My principal broker, Randy McCreith is quite eloquent with words. Below he has summarized the RMLS Market Report for March 2009, I've used it with his permission. It's too big to download here, but feel free to email me if you'd like a copy.
The good news locally:
Anecdotally, we continue to experience heightened buyer activity both in expressed interest (internet activity, showings, and inquiries) and in offers actually being made. There seems to be universal agreement among local brokers (Yamhill County and Portland metro) that the buyer mindset is very different than last year. Although buyers are aggressively value shopping, there is a snowballing confidence that this is the right time to buy; almost an “It is safe to go back into the water” consensus.
Factually, two excellent developments are notable:
1. Portland housing inventory has dropped by 7 months in the first quarter (from January’s 19.2 months at the current rate of sales, to March’s 12 months). This is happening at a time of the year when new listings escalate and normally increase the inventory.
2. Pending sales (accepted offers) are up 28.3% over February. Compared with the same period for the past two years, this is something to write home about. In 2008 the increase was just 5.5%, and 8.3% in 2007 (before the crisis hit). This means that something significant is happening.
There is also good reason to maintain hope:
1. Interest rates are historically low. Buyers are routinely getting below 5% on a 30 year fixed loan. Two recent closing clients got 4.5%! In my entire life, I never thought we would see anything like this. Nothing affects buying power and future profitability like the interest rate. Good Investments are made in the buying, not the selling. You can buy now and enjoy the rewards for 30 years!
2. There are amazing offers, incentives, and deals to take advantage of. Banner Bank’s 3.875% interest for 30 yr fixed, INCLUDING JUMBO MONEY UP TO A $ MILLION for their inventory of 200 new construction homes, is just like getting free money (ask us about this). The First Time Buyers Creditfrom the Stimulus Plan offers $8,000 as a gift if you have not owned a home in the past 3 years. Our daughter bought her first home last month, filed her taxes, and got $8,000 direct deposited into her checking account within 2 days! Not only are there great deals, but there are ‘steals’ now available as people must unload properties. The National Association of Realtors® Affordability Index already reached a record high in February (see attached). Let us help you buy well…
3. Confidence is up. Although there is still plenty of bad news about the economy (most notably unemployment), there is a growing consensus that the bad news about the housing market is either ‘spent’ or factored in (there will still be plenty of foreclosures). Economists and specialists believe it is an exceptional time to buy and that the housing market is at the very least bouncing along the bottom. Recently two local, well-respected, economists announced they believe both the housing market and the stock market have already hit their bottoms.
What is the Bottom?
The bottom of the housing market is really about two dynamics:
1. A change in direction. I believe the change in direction began in January following the disastrous 4th quarter of 2008 (which in hindsight will be seen as the bottom). 2008 was a year of decline as we were hit with one blow after another after another. This paralyzed more of the market with each event (recession, oil prices, financial sector meltdown, etc). Although our numbers, by definition of a ‘bottom’, are worse than a year ago, the trajectory of the market is moving forward now and improving. Recovery has begun.
2. The stabilizing and reversing of pricing. This cannot happen until inventory (supply) is reduced and demand (the number of buyers) is increased. This dynamic has been at work for 3 months now and supports the thesis that the bottom is behind us. Does this mean prices are firm and appreciation is occurring? Not yet. Sellers continue to lower prices because many must sell now. Time pressures on others are leading many more to sell at short sale prices, and foreclosures continue to grow. Seller fatigue is forcing some to take very low offers. All of this affects appraisals, which will continue to put downward pressure on pricing for months to come. Still, many times in the first quarter we have seen multiple offers on properties, or buyers getting surprised that when they do decide to offer but the property is already pending. The current buyers have never seen this before and it will stimulate them to be more decisive and timely. This will contribute to stabilizing the market.