South Waterfront part 2 takes shape

From the Oregonian:

Portland has grand plans for the second phase of high-rise development in the South Waterfront district. But those plans will come with a grand cost. The city projects that a single road project will cost the public $66.5 million. That road -- six-tenths of a mile on Moody Avenue -- is far more than asphalt. It's a new pair of streetcar tracks, new utility piping and new bike lanes. All of that will rise up to 14 feet higher than the existing Moody Avenue to get above the flood plain and accommodate a light-rail line on its way to Milwaukie. City leaders, in a pitch for U.S. economic recovery grants, said the work would unlock prime riverfront land to new development and potentially growing companies. The project has regional benefits of corralling growth, cutting carbon emissions and expanding streetcar capacity to other neighborhoods, Portland officials believe.
"This is what will produce livable communities," said Art Pearce, senior project manager in the city's transportation office.
The Moody Avenue project is part of a $78 million effort to spark redevelopment in an area the city calls the "Innovation Quadrant." The area runs from Portland State University to Oregon Health & Science University to South Waterfront and across the river to OMSI.

The Innovation Quadrant? Seriously!?

2356 NW Hoyt is sold

Charles Turner's flip project at 2356 NW Hoyt finally sold. The home was on the market for almost a year and saw several price cuts.

The Original asking price in October 2008 was $1,195,000.

In January he dropped the asking price $45,000 to $1,150,000.

In February he dropped the asking price $25,000 to $1,125,000.

In March he dropped the asking price $25,000 to $1,100,000.

In May he dropped the asking price $50,000 to $1,050,000.

In June he dropped the asking price $50,000 to $999,950.

In August he dropped the asking price $25,000 to $975,000.

The final selling price was $912,500 or 24% less that the original asking price.

Charles other flip project is still on the market. Oringal price was $699,000 but he is now asking $615,000 for it.

Auction ends with 40 of 41 units sold

From the Oregonian:

As hundreds of people crammed a conference room, auction company Accelerated Marketing Partners turned on the rock music, amped up the mics and sent their whistling staffers skipping through the aisles to unload 41 condos.

Their hustle appeared to pay off.

Some condos sold for more than 40 percent off the original price. With those discounts, a pre-auction marketing blast -- which included a national ad in the Wall Street Journal -- seemed to generate the demand they sought.

They attracted a diverse crowd of curiosity seekers, investors and homeowners.

At the start, the auction company was short dozens of chairs, sending staff scurrying. One broker wondered whether the auctioneers did it on purpose to suggest demand was more than anticipated.

At the low end, a one-bedroom condo with a minimum bid of $169,000 sold for $254,000, a 31 percent discount from the original price. A condo with two bedrooms and a bonus room sold for $842,000, a 42 percent discount.

And when the 22nd-story penthouse came up, the auctioneer couldn't entice a single bidder.

The 2,300-square-foot condo that once listed at $1.3 million couldn't find a single bidder at $899,000.

South Waterfront residents fearful of new neighbors

From the Oregonian:

The developers behind Portland's South Waterfront district sold a carefully crafted image of luxury living at Ritz-Carlton prices.

Portland's Ziba Design Inc. made the developers' pitch with a sales office patterned after Apple stores and a neighborhood brand defined as "Urban River Living."

Now lenders in charge of the district's glitziest tower are selling the Atwater Place as though it was a $499 mattresses on fire sale.

South Waterfront's glass cubes, granite countertops and million-dollar mountain views have been taken over by bargain hunters and sidewalk salesmen waving red arrows blaring "AUCTION CONDOS."

Not surprisingly, the Atwater's original buyers are none too happy.

"We understand it had to be done, but the manner kind of cheapened it in many of our minds," resident Michelle Cohen said. "We tried to talk to the realty people, but they aren't budging." ...

The auction makes residents queasy, with starting bids as much as 63 percent below previous asking prices.

"It scares the heck out of me," said Neustadt Storie, a lawyer.

Neustadt Storie and her husband, who works in sales, paid $705,000 for a 1,900-square-foot condo on the fourth floor in January 2008. The unit below them, which has the same floor plan, is up for auction with a minimum bid of $349,000 -- half what they paid 2 1/2 years ago.

At that rate, Neustadt Storie figures it could be years before her condo recovers the value she paid for it.

She worries too about who her neighbors may be after the auction.

Stevens said nearly all of the auction buyers plan to live in their condos and aren't speculators.

Neustadt Storie said the Atwater is full of doctors, dentists and lawyers but she has seen younger people with parents walk through the building since the auction promotion began.

"Just what I want, to live in a dorm," she said. "My concern is the parents will rent it out for a frat party until they can flip it after the kid graduates."

The auction is tonight, please let us know if you are going to attend it.

Portland RMLS Market Action Report – August 2009

The Regional Multiple Listing Service released the Market Action Report last week and the median sale price for August 2009 was $249,900; this is a 10.8% decrease from the median sale price for August 2008.

The Portland residential real estate market peaked in August 2007 with a median sale price of $302,000. Prices have now fallen 17.3% from that peak.

Months of supply (total inventory/monthly sales) sits at 7.8 months compared to the 9.9 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 14,360 homes for sale; this is a decrease of 18.1% from the same month the year before.

The third chart shows closed sales by month. There were 1,841 closed sales during the month; an increase of 4.0% from the same month the year before.

The fourth chart shows new listings by month. There were 3,780 new listings during the month; a decrease of 14.1% 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 19.0% from the current median for the ratio to reach 3.0.

I’ve talked with a few buyers and realtors this month and here is what I’ve put together.

The main driver on the buy-side are people trying to take advantage of the $8,000 tax credit for buying a home. You only get the tax credit if you close by December 1st which means you really need to be making an offer by November 1st at the latest. Most short sales, third-party approval, and bank owned real estate don’t meet this accelerated timeline because of the long approval time.

Basically this means the pool of inventory available to the homebuyers is fairly small when compared to the RMLS number above which leads to some bidding wars. The good news out of this is that sellers who aren’t underwater have some buyers.

I don’t see the positive news continuing when the subsidy ends but the NAR is trying to extend the tax credit.

From the New York Times:

The real estate industry, including the powerful 1.1 million-member National Association of Realtors, wants Congress to extend the credit at least through next summer. The group hopes to expand the program to $15,000 and to allow all buyers, not just those who have been out of the market for at least three years, to qualify. The price tag on that plan: $50 billion to $100 billion.

Don’t get upset over the price tag because we’re not paying for this…our kids will.

Unemployment rate still above 12%

From the Oregon Employment Department:

Oregon’s seasonally adjusted unemployment rate rose to 12.2 percent in August from the revised July figure of 11.8 percent. Oregon’s unemployment rate has been close to 12 percent for the six-month period March through August, following a steep run-up during the prior nine months.
Oregon’s unemployment rate was 6.5 percent in August 2008.

In August, Oregon’s seasonally adjusted nonfarm payroll employment declined by 6,600 jobs, following a gain of 500 (as revised) in July.

My graph is not seasonally adjusted

Corus bank financed over $300 million of Portland's condo development

On Friday the FDIC closed Corus Bank. This bank kept funding condo developments long after other lenders pulled back so this isn't too much of a surprise.

The bank was active in the Portland market and funded over $300 million worth of projects.

Here is the rundown:
The Westerly $53,000,000
3720 $115,000,000 (converted to apartments)
The Strand $82,000,000
The Elizabeth Lofts $37,000,000 (no units for sale by developer so this had a good ending)
Broadway Condominiums $31,000,000

$68 million AmberGlen Business Center goes into foreclosure

From the Oregonian:

In go-go days of May 2007, a San Diego company hunted deep into Hillsboro's Silicon Forest for a real estate buy that would produce a princely profit.

Equastone Real Estate Investment Advisors thought it found its prize when it bought 40 percent of AmberGlen Business Center, a sprawling glass and brick office park that bills itself as Oregon's largest.

With money easy to come by, the firm took out a high-risk loan to make the unsolicited $67.9 million deal, an eye-popping 24 percent increase from the last sale just 20 months earlier.

Two years later, Equastone's bet busted.

The firm's buildings - equal to about 28 high-rise floors -- are in default, the first step of foreclosure. Local brokers say the investors would be lucky to sell for half what they paid.

The article is a good one. I recommend reading the entire thing.

Here come the foreclosures

From the Oregonian:

Portland-area foreclosure filings have begun ticking up again this summer, reversing a spring trend that showed mortgage defaults had leveled off.

County records show that the number of mortgage defaults - the first step in a foreclosure - rose less than 2 percent in Clackamas, Multnomah and Washington counties between the first and second quarters of 2009.

But this summer, new foreclosures are on pace to jump 9 percent in the third quarter to about 3,500 for the tri-county region, or 38 filings every day.

"We're not seeing any relief," said Sande Sivani, a consultant who researches property records and records documents for title companies. "It's going up and up and up."
...

IHS Global Insight's this week ranked Portland as the country's sixth most overvalued housing market. The firm says the Pacific Northwest is the final region to watch the froth of the boom years burn off.

Of the 11 markets labeled overvalued, seven fall in Oregon or Washington.

Remember when Realtors said mortgage rates would go up...?

From the Oregonian:

Rates for 30-year home loans edged down this week, remaining close to record lows reached over the spring.

The average rate for a 30-year fixed mortgage was 5.08 percent, down from 5.14 percent a week earlier, mortgage company Freddie Mac said Thursday. Rates, while above the record low of 4.78 percent hit in the spring, are still at attractive levels for people looking to buy a home or refinance.

"Low mortgage rates are helping to keep housing very affordable," Frank Nothaft, Freddie Mac's chief economist, said in a statement.