2010 outlook for Portland's housing market

What is our local housing market like right now?

The Portland metro area housing market is seeing signs of recovery. In January of 2009, we had over 19 months worth of housing inventory. We are now at about 7.7 months worth of inventory. Inventory is determined based on the current sales rate, how many months it would take to sell off all the homes currently on the market if no additional homes came on for sale.
 
We’ve seen a dip in pending home sales, as the 1^st time home buyer tax credit was expiring last fall. However, we are beginning to see folks coming back into the market to take advantage of the extension of that credit.

Prices are still dropping and for the year of 2009. Average home sales prices dropped 12.2% from 2008.  It’s still a buyer’s market, and we anticipate the market remaining relatively flat, moving through the first and second quarters.

What do you see as strengths and weaknesses as the new year begins?

I really see this as a tale of two markets.  The lower end of the market is actually pretty hot right now with first time home buyers competing with investors for properties that are foreclosures and bank owned. We are seeing many situations with multiple offers for properties under $250,000. However, the higher end of the market is still moving slowly as folks who would typically be “moving up” are not able to sell their current homes. There were over 160 $1million-plus homes sold in the Portland metro area last year, so it’s still possible to sell upper end homes, but they must be in great condition and priced right.

Are you seeing much investment activity?

Investors are in the market in a big way, taking advantage of the bargains out there along with foreclosures and short sales. Additionally, we are seeing strong first-time home buyer interest.  At our company, we’ve been seeing much more interest in selling than in the past six to 10 months and are beginning to work with sellers who don’t have to sell, but want to sell.

Are foreclosed and short sale homes still a hot commodity?

Yes!  We continue to have significant numbers in the Notices of Default – the first step towards the foreclosure process for a homeowner. That translates to many homes hitting the market as short sales. We’ve also seen an increase in the number of bank-owned properties coming on the market. There’s a lot of talk out there about the “shadow inventory” that banks are holding – homes that they have foreclosed on but haven’t yet put on the market to sell. That will continue to be a wildcard in the inventory and can have a detrimental impact on home values, should banks flood the market with them. Experts are saying that isn’t likely though, because banks want to maximize the dollars they get for those homes.

In local areas where values fell last year, is there reason to hope for improvement in 2010?

There is reason to hope!  We have some real pent-up demand for housing that no one is really paying attention to.  The Echo-boom Generation (the Baby Boomers’ kids) are all at that homebuying age – and there are six million more of them than there were boomers in 1970s.

According to conservative estimates, the number of households in the U.S. is expected to rise 1.25 million annually over the next 10 years. Because builders have not been building, essentially for the past three years, we are anticipating a housing shortage beginning in 2011 that could continue up to 10 years as this group establishes households.

What are interest rates like now?

Interest rates are still very low!

Should potential new homeowners try to take advantage of the First-time Home Buyer Tax Credit?

Yes, anyone who wants to be a homeowner should speak with a realtor to see if they qualify and how to get started. You must be in contract by April 30 and close escrow by June 30, 2010 in order to qualify.

How about those looking to move up?

Yes, there is also a tax credit of $6,500 available for homebuyers who have lived in their existing homes for five of the last eight years.
 
What is your advice for the average homeowner who wants to sell but is apprehensive about doing it now?

It depends on the home, price range and how much they owe. If they have good equity, we tell our clients they’ll have to “Sell low, buy lower”…Basically that they’ll get a great bargain on the buy side that will offset what they won’t get for their home. People always have many reasons for selling – growing families, job changes, financial changes and just wanting to move. Those reasons don’t go away just because we have a down market. You can still sell your home – it needs to be priced right and in good condition!

What is your advice for a potential buyer who is holding off?

What part of “Buyer’s Market” doesn’t work for you? Really, if you are in a position to buy, you absolutely should be buying. Even if you don’t qualify for the tax credit, we haven’t seen such a great market for buyers in years. Now is without a doubt the best time to buy.