The mortgage rate freeze is a bad idea

I'm sure I'm not the only one - outside of those who took out mortgages they couldn't afford - who thinks the rate freeze bailout is a bad idea. Ignoring all the potential legal issues with the plan, or the fact that it might be impossible to actually define who will be helped, this basically amounts to a bailout for those that made a poor decision.

I certainly didn't get any help 5 years ago when some of my internet stocks crashed. That's not nearly as heart-wrenching as watching little Johnny lose his house because his parents bought a house they couldn't afford with a mortgage that shouldn't have existed in the first place.

I hope the bailout gets tossed out in court. As painful as it might be for everybody, letting the market correct itself is the best way to go. If we don't get the bad loans off the books, we'll be in the same situation that Japan was in 20 years ago. And I'm sure nobody wants that.

Portland home prices will fall soon

Take a look at the latest S&P/Case Shiller Index for Portland. Although it looks like Portland is still in good shape, with 2.75% price appreciation year over year, if you look at the chart near the bottom of the page it's obvious that the trend is going to go negative soon.

This is also August data, well before the mortgage industry had it's major convulsions.

I predict price growth in Portland will go negative before March 2008. Anyone else care to make a prediction?

Three types of sellers

After watching the market soften for the past few months, I have seen three types of sellers emerge.

1. The ostriches, who have their heads in the sand and can't figure out why their overpriced house has been on the market for 6 months.

2. The optimists, who might initially overprice their homes, but then quickly move to correct the price and start getting interest.

3. The realists, who price their house at or below recent sales prices, and sell quickly.

I have seen plenty of houses sell in one day, or in a few weeks. But more often than not these days I see the first two types of sellers.

In our own experience, we recently we involved in a minor bidding war for a duplex in a great neighborhood. We loved the location, but the duplex needed a few significant repairs to be rentable. We tried to negotiate with the sellers, but they flat out refused, claiming that the second offer would buy it at the same price "as is". As many times as our Realtor mentioned that their "as is" offer included an inspection clause, and therefore wasn't really "as is", he wouldn't budge. So we walked. And a few days later the second "as is" offer walked. And the duplex went back on the market. One of those significant repairs is now being addressed, and I look forward to seeing the final selling price.

If you want to sell quickly these days, price your house under recent comps. I'm expecting a decline in prices, even here in Portland, so I'm not going to pay your inflated price when I know I can wait for something more reasonably priced.

Portland housing inventory continues to rise

Inventory is up another 0.6% this week, to a high of 20,643 single family homes and condos. I imagine the inventory will continue to rise for a few more weeks, until sellers start pulling their homes off the market and hope for better luck in the spring. I'd like to know if this is an all time high for Portland, for the nation as a whole we're at an 18 year high, which corresponds to the last major real estate recession from the early 90's when prices went flat for six! years.

Introductions

Hello! My name is Ian, and my wife and I recently relocated to Portland from Stuttgart, Germany. We loved living in Germany, and so far we've loved Portland even more! When we arrived here in November we decided to rent a house so we could explore the different Portland neighborhoods. We were taking the risk that home prices would continue to rise, but we figured that was better than buying a house in a neighborhood that we didn't like.

And boy are we glad we didn't buy last year!

It's been a crazy 10 months as we've unpacked, settled in and started exploring restaurants in the Hawthorne, Belmont, Alberta, Hollywood and other neighborhoods. We've surfed real estate web sites, drooled over all the beautiful craftsman houses and bungalows in town, and tried to pick one neighborhood over the other. We've also been frustrated by the crazy price increases that Portland has seen in the past few years, and wonder if we'll really be able to find a house we really like, that we can also afford.

But then a funny thing happened. As spring sprung, houses started to pop up, and up, and up and suddenly in seemed like every other house in Portland was for sale. And then prices started to fall. And then the mortgage industry imploded. And suddenly there was hope that we'd find a good deal after all. So stay tuned for my "outsider" view of the Portland market as we try to find the perfect duplex to live in for the next few years!