Market News
Metro Market News was designed for one primary reason: to help people find the properties and the information that they desire about the Portland metro area all within one web site
No Comments Where to Buy and Sell in Portland, Oregon
Obviously, there are good deals and bad deals in every area of the city. However, there are clearly parts of the Portland Metro area where home values are declining and there are other parts where significant appreciation is still occurring.
It goes without saying that purchasing real estate where values have declined does not necessarily mean that the value for said property will immediately begin to appreciate and will not continue to decline nor does attempting to sell a home in a sector of the city that is currently increasing in value guarantee that a profit will be made on a transaction in that area. There is an element of risk in either case. However, by watching market trends and understanding that there are several “micro-markets” within the Portland area, you will be better equipped to make a wise decision regarding any given sale or purchase (this may include deciding not to participate at all for a while).
According to the latest Market Action Report from RMLS, the year-to-date statistics through September for the primary “micro-markets” in the city are as follows:
141 – North Portland – (+2%)
142 – NE Portland – (+2.1%)
143 – SE Portland – (-1.5%)
144 – Gresham/Troutdale – (-5%)
145 – Milw/Clackamas – (-6.7%)
146 – Ore City/Canby – (-3.7%)
147 – L.O. / West Linn – (+5.4%)
148 – West Portland – (+6.8%)
149 – NW Wash. Co. – (+0.4%)
150 – Beaverton/Aloha – (-3.8%)
151 – Tigard/Wilsonville – (-3.8%)
152 – Hillsboro/F. Grove – (-4.1%)
There are several smaller “micro-markets” within the aforementioned areas. For example, neighborhoods within NE Portland (142) such as Irvington, Hollywood, Concordia, etc., that are not necessarily appreciating/depreciating at the same rate. In addition, factors like seller motivation and condition of property also have a significant impact on value.
Over the last few years, the local real estate market has experienced several dramatic changes. Many areas of the city have gone from slow and steady growth to rapid appreciation to year-to-date drops in value. All of that, coupled with the seemingly constant mantra from the national media that the real estate market is terrible in addition to the breakdown in the financial markets, has created opportunities for some and heartache for others.
Like many investments, there is a clear correlation between risk and reward with regard to real estate investing in the Portland area. Typically, areas with more dramatic value fluctuations represent higher risk and market areas that are less volatile, and in many cases not as affected by exterior factors/influences, are less risky.
Consider the following analysis of West Portland vs. Milwaukie from September 2006 to September 2008:
The 9/06 Market Action Report indicates that West Portland’s year-to-date appreciation was at 12.1% and last month’s rate was 6.8%. Conversely, the 9/06 figure for Milwaukie was 20.0% and the 9/08 number was -6.7%.
A conservative investor would likely be more inclined to purchase properties in West Portland and a more aggressive investor (probably more short-term oriented) may be more easily enticed by the past performance of Milwaukie.
Sellers also need to be aware of market trends. Areas like Lake Oswego have consistently increased in value year after year for the past several years – despite all of the negative industry factors throughout the country. Hence, sellers in Lake Oswego are statistically more likely to obtain offers closer to their asking price than sellers in an area like Beaverton that is currently 3.8% off last year’s prices. Also, since Beaverton has had a solid history of appreciation and this is the first year in long while that Beaverton has experienced a decline in property values, sellers in the area may want to wait until it is a more favorable environment to sell their home.
Bottom line: there are opportunities for success in any market if you recognize market trends and act accordingly!
Please feel free to contact me with any questions.
-Patrick Krause
Owner/Principal Broker
Soldera Properties, Inc.
503.807.4430
pk@patrickkrause.com
Short-Sales and How They Affect The Real Estate Market….and You!
What is a short-sale? Essentially, a short-sale is negotiating with a mortgage holder to accept less than what is owed on a property as payment in full.
Why would a bank accept less than what they are owed on a specific property? There are several reasons but often times it boils down to the fact that the bank would rather take less up front in exchange for not having to endure the lengthy (and in many cases very expensive) foreclosure process. When it becomes clear that the current homeowner will be unable to continue making adequate payments, then foreclosure proceedings will likely ensue. Foreclosures ultimately show up on the bank’s books as real estate owned (REO) and that is a liability for the bank. Too many liabilities are not good for any business and banks are no different.
What happens to the homeowner? Obviously, each individual case is unique but the bottom line is that if the correct payments are not made, then the property needs to be vacated.
How do short-sales affect the real estate market? There are both negative and positive implications and it normally depends on your perspective. Each time a property is sold and recorded for less than market value, the surrounding area can be negatively impacted (just as higher sold prices have a positive effect). Buyers, on the other hand, are able to purchase homes for significantly less than they might have otherwise which usually ends up benefiting them in the future. Better deals bring more buyers and as participation and demand increases, prices typically begin to rise.
How do short-sales affect you? As mentioned above, too many short sales can have a negative impact on the value of homes in a specific area because appraisals for current and future sales will likely be less than they “normally” would have been. If you are looking to sell your home in such an area, you may not get as much as you want. If you are looking to purchase property, then you may want to have your Realtor search for short-sale opportunities which may ultimately allow you to make an exceptional buy with an immediate equity position in the property.
Feel free to contact me for more information.
Patrick Krause
Owner/Principal Broker
Soldera Properties, Inc.
503.807.4430
Portland Is On The Map!
Over the last few years, Portland has been slowly recognized as a destination city on the west coast. Despite the fact that it is flanked by high profile cities like Seattle, San Francisco and Los Angeles, an increasing number of people have decided that Portland is the place where they want to live.
Each year, national studies and surveys are conducted that rank American cities in an array of different categories. Portland is consistently in the top portion of the lists and lately has been ranked number one in many of them. Here are a few of the most recent lists and topics:
Country Home Magazine – Top 25 Green Cities. Portland is ranked #2: http://www.countryhome.com/greencities/top25.html
Reader’s Digest – Top 50 Cleanest Cities in America. Portland is ranked #1: http://www.rd.com/your-america-inspiring-people-and-stories/50-cleanest-dirtiest-cities-in-america/article15115.html
Travel and Leisure – The Best U.S. Airports. Portland is ranked #1: http://www.travelandleisure.com/slideshows/best-us-airports/
Sustain Lane – Top 50 Green Cities. Portland is ranked #1: www.sustainlane.com/us-city-rankings/
America’s Best Online – Top 10 Cities to Live. Portland is ranked #3: http://www.americasbestonline.net/index.php/pages/citiesbesttolive.html
The local and national news has been overwhelmingly negative lately with regard to the financial and real estate sectors of the economy so this post is a reminder to all of you to enjoy Portland! We live in one of the best cities in the country!
Thank you for all of your emails and calls. Talk to you soon…
-Patrick Krause
Seller Rate Buy-Down is Often Better Than a Price Reduction
In most normal circumstances, properties sell for less than the asking price. If one were to look at almost any comprehensive market analysis for a given area, the average price for the SOLD listings would likely be less than the average price of the ACTIVE listings.
In abnormal circumstances such as what we are currently experiencing, sellers’ motivation levels are higher than normal, listing prices are being reduced and are therefore lower than normal and qualified buyers are often able to “get a deal.”
However, many buyers do not realize that they can almost always get an even better deal by improving the terms rather than just reducing the price. Let me explain:
Buyer 1 offers $900,000 on a home that has already been reduced several times and that is listed at $1,000,000. Due to current market conditions, the seller begrudgingly agrees and a deal is made. Buyer 1 puts 25% down and finances $675,000 at 6.25% on a 5/1 ARM. The principal and interest payment would be approximately $4,156/month.
Buyer 2 offers $975,000 but negotiates a seller buy-down with an off-sheet rate of 4.75% for a 5/1 ARM. Buyer 2 also puts 25% down and the payment for principal and interest would be approximately $3,815/month.
On the surface, it looks like Buyer 1 negotiated a better deal because he was able to knock an additional $75,000 off the purchase price. Not necessarily. Consider the fact that Buyer 2 got the seller to reduce the price $25,000, pay all of the loan fees (seller would need to pay approx $30,000 for such a buy-down) AND Buyer 2 still saved over $341/month as a result of a better loan product. Moreover, the seller would be more apt to work with Buyer 2 because, despite the fact that the terms are more beneficial for Buyer 2, the seller would save $45,000 because the buy-down and smaller price reduction for Buyer 2 would total $55,000 as apposed to the $100,000 price reduction for Buyer 1.
Keep this concept in mind when you are out there negotiating! Also, visit www.lowpriceluxuryhomes.com for more information on this concept and to view homes that are currently for sale with this type of program already in place!
As always, feel free to contact me at any time.
-Patrick Krause
Owner/Principal Broker
Soldera Properties, Inc.
pk@patrickkrause.com
503.807.4430
Now What Do I Do?
Many people have recently asked me this question with regard to the Portland real estate market.
It is a frustrating time for both buyers and sellers. For sellers, market time is dramatically increasing while prices are starting to level off and in many cases are decreasing. On the other hand, a large number of buyers are not able to obtain the loan products that were available to them just a short time ago which makes it much more difficult to purchase a home. Unfortunately, the latter scenario exacerbates the former and the problem just seems to get worse.
That said, there is still reason for optimism. According to RMLS, there were 1,770 closed sales in the month of August within the Portland Metro area. A large number of transactions are still being closed however it is becoming much more important for participants in the marketplace to be aware of current market trends and conditions. I recommend the following:
Sellers
- Get serious about preparing your home for sale – Inventory is high which means more competition. Your home should be clean, nice smelling, free of clutter and well priced relative to the comps in the area
- Price your home correctly – Know your competition and price your home accordingly.
- Hire a Realtor – A qualified and competent Realtor will save you time and money. Statistics continually show that homes listed with a Realtor have a much better chance of selling for more money and in a shorter period of time. Moreover, your liability is typically reduced, the necessary affiliates will be provided for you (i.e. inspectors, title companies, sub-contractors, etc.), marketing material will be provided and distributed for you and your audience will be dramatically and instantaneously increased.
- Track your progress weekly – Continually update the market analysis for your home and make adjustments accordingly
- Make your home available – It must be easy for Realtors and buyers to see your home. A lockbox is the best way to insure that your home will be shown even if you are unable to be there.
- Use your price to your advantage – Since you have priced your home correctly, you should not need to come off your price very much (if at all) at the negotiating table. When your price coincides with market data and the buyer’s offer does not, your negotiating position is strengthened.
Buyers
- Get pre-approved – Find a credible and qualified lender and obtain a letter of pre-approval. Many sellers will not pull their home off the market on behalf of a potentially unqualified buyer
- Study available loan products – Make sure that you are aware of the different loan products that are available to you. While many of them are no longer available, buyers still need to make sure that they are obtaining the loan that best suits their needs
- Ask the seller to buy down your rate – You will almost always save MUCH more money by having the seller buy down your rate rather than reducing the price (in many cases you can get both!). Go to www.lowpriceluxuryhomes.com to see how dramatic this strategy can be.
- Discover the seller’s motivation – There are opportunities for maximizing your negotiating position with regard to price and/or terms if you know the seller’s motivation
- Analyze market data prior to making an offer
- Find a Realtor – It typically doesn’t cost you anything to have an expert negotiate on your behalf! Plus, you will have access to much more and much better information.
Obviously, there are many other things that can be said about buyers and sellers and the real estate market. However, I thought that the aforementioned concepts may be helpful for you.
As always, please feel free to contact me with any questions.
-Patrick Krause
Owner/Principal Broker
Soldera Properties, Inc.
503.807.4430
pk@patrickkrause.com
