Eugene RMLS Market Action Report – October 2009

The Regional Multiple Listing Service released October’s Market Action Report and the median sale price for October 2009 was $195,000 this is a 7% decrease from the median sale price for October 2008.

The Eugene residential real estate market peaked in June 2007 with a median sale price of $243,300. Prices have now fallen 20.0% from that peak.

Months of supply (total inventory/monthly sales) is at 6.2 months compared to the 9.2 months of supply for the same month last year. A balanced market has about 7 months of supply.

The first graph compares the median and average sale price with the months of supply. Click on any graph for a sharper image.

The second graph shows the total supply of homes available for sale. This is simply a calculation of the months closed sales multiplied by the months of supply. There are currently 1,946 homes for sale; this is a decrease of 16% from the same month the year before.

The third chart shows closed sales by month. There were 314 closed sales during the month; an increase of 25% from the same month the year before.

The fourth chart shows new listings by month. There were 503 new listings during the month; an increase of 11% from the same month the year before.

The final graph shows how affordable the median priced home is for a family of four. History indicates the ratio is usually between 2.5 and 3.0. Prices would have to fall 15% from the current median for the ratio to reach 3.0.

The rational behind my affordability ratios

With home prices falling and affordability increasing it probably is a good time to remind people how I calculate the affordability ratio.

I use median family income numbers from The U.S. Department of Housing & Urban Development (HUD). HUD doesn't list income levels for every metro area. According to HUD the income level for Portland is $70,000. When you compare the current median home price to the current median income you get a ratio of 3.5.

HUD doesn't publish data specifically for Vancouver so I use the Portland income level. Some will say wages are lower in Vancouver and I have no doubt there is some data to back up that argument but wages vary significantly on this side of the Columbia too.

Eugene's median income is listed as $57,200 and their ratio is 3.4.

HUD doesn't release new data at the beginning of the year so I've been using the 2008 HUD data for most of this year. I'll start using the 2009 data in November.

Some readers might say this ratio is overly simplistic and doesn't take interest rates or taxes into consideration. They might even have the courage to mention the NAR affordability index which reported affordability every month of the housing boom. I agree, this is a simple ratio and that is why it is more accurate than the NAR numbers.

Vancouver median priced home is now affordable

The Regional Multiple Listing Service released the Market Action Report this week and the median sale price for October 2009 was $200,000 this is a 14% decrease from the median sale price for October 2008.

The Vancouver residential real estate market peaked in July 2007 with a median sale price of $269,900. Prices have now fallen 26% from that peak.

Months of supply (total inventory/monthly sales) sits at 6.4 months compared to the 13.7 months of supply for the same month last year. A balanced market has about 7 months of supply.

The first graph compares the median and average sale price with the months of supply. Click on any graph for a sharper image.

The second graph shows the total supply of homes available for sale. This is simply a calculation of the months closed sales multiplied by the months of supply. There are currently 3,424 homes for sale; this is a decrease of 30% from the same month the year before.

The third chart shows closed sales by month. There were 535 closed sales during the month; an increase of 52% from the same month the year before.

The fourth chart shows new listings by month. There were 765 new listings during the month; a decrease of 13% from the same month the year before.

The final graph shows how affordable the median priced home is for a family of four. History indicates the ratio is usually between 2.5 and 3.0. The current ratio is 2.96 therefore homes are affordable again in Vancouver!

Portland RMLS Market Action Report – October 2009

The Regional Multiple Listing Service released the Market Action Report this week and the median sale price for October 2009 was $245,000; this is an 11% decrease from the median sale price for October 2008.

The Portland residential real estate market peaked in August 2007 with a median sale price of $302,000. Prices have now fallen 19% from that peak.

Months of supply (total inventory/monthly sales) sits at 6.5 months compared to the 11.1 months of supply for the same month last year. A balanced market has about 7 months of supply.

The first graph compares the median and average sale price with the months of supply. Click on any graph for a sharper image.

The second graph shows the total supply of homes available for sale. This is simply a calculation of the months closed sales multiplied by the months of supply. There are currently 13,058 homes for sale; this is a decrease of 20% from the same month the year before.

The third chart shows closed sales by month. There were 2,009 closed sales during the month; an increase of 37% from the same month the year before.

The fourth chart shows new listings by month. There were 3,443 new listings during the month; a decrease of 5% from the same month the year before.

The final graph shows how affordable the median priced home is for a family of four. History indicates the ratio is usually between 2.5 and 3.0. Prices would have to fall 17.0% from the current median for the ratio to reach 3.0.

Thank God we don't live in Detroit

From ABC News:

Nearly 3 in 10 residents of Detroit need a job.

The unemployment rate in the city of Detroit rose to 28.9 percent in July, the highest rate of unemployment since Michigan started keeping modern numbers, according to the Michigan Department of Labor, Energy, and Economic Growth.

113,008 people in Detroit are without jobs, 277,815 people are currently employed.

Despite news of an improving economy, many residents of Michigan haven't felt the impact of the nation's stimulus programs. The state of Michigan has the highest unemployment rate in the nation at 15 %. Other large cities in Michigan are extremely challenges as well. The city of Highland Park had a 36% unemployment rate in July, Pontiac 35 % and Flint 28 %.

Portland is down to 10.9% last month.

August Case-Shiller data shows improvement for Portland

The S&P Case-Shiller Index is based on observed changes in home prices. It is designed to measure the increases or decreases in the market value of residential real estate.

For each home sale transaction, a search is conducted to find information regarding any previous sale for the same house. If an earlier transaction is found, the two transactions are paired and are considered a “repeat sale.” Sales pairs are designed to yield the price change for the same house, while holding the quality and size of each house constant.

Sales pairs from the following counties are included in the Portland index: Clackamas, Columbia, Multnomah, Washington, Yamhill, Clark (WA), and Skamania (WA).

The first graph shows all historical data for Portland, Seattle, and the 10 city index. The Portland residential real estate market has fallen 12.6% in the last year.

The second graph highlights the changes since the Federal Reserve stopped lowering interest rates in June of 2003. The Portland index is currently at 148.51; a decline of 19.85% since the market peak. The last time the index was this low was June of 2005.

The final graph shows the year over year percent change since June of 2003.

It looks like Portland is following the national trend and might be bottoming out soon. There is some concern that the Case-Shiller data is not correctly adjusting for the positive seasonal trends so there might be some more negative news as the slow winter months get added to the graph.

Even if this isn't the exact bottom we are certainly closer to the bottom than the peak.

One month left to claim tax credit

From The Oregonian:

Boye Oshin is gambling with a bank to win $8,000.

The 24-year-old Intel engineer has tried since June to buy a three-bedroom Hillsboro home. But the seller is still waiting for approval from the lender who would lose money on the deal. The house is underwater with the seller owing more than it's worth.

Oshin, on the other hand, needs the deal to close by Nov. 30 to score an $8,000 federal tax credit for first-time buyers.

Can he make it?

That's anyone's guess.

Oshin joins a backlog of buyers trying to close a home purchase before the tax credit deadline.

Home purchases -- when there's not a single glitch -- can move as fast as a month from the date the seller accepts an offer to the date the deal closes. With the housing market in tatters and underwriters under pressure to scrutinize deals, most sales aren't moving that quickly. Most deals need 45 days or longer to close.

For those still hoping to get the credit, mortgage bankers and real estate brokers warn that buyers should have an offer accepted within days -- at the latest
...
The National Association of Realtors has estimated that about 1.8 to 2.0 million first-time buyers will use the credit this year. But of those, the group said, only about 350,000 are people who wouldn't have bought without the credit.

Based on the group's math, the true cost of the credit is not $8,000 per buyer. It's actually $43,000 per each net new buyer, according to an analysis by the financial blog Calculated Risk.
...
Rick McDowell, Oshin's real estate broker, expected the bank would decide within three months of making the offer in June. But they're still waiting for what the bank calls a "Phase 2" and final approval.

"It's a bureaucratic nightmare," McDowell said.

With weeks to go before the credit expires, Oshin reluctantly paid for an appraisal. If the deal fails, he'll have lost the $500 fee.

"When I think about potentially getting that $8,000, it's worth it," Oshin said.

The appraisal alone can take two weeks. New federal rules limit mortgage brokers' contact with appraisers. The goal is to prevent brokers from pressuring appraisers to issue a favorable report, but it also makes it more difficult for brokers to control how fast the work is done.

Emory, Oshin's mortgage banker, said: "He's going forward because it's the only chance he has of making it."

This isn't the first horror story about trying to buy a short sale. Most people who are racing the clock to get the $8,000 tax credit have passed on any 'third-party approval' properties because of the uncertainty involve. My guess is that Oshin will not get the home.