What's an Unfinished Attic Worth?

A reader sent this in:

"So I get these email alerts when new things pop up in certain areas within certain price ranges.

http://christine-anderson.com/8113219

It says the seller is a licensed realtor. I checked Portland maps (which lists 964 sf as opposed to the 2,264sf on the listing) [ed - of course!] to see when it was last sold. However, there is no information listed there. I have been noticing this recently and I was wondering if you knew why it would sometimes not display the last time a house was sold (and for how much)?

It seems a mystery to me. Also, since they're clearly including the finished attic but there is no permit and pmaps indicates that it is unfinished, does that mean that all work was done without permits?"

My take on a lack of previous sale information is that the house last sold before Portland started putting all it's records online, around 2000 I believe.

If you're seriously interested in a house a Realtor should be able to dig that up for you, or you can go down to the city and look up past records.

As for the attic, I bet it was finished years ago without a permit. If it's not specifically listed as finished space then it was likely not permitted, or inspected. The work might be fine, or it might be a fire-hazard just waiting for your mega-watt hair dryer and space heater to both be plugged into the same circuit.

If it was me I would consider the attic "semi-finished" space, not worth the same value as properly-finished space, but worth a bit more than unfinished space. Assuming you don't need to rip out the entire second floor and start over. In which case it's worth LESS than unfinished space to account for extra demolition work.

When I'm comparing houses I use a basic formula to translate unfinished space into finished space, to make it easier to compare apples to apples. I assume unfinished space is equal to half the same finished space, assuming it can be finished (no 6 ft ceilings, at least for me) because it costs less to finish a basement than to add on a new wing or add another story to a house.

So for this house:

Finished space: 964 sq ft
Unfinished space: 1300 sq ft (assume all of the basement could be finished)
Calculated finished space: 1714 sq ft (964 + 1/2*1300)

Estimated price / sq ft = $325,000 / 1714 = $189.6 / sq ft

Now it's easier for me to compare different houses on the same level.

I also like to compare the averages with the stats on Trulia. I believe Trulia uses the assessor data, so to compare this house you'd use the 964 sq ft figure for an average of $337 / sq ft. WAY overpriced in my opinion, even if the house is cute (which it is).

These are a couple of tricks I use to bring the discussion back to facts and data and get past the emotional and cute factor.

Good luck with your search!

Ian

(Got a question about a house you're interested in? Send me an email and I'll let you know what I think.)

The Next Wave is About to Crash

60 Minutes recently ran a piece about the next wave of loans that will soon go bad. The orange peak to the left above above are the subprime mortages that have reset recently and forced many into bankruptcy.

The greenish peak to the right are the Alt-A and Option loans that are starting to reset.

Portland has a number of these loans, which were used to buy all sorts of property, including high end property. These aren't buyer's with bad credit, but rather buyer's who bought more house that they could afford assuming they could refinance into 30 year fixed loans once their home value appreciated another 20% in a year.

Some of these loans had options that didn't pay off any of the principle, these are now starting to reset as they typically contain a clause (that most didn't read) that says that the principle must be paid down when it reached 110% of the original amount.

Other loans had low teaser rates (as low as 3% for some) that are now resetting to 6% or higher, doubling the payment.

I remember a Portland couple was featured in Money magazine last year. They had just bought a 700k house, on about $100k income, using one of these loans. (If they had used a conventional 30 year fixed at 6% their PITI would be about $3700 a month, or 44% of monthly income for someone earning $100k a year. So no they really can't afford this house) One of them was staying home to raise their child, the other worked. They had planned to refinance once the value went up, I assume now that they will be defaulting, or the second person will be going back to work soon.

It's only going to get worse here folks, and according to the recent RMLS data it is already getting worse quickly.

Click here to watch the full piece.

Thanks to Greg for the tip.

Portland Market gets Fugly - 15 Months of Inventory!

The November RMLS report was released a few days ago, and it's ever worse than this pessimist expected.

Median prices are down 7% from Nov 07 to Nov 08 to $265k

The average price is down 11% from Nov 07 to Nov 08 to $308k

Closed sales are down 40% to 1041, the lowest level since Feb 1993

Months of inventory spiked almost 40% to 15 months - this might be an all time record

Total market time is now 135 days = about 4.5 months

My initial analysis says that the drop in closed sales is the result of the credit market, which isn't going to be better anytime soon. So unless people start saving more (right, anybody seen their portfolios recently?) or prices drop to the point that people don't need to borrow as much, sales will remain slow and inventory high.

Real Estate Brokers = Expert Advice?

Ryan Frank has an interesting piece on Happy Valley, or "Foreclosure Valley" in the Oregonian today.

One part of the story featres the Andersons, an older couple who speculated on a $600+k house in Happy Valley and lost over $100k. That sounds like less than a 20% loss until you realize that they didn't put any money down, so it's a 100% loss. At least they cut their losses, unlike lots of others out there still holding out hope for a quick rebound.

The best line of the story though was this:

"She says she should have hired her own real estate broker for expert advice. "That was our mistake. My mistake," Aloma says, hanging her head, blinking back tears."

Expert advice? The same Realtors who didn't believe Portland prices would drop? The same Realtors who only get paid on a sale, so of course it's a good time to buy!

No Aloma, your mistake was not looking at reality and realizing that growth had peaked and was declining, that the party was over. But don't beat yourself up too badly, that data was nearly impossible to find in 2006. At least today it's not.

Home Builder Association Annual Forecast Today!

The Home Builders Association or Metro Portland is holding its annual forecast meeting today.

I assume the intended audience is home builders and those in the trade, but the comment on the last slide of this presentation that we've hit bottom is interesting, especially as the next comment is that "pricing may still erode".

For those that are in the market for an existing, or new home, this really means that the market has not bottomed for sellers or buyers, but rather it can't get much worse for builders, as we're at a 20+ year low this month for new housing starts.

Lots of interesting data in the presentations, although without the commentary it's hard to know what they're trying to show in each slide. Other than "it's bad, it's really (*&%$ bad!"

But let's hit a few highlights:

Employment growth is negative
Manufacturing and construction jobs are down 5% and 10% respectively
New residential building permits are down 40% from last year
Unemployment is up
New migration to Portland is still positive
Condo inventory is over 15 months of supply
East Portland is doing better than all other Portland regions, with only 7.5 months of supply
The national homeowner vacancy rate has nearly doubled over the past few years

The presentations are interesting, but nothing really new or suprising for those following this blog.

Oh, and props to Clint for having his work poached for the presentation.

Thanks to Hallie for the link!

4.5% Mortgage Rates?

Apparently the treasury department is weighing action to lower mortgage rates to 4.5% in an effort to jump start the housing market, with a few restrictions of course.

As I heard the proposal this morning, it would be for new loans only, not refinancing.

Would 4.5% cause anybody out there to buy now in Portland? Even knowing you'd likely lose money if you had to sell in less than 2-3 years?

Thanks to eln for the link.

Portland Existing Home Prices Drop 8.6% in September - Case Shiller

The median price of existing homes in the metro Portland area fell 8.6 % year over year in September 2008 according to Case Shiller, continuing the trend that began in July 2007. This is now down 9.0% from the peak in July 2007, wiping out any gains made since March 2006.

The index also fell 1.3% from August to September. The slight month over month gains we saw over the summer have now reversed and the monthly decline is accelerating.

The chart above clearly shows that there was definitely a bubble in Portland, and it is now deflating.

Last year in one of my first posts I predicted that price appreciation would go negative before March 2008, and looking back it looks like I was right.
The chart above shows the price index, and you can clearly see the bubble forming in 2004, accelerate in 2005 and then start to slow in 2006.

Last month I predicted that prices will be down 9% by the end of the year (down from my 10% estimate a few months back).

The above chart shows Portland, Seattle, the San Francisco bay area (the other areas I consider as closest to Portland) as well as the 20-city composite index. Portland and Seattle are tracking each other nicely, still about a year behind the rest of the market. While the 20 city index has started to flatten out the San Francisco Bay area has really fallen off the cliff and continues to plummet.
This chart shows the price index for the past 8 years. I also added a line (the light grey line) that represents 5% growth starting in September 2000. You can see that the current price index is still well above the 5% growth line, indicating that we still have a ways to go before prices fall back in line with historic averages. I'm predicting prices won't be back to historic norms until late 2009, but even then if the economy is still in the toilet I wouldn't expect growth to suddenly accelerate.

This chart shows the previous bubble in the early 90's, and also shows that Portland prices had never dropped over the past 20 years. But as they say, past performance is no guarantee of future performance!

ABOUT CASE SHILLER:
The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States. These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family home re-sales, capturing re-sold sale prices to form sale pairs. This index family consists of 20 regional indices and two composite indices as aggregates of the regions.

Portland Existing Home Prices Drop 8.6% in September - Case Shiller

The median price of existing homes in the metro Portland area fell 8.6 % year over year in September 2008 according to Case Shiller, continuing the trend that began in July 2007. This is now down 9.0% from the peak in July 2007, wiping out any gains made since March 2006.

The index also fell 1.3% from August to September. The slight month over month gains we saw over the summer have now reversed and the monthly decline is accelerating.

I will post the charts later today. Stay tuned!

Lair Hill - 30% off!

A reader sent this one in. RMLS # 8101965 It's now listed for $299k, down from $429k. That's quite the discount - over 30%. I have to wonder if the $429k price was just wishful thinking, or a marketing ploy to make it look like a big discount. Anybody know this area and care to speculate? At the current price it's going for $200 / sq ft, less than the median $247 / sq ft for zip code 97239 according to Trulia. Then again the interior is pretty generic 90's bland, and it's an attached house, so I would expect a lower comp.

And for those who have been wondering why it's been so quiet here lately, well, it's been a crazy month. My parents were in town for a week, then I was back in Michigan celebrating my mom's retirement, and on the way back I picked up some nasty bug that had me in bed for 2 days. After catching up on work from all that the blog just didn't get much love. But please keep sending in your finds, rumors and questions and I will post them as quickly as I can!

Cheers!
Ian

Portland Median Existing Home Prices Continue to Slide - Down 7.6% YoY (Case Shiller)

The median price of existing homes in the metro Portland area fell 7.6 % year over year in August 2008 according to Case Shiller, continuing the trend that began in July 2007. This is down 7.8% from the peak in July 2007, wiping out any gains made since April 2006.

The index fell 1.3% from July to August. The slight month over month gains we saw over the summer have now reversed and the decline is accelerating.

The chart above clearly shows that there was definitely a bubble in Portland, and it is now deflating.

Last year in one of my first posts I predicted that price appreciation would go negative before March 2008, and looking back it looks like I was right.

The chart above shows the price index, and you can clearly see the bubble forming in 2004, accelerate in 2005 and then start to slow in 2006.

I am now predicting that prices will be down 9% by the end of the year (down from my 10% estimate a few months back).

The above chart shows Portland, Seattle, the San Francisco bay area (the other areas I consider as closest to Portland) as well as the 20-city composite index. Portland and Seattle are tracking each other nicely, still about a year behind the rest of the market. While the 20 city index has started to flatten out the San Francisco Bay area has really fallen off the cliff and continues to plummet.
This chart above shows the price index for the past three years. You can more clearly see the seaonality, as well as the fact that prices are back to April 2006 levels and dropping.

This chart shows the previous bubble in the early 90's, and also shows that Portland prices had never dropped over the past 20 years. But as they say, past performance is no guarantee of future performance!

(EDIT) - I have added the charts and more analysis. Sorry for the delay, I lost the post a few times and had to find the time to recreate it.


ABOUT CASE SHILLER:
The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States. These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family home re-sales, capturing re-sold sale prices to form sale pairs. This index family consists of 20 regional indices and two composite indices as aggregates of the regions.

Double Check Those School Districts

I've seen a lot of listings with mislabeled school districts. This can obviously affect the price of a house considerably, and lead to major disappointment if you're looking for a specific school.

Before you get serious about any property you're looking at (at least in Portland) run the address through the Portland School District website (here) to confirm where it sits today.

I know the boundaries have changed considerably recently and will likely continue to change, but frankly I wouldn't trust anything in the listings as they seem to be wrong more than right in my experience.

The post below is a classic example. I can't prove it was mislabeled incorrectly on purpose, but it wouldn't surprise me as Grant is ranked higher than Jefferson in recent school ratings.

I have also added a link to the Buyer's Resources to the right for future reference.

Update - 5421 NE 25th Back on Market, now $319k

Back in July this little gem was on the market for $129k. It sold for $165k to a couple from West Linn, who have re-muddled it and put it back on the market for $319k$304k. (RMLS# 8099354)

It was in pretty rough shape back in July, this info was provided by Ron Ares: "Approach w/ caution, unstable flooring. Property will not qualify for conventional financing. " Ouch.

It has also had an interesting sales history:

07/29/2008	SW(Bank Sale)	2008112745	$165,000.00
06/23/2008	TR(Foreclosure Auction)	2008095071	$182,628.00
08/29/2006	SH (?)	2006171253	$45,341.00
04/27/2006	WARRANTY DEED	2006078573	$251,000.00
12/17/2001	SW(bank sale)	2002014876	$18,100.00

Here's a photo of the house as it sits today:

A couple things I noticed looking at the distorted photos (come on folks, don't you have someone in the office that can upload these things so they don't look like you're in looking in a funhouse mirror?) First, they put the new electrical service right smack dab on the front of the house. Would it have cost much more to keep it on the side as it was originally, so it's not sitting like a pimple on the house's face?

Second, check out that door opening? I'm all for open floor plans, but couldn't they do it without a big pillar in the opening? That just screams poor planning.

I'm also pretty sure those are not the "original hardwood floors" as advertised. I could be wrong, but when I see them stained that dark I assume they're trying to hide something. These look new to me based on the width.

To their credit the work was actually permitted.

At the current asking price that's a steep $282k per square foot. Pretty steep in this market, at that location. Good luck!

Thanks to Will for the update! Please keep them coming folks, if you're in the market or just see an interesting house, bad remuddle, outrageous flips, etc. send me the info and I'd be glad to feature it here.

Foreclosures Double in Portland

(Karen Rider (foreground), an agent for a trustee sale officer, conducts an auction of foreclosed homes on the Multnomah County Courthouse steps just inside the building. Photo from the Portald Tribune)

In what should be no surprise to the readers of this blog (since I have covered it previously here), the Portland Tribune reports that foreclosures have doubled in the past year in the Portland area. In August 2007 Portland ranked 332nd out of the 383 largest metropolitan areas. By August 2008 we've moved up to 254th. (source: First American CoreLogic). Over 300 Multnomah county residents have been hit with foreclosure notices, surpassing the peak from the 2001-2002 recession.

Portland is no real-estate basket case like Las Vegas or Phoenix. But the national foreclosure crisis that initially spared Portland has arrived here in a big way, bringing more human suffering and dampening housing prices.

The number of Multnomah County residents in jeopardy of losing their homes has nearly doubled in the last year, based on the number immersed in foreclosure proceedings. Over the spring and summer, 300 Multnomah County homeowners a month got slapped with foreclosure notices – topping the peak levels reached in the last recession of 2001-02.

In August 2007, the Portland area had an enviable 332nd-highest foreclosure rating among the nation’s 383 metropolitan areas. But by August 2008, Portland jumped to 254th-highest, according to First American CoreLogic, which provides real estate data services.

“There’s a shakeout right now, and we’re failing on all cylinders,” said Portland real estate economist Jerry Johnson.

Portland took longer than most cities to emerge from the last recession and didn’t get as overbuilt as other markets, Johnson said.

But Portland home prices kept rising during the last recession, he noted. If banks and besieged homeowners try to dump too many discounted properties, he said, “you could swamp the market and kill the guys who are OK.”

Home prices are sliding in large swaths of the metro area, especially in overbuilt sectors such as Portland’s condo market and suburban Happy Valley. In early October, in the 97086 ZIP code that includes Happy Valley, there were 247 homeowners facing foreclosure on top of 95 homes seized by banks, according to VisionCore, a division of First American CoreLogic.

I encourage you to find the print version if you can, the charts in the print version are not included in the online version. Here are a few stats on the number of foreclosure notices by zip code for 2008:

West
97201: 21
97209: 52
97210: 17
97221: 13

North
97203: 121
97217: 128

NE
97211: 123
97212: 55
97213: 59
97230: 115

SE
97214: 29
97215: 39
97202: 58
97206: 178
97266: 202
97236: 194

So far the foreclosures seem to be hitting the North and the outer NE and SE the worst, which is not surprising given that on average those areas have lower incomes and owners are more likely to be one unfortunate incident away from financial ruin.

I will continue to look for more local data, this is the first data I have seen by zipcode, provided by First American CoreLogic.

Offtopic: Outraged Lehman Brothers' employees blockade the corporate headquarters

"Party inside the spacious living room..."

From the "truth is stranger than fiction file" comes this reader sighting (RMLS #8058002). The actual listing text is below:

Party inside the spacious living room or on the covered patio; great place to invite friends over for good times. Two cozy fireplaces w/ gas inserts. Large brick barbecue in fenced back yard. Lots of new double paned windows w/ vinyl frames, new oak laminate flooring in living room. new roof on garage. lots of extras.

There are 6 photos posted, and the last one is this:


Damn, those are some serious party animals. I'd LOVE to party with them. Knowing how much fun can be had in this house will DEFINITELY help it sell.

One Problem We Aren't Facing

This isn't strictly Portland related, but I thought you guys might be interested.

We had dinner with a friend from Boston who's been watching the housing market there, waiting for prices to drop to the point where they can afford something (patience...) and she had a great story.

Apparently there are so many houses that went into foreclosure, or were bought back by banks last winter, and ended up sitting vacant over the winter. The banks would turn down or turn off the heat to save money, and of course the pipes would freeze and burst. SHe has seen a number of houses that at a minimum have holes in the floor from water damage, and in the worst cases have developed nasty cases of mold.

I can't imagine that banks did this intentionally, but it speaks to the volume of properties that they must be dealing with, overwhelming their reduced staff.

Luckily we shouldn't have that problem here. But I have been seeing more and more houses that look like they've been empty for a while.

10% off Any House Nationwide! - Except Portland

This truly smacks of desperation. As featured in the Portland Business Journal, "NW markets just say no" Caldwell Banker is trying to run a national promotion for 10% off any house listed with them. However the PNW STILL thinks that we are immune, and not in as bad a shape as the rest of the country, even as prices have dropped over 7% and continue to fall.

"The Portland and Seattle affiliates of Coldwell Banker Corp. are refusing to participate in a nationwide sales promotion designed to push the housing market past the “tipping point” to recovery.

Starting today, Parsippany, N.J.-based Coldwell Banker is pushing a 10-day sales event, boasting 10 percent discounts on the price for homes listed for sale with Coldwell Banker affiliates. The campaign is being promoted nationwide, leading to confusion in markets where franchisees are refusing to participate.

In the Northwest, Coldwell Banker affiliates in both Portland and Seattle say the “sale” undercuts the role of professional agents and aren’t participating. Not only must agents take a cut in commission, but sellers receive 10 percent less than their asking price.

Gail Fisher, president of Coldwell Banker Barbara Sue Seal Properties, which has about 440 agents in the Portland area, said the national sales event is inappropriate.

“We feel that every situation for pricing for a property is very individual,” she said. “I feel it sells short the services we have to offer for our clients.”

An across-the-board 10 percent price cut isn’t right for every property and ignores the professional skills agents bring to the table when they list homes and work with sellers to set realistic prices."

There are so many things wrong with the story I don't know where to start. But I'll try.

"Starting today, Parsippany, N.J.-based Coldwell Banker is pushing a 10-day sales event, boasting 10 percent discounts on the price for homes listed for sale with Coldwell Banker affiliates. The campaign is being promoted nationwide, leading to confusion in markets where franchisees are refusing to participate."

First off, from a marketing perspective, if it's being promoted as a national promotion, it truly has to be a national promotion. Consumers aren't stupid, they can see through false claims. And you'll need a lot more than 10 days to blow out the 9+ months of inventory we're currently sitting on.

"In the Northwest, Coldwell Banker affiliates in both Portland and Seattle say the “sale” undercuts the role of professional agents and aren’t participating. Not only must agents take a cut in commission, but sellers receive 10 percent less than their asking price."

Here are the two big issues. Sellers still haven't accepted the new pricing rules, and are chasing the market down. Realtors can't do the math that says that any sale at any price is better than none, or Anything > Zero.

“We feel that every situation for pricing for a property is very individual,” she said. “I feel it sells short the services we have to offer for our clients.”

An across-the-board 10 percent price cut isn’t right for every property and ignores the professional skills agents bring to the table when they list homes and work with sellers to set realistic prices."

So Gail, just how successful have you been when it comes to setting realistic prices? If prices were set properly we wouldn't be sitting on 9 months of inventory right?

"However, Fisher said the Northwest housing market has not stalled to the same degree as the more bubble-prone regions of the country, namely Florida and California. A sale might work in a market where prices have collapsed."

Sigh, still repeating the "we didn't have a bubble mantra" Gail? For anybody that still thinks we didn't experience a bubble, here once again is proof that we did. And while the PNW is late to the party, we're definitely at the party now.

"In Metro Portland, the median price of homes sold in August was $280,000, down about 7.3 percent from this time a year ago, according to the Regional Multiple Listing Service. Any drop in price results in a corresponding drop in the commission paid to the agents who broker the eventual sale."

This comment hides the real issue. While prices are only down 7%, sales are down over 30%, so total commissions are down over 35%. Look at what's happening to the auto industry with 30% drop in sales and you'll understand why real estate agents are freaking out. Many are making no money, and the rest are making much less. Only a few creative real estate agents who saw the impending meltdown and have changed their strategy are making any more money.

"In a video explaining the sales event, Jim Gillespie, president and chief executive officer of Coldwell Banker Co., said the event will help bring about a recovery in the housing market and help buyers take advantage of a new $7,500 tax credit available for first-time home buyers. The event will help move the market over the “tipping point” to recovery, he said."

Again, just so everyone knows, that $7500 tax "credit" is actually an interest free loan that you much pay back over 10 years. We I can't lie with my marketing but the government can is still beyond me.

"A survey of Coldwell Banker agents in the United States found that 56 percent think prices in their market are too high and that 77 percent believe their sellers have unrealistic expectations about the value of their homes.

Nearly 80 percent said when homes are priced appropriately, they attract buyers and sell faster."

Homes will not only need to be priced right, but buyers will actually need to have a real income and a real deposit. And banks will need to have access to credit to be able to offer loans. We have a long way to go before all that happens.

Thanks to Portland Gentrification for the link.

Wells Fargo Jumbo Rates Over 9%

I haven't been tracking rates lately, and certainly not jumbo rates, but I'm pretty sure this is a pretty major jump.

This isn't going to help anybody sell those high end properties anytime soon.

Chicago Cop Won't Evict Renters

A local sheriff in Cook County Illinois has decided not to evict renters that are evicted when their landlord falls behind on the mortgage.

"CHICAGO - The sheriff here said Wednesday that he's ordering his deputies to stop evicting people from foreclosed properties because many people his office has helped throw out on the street are renters who did nothing wrong.

"We will no longer be a party to something that's so unjust," a visibly angry Cook County Sheriff Tom Dart said at a news conference.

"We have to be sure that when we are doing this — and we are destroying some people's lives — we better be darned sure we're talking about the right people," Dart said.

Dart said he believes he's the first sheriff in a major metropolitan area to stop participating in foreclosure evictions, and the publisher of a national foreclosure database said he's probably right."

Good for this guy. He might go to jail for it, but it's nice to see someone doing something positive these days. If the banks were smart they'd try to sell the house to the renters instead of taking it back.

Portland Median Existing Home Prices Slip Again - Down 6.6% YoY (Case Shiller)

The median price of existing homes in the metro Portland area fell 6.6% year over year in July 2008 according to Case Shiller, continuing the trend that began in July 2007. This is down 6.6% from the peak in July 2007. The month over month declines are also accelerating, as the index dropped 0.5% from June to July 08, vs. 0.3% from May to June.

I'll post the charts later today.

Open Thread - Vacation Time

We're off for a little vacation to visit family, so here's an open thread for y'all to discuss the latest Wall St. meltdown or whatever else you feel like. Catch you in a few days!

Portland Market Dashboard - New Feature

This is something I've been thinking about for a number of months, and finally got around to putting together. It's a dashboard that shows which direction the Portland market is heading, based on a number of leading indicators. We use the same basic format at the company I work for to track the business (sales, inventory, revenue, units, etc)

There are a number of leading indicators that drive the increases or decreases in housing prices. They basically come down to supply and demand. Supply being the number of homes on the market, demand being the number of qualified, able buyers.

The top part of the chart shows the leading indicators, the bottom half shows the lagging indicators, or the results.

I will keep refining this and adding to it monthly and with it we should be able to predict when the market has hit bottom and is ready to rebound. I don't believe you can predict the bottom of the stock market, but I think we can predict the bottom of the housing market relatively easily. What will be harder to predict is how much prices lag the bottom, and when things actually pick up. We might bounce along the bottom for a looong time.

Portland Median Prices down 6.7% in August - RMLS Market Action

RMLS released their August sales data and in what shouldn't be a surprise at this point, median Portland prices continue to decline, falling 6.7% in August compared to last year. Average prices are also declining, falling 9.7% compared to August last year.

One major change to note is that the RMLS is now reporting the total time a property has been on the market, not just the most recent time since a re-listing. The change from 56 days to 121 days is largely due to this change, although some increase is due to more properties on the market and fewer buyers. This should help reduce the number of re-listings as re-listing a property will no longer reset it's time on the market, unless the property is off the market for over 30 days. Charles Turner talks about this in more detail on his blog.

Inventory in Months seems to have stabilized around 10 months of supply. I believe a "normal" market should be between 3-6 months of supply, but this is a metric that seems to change regularly.

The above chart also shows changes in th emarket by sub-region. This shows that some areas such as North Portland and NE Portland are holding up a bit better than areas such as Milwaukie/Clackamas. However take this data with a serious grain of salt, this is 12 month rolling data, not monthly data, so any significant changes are still being masked and areas such as N and NE Portland might be negative Year over Year, but won't show up for a few more months.

I'd love to see the RMLS report their data monthly instead of a 12 month rolling average. I bet it changes once the market picks up, as they'll want to highlight the increase. I'd like to see the change now.

Free Fall Friday - 5219 SE Belmont St now $999k

Sent in by a reader:

"There's a pretty interesting house on Belmont Street on the lower slopes of Mt Tabor (5219 SE Belmont). MLS# 8088100.

It was purchased in June 2004 for $1.14 million. It's been listed several times since then, first (without a sign, but on the MLS) for something like $1.85 million, then a long period where I think it started at $1.5 million and dropped by degrees. I didn't keep track of the exact numbers. This summer there was an "estate" sale, and the lawn turned brown, a bad sign because the owner was a Willamette Week "Hydro Hog" in 2006 (http://wweek.com/editorial/3247/8039/) who disparaged his neighbors' brown lawns. Now I see that the owner since July is Deutsche Bank Trust which seems to have "paid" $1.3 million for it. Is that a foreclosure? [Yes, that means that was the loan balance and nobody bought it at auction so it went back to DB.]

It's for sale for $999,000, I went through it in 2004 and I'd say it's a lot of house for a million dollars. The current listing really sells it short, as It's formally known as the "Blaine Smith House" and was designed by Ellis Lawrence, a renowned Oregon architect who founded the School of Architecture at U of O and designed many of the buildings on campus. It was a lot better deal in 2004, though, as a historic property tax exemption ran out last year and the taxes went from $2,900 to $19,500, the assessor's Real Market Value being a whopping $1,735,990.

Schadenfreude bonus: The last owner was apparently a mortgage broker."

Trulia lists it as a 7 bedroom, 5 1/2 bath and 6700+ sq ft on a 27,000 sq ft lot, so yeah it is a lot for $1,000,000. It also has 3 kitchens I believe, which I guess is handy if you're hungry and don't want to walk a 1/4 mile to the main kitchen.

It's a beautiful house on a huge lot, I just wouldn't want to heat it. Or water the lawn.

Thanks for the tip Tom, keep them coming everybody!

Update - Hokoya Lofts Now for Rent!

John points out that the Hokoya Lofts featured in a previous post "Hokoya Lofts - N. Williams" are also now for rent for $1750/ month. Craigslist Posting

So I plugged it into the Rent vs. Buy calculator...

You could pay $21k per year, with probably $5k in upfront costs to rent the loft. Or pay $24k per year to own it, with $65k up front. And take on all the risk of the market decline (or increase!).

Here's the listing in case the craigslist listing gets pulled:

$1750 / 2br - Be the first to live in this beautifully designed building (Portland) (map)

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The building is centrally located a short distance to several North and Northeast Portland retail areas including the Mississippi Historic district and Alberta Street. Major connector streets to downtown, Northwest Portland and freeway entrances to I-5 and I84 are within blocks. MAX light-rail train on Interstate Avenue is minutes away as is Portland Community College campus.

The units include floor to ceiling double sliding glass doors to connect the kitchen and living space to the private front alleyway, making the space feel larger while providing a place to dine or relax just outside your door. An aluminum grate floor above the first floor, allows light to reach farther into the ground floor while encouraging airflow up through the entire unit. The second floor is one large light filled space with a smaller bedroom or office space on the north side. The third floor master bedroom has a floor to ceiling window with an etched lower section for privacy and a large closet along one end.

Also available are 2 Live/Work units with ground floor retail space. http://portland.craigslist.org/mlt/off/835690122.html (office & commercial) for information.