainty….
I’m always amazed by people who dare to wait until the last moment…..nerves of steel those people…..