Thursday, April 30, 2009

A successful flip?

What defines a successful flip?

A reader made this comment on one of the earlier posts:

"I was poking around in NE this weekend and found a couple interesting recent high end flips that appeared to have worked.

1928 NE 26th. Paid $375K on 4/25/2008. Pending sale at $765K.

2028 NE Alameda. Paid $875K on 2/14/2007. Pending at $1,495,000.

3117 NE 32nd. Paid $270,000 on 4/2/2007 and closed for $785K on 2/19/2009.

These do seem to be the exception rather than the rule though. They are all well located (no busy streets, etc.) and the rehabs appear to be well done."
The house on 32nd was especially interesting. Take a look at the before photo:

And then the after photo:

Yes it's the same house, but it looks like 80% of it is new. They added up as well as out. Unfortunately I don't know who did the work.

On the surface it loks like a nice remodel, but something about the details stuck me as odd.

The kitchen is nice, if a little generic. I guess for 3/4 of a million I would expect a bit more.

But then I saw this room (I assume it's the dining room). The room just strikes me as odd. Personally one of my favorite features of old craftsman homes are these cabinets and columns that seperate the living and dining rooms. But seriously, what were the "architects" thinking here? Did someone screw up?

First off, why are the cabinets so small? They're perfect for showing off your fine china to your toddler. And the built in's in the back of the dining room? Not really built in, they look like generic home depot cabinets smacked on a wall. But the kicker is the columns. They don't reach the ceiling! That looks like a major goof to me, and I'm pretty sure the base cabinets were supposed to be a little bit bigger. Oops.

All in all, I'd expect a lot more for $785k. For the builder I think it was a successful flip, if not a slam dunk after all their costs. But for the buyer? I'd take the house at 3311 Tillamook over this one, and pocket the $200k difference. At least you're getting a real vintage craftsman foursquare with more pleasing proportions, old growth wood trim, a bigger house and a bigger lot.

These are real built-ins.

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Wednesday, April 29, 2009

Portland Existing Home Prices Drop 14.4% in February (updated with analysis) - Case Shiller

The February Case Shiller data was released yesterday and February's median price for an existing home in Portland was down 14.4% from February 2008. (click on any chart to expand it to readable size)

The monthly change was slightly better this month, only down 1.9% from January as compared to the 3% drop from December to January.

The median Portland home price is now down 19.1% from the peak in July 2007.

The chart above shows the price index for the past three years. You can clearly see that prices have now dropped well past the prices seen 3 years ago, and have hit levels not seen since July 2005.

The above chart shows growth rates for 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 very closely, still about a year behind the rest of the market.

While the price index continues to fall everywhere, the growth rate (or decline rate) for the 20-City index as well as for the San Francisco Bay Area markets appears to have reached an inflection point. We need a few more months of data before calling it a trend, but it looks like there are signs of a bottom approaching for the Bay Area as well as the rest of the country.

February is the first month where the price decline didn't set a new record for the SF Bay Area and for the overall 20 city index.

This chart shows the price index for the past 8 years. I also added a line in pink this month that represents an average of 5% growth starting in January 2001. You can see that the current price index is now below the 5% average growth line. An over-correction is to be expected, but we are also probably correcting to a more reasonable 3-4% long term growth rate, or about the rate of inflation.

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, until 2008. But as they say, past performance is no guarantee of future performance!

What else would you guys like to see? Any predictions on when/where we'll see the price bottom?

Please feel free to distribute these charts as long as you leave the footer!

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.

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Tuesday, April 28, 2009

Portland Existing Home Prices Drop 14.4% in February - Case Shiller

The Case Shiller data was released this morning, and Portland prices fell 14.4% in February, down 1.9% from January.

Full details and charts will be released later today Wednesday (work has been busy) when I get a break.

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Thursday, April 16, 2009

First Time Homeowner Fair

This was sent to me recently, and I thought someone might be interested.

NOte: I still wouldn't recommend anyone buy a house right now while prices are falling, unless you can find something that is seriously undervalued and plan on staying a long time. Don't even think about buying a house that costs more than 3x your annual income.

East Portland Homeownership Fair – New help for home buyers and home owners

What: East Portland Homeownership Fair

When: Saturday, April 18th from 10 am2 pm

Where: Kelly Elementary School, 9030 SE Cooper Street (south of Foster Road off 92nd Ave.)

Why: Giving E. PDX residents the tools they need to buy new homes & preserve the ones they've got

Notable: There will be a free raffle for a $4,000 Home Buyer’s Assistance Grant

More Info: Visit or call 503-788-8052

The homeownership landscape has changed enormously in the past year. But the demand for homes remains constant – particularly in East Portland, where diverse young families seek stable and secure places to build their lives.

With that in mind, ROSE Community Development and Kelly SUN Community School present the revamped East Portland Homeownership Fair, with more information available to more East Portlanders than ever.

This FREE event will be held on Saturday, April 18, from 10 a.m. - 2 p.m. at Kelly Elementary School, 9030 SE Cooper St. It is open to anyone interested in buying their own home, and homeowners who are interested in finding ways to maintain and preserve their home.

Lenders, Realtors, title companies, developers, home-buying counselors, businesses, and non-profit organizations will provide helpful information about their services and programs. Several of the workshops, such as “Homeownership Preservation”, “Should I Re-fi?”, and “Age in Place with a Reverse Mortgage”, will outline the steps for homeowners who are worried about foreclosure. In addition, there will be two “Ask the Experts” panels, with homeownership professionals answering questions from fair attendees about issues ranging from tax credits for homebuyers to foreclosure prevention and the various ways of financing a home purchase, as well as 3 other workshops for home buyers.

The highlight of the day will be the drawing for a $4,000 Home Buyer’s Assistance Grant to be given to a qualified potential homebuyer. In the first two years of the fair, grant-winners used their prize money to help purchase new homes within a year. For grant rules, visit

This will be the event’s fourth year at Kelly Elementary School. Originally known as the Lents Home Buying Fair, it was so successful that organizers decided to expand the fair through an extensive outreach campaign into all East Portland neighborhoods, with a particular emphasis on the David Douglas School District and east of 122nd Avenue.

ROSE has also worked hard to connect with East Portland’s growing immigrant population. The Fair will have interpreters for attendees who speak Spanish, Russian, Vietnamese, Cantonese, and Mandarin. In addition, there will be youth activities and a free lunch provided by Burgerville on a first-come, first-served basis.

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Median Home Price Drop 14% in March - RMLS

The March RMLS data was released this week, and there doesn't seem to be much sign of a recovery just yet.

Ignore the mainstream media comments about sales being up. They always rise in the spring, the real measure is of course how they compare to last year. And in that comparison things are bad. Even the RMLS was unusually stoic stating:

"Portland metro area market activity continued to grow over last month, but fell short of reaching March 2008 levels."

There were 1184 closed sales in March 2009, down 30% from March 2008.

Sales were up 28% from February 2009, but they were up 22% from Feb to March 2008, and I'm sure they were up a similar amount in 2007.

A couple other highlights:

The March 2009 median price was $246,400, down 14% from $286,500 in March 2008.

3685 new properties were listed in March 2009, down 28.5% from March 2008. This is the one bright spot, as new listings fell to their lowest level in 10 years, signaling that the glut of inventory might eventually start clearing up.

Total inventory dropped 8%, from 15,388 to 14,208 in March 2009. This also signals that the bottom might be coming, as inventories shrink prices will eventually stabilize.

Unfortunately prices are still dropping like a rock with no sign of letting up, which is all most folks really care about. And given our 12%+ unemployment rate I don't see things getting better anytime soon.

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