Speculators Edge Toward Exits In Oregon
The Register Guard reports on the predictable path of Oregons’ housing bubble. “Three words say everything about the shape of Lane County’s real estate market in January: selection, selection, selection. Buyers had more choices in January than at any time in two years, as the county’s inventory of active residential listings reached a 4.1-month supply at the current rate of sales, according to the monthly report from RMLS Inc.”
“Just a month earlier, the county’s inventory had been sufficient to last only 2.5 months, and it reached an all-time low of 1.7 months last May. ‘It’s leveling off, as far as I’m concerned,’ said Cory Neu, president of the Eugene Association of Realtors.”
“Neu said most of the increase in supply seems to be on the bottom end of the market, where investors are either building new entry-level homes or selling homes that previously served as rentals. The number of higher-end homes on the market has remained more stable, he said.”
“‘But I’m definitely feeling, as the statistics say, that there is a larger inventory on the market right now,’ Neu said. ‘And that’s really what’s been driving our appreciation these last couple years, that very low inventory.’”
“Despite the increasing supply, cost is one factor still working against some would-be home buyers. The median price of homes sold in January was $201,400, 20.6 percent higher than the median price in January 2004. However, the median price was at its lowest level since an all-time high of $209,900 was reached last August.”
“Neu said the gradual settling in prices is likely a reaction to expanding inventory. When more homes are on the market, asking prices are driven more by current listings and somewhat less by what previous sellers have gotten for their homes, he said. ‘You’ve also got to take a look at your competition that’s actively on the market,’ Neu said.”
“Home sales and construction have been been in a boom mode nationwide for the past two years due largely to mortgage interest rates that remained at historically low levels. Mortgage rates have risen nearly a full percentage point from their low point about a year ago, but apparently are not yet high enough to burst the housing market’s bubble, as many have predicted.”
“One explanation for the increase in the inventory of homes on the market is that new listings increased at a higher rate than either closed sales or pending sales. There were 510 new residential listings in January, 16.7 percent more than the 437 new listings reported in January 2004.”
Regular readers may recall a couple of reports from Oregon about speculators, largely from California, buying rent houses there and running at negative cash-flow. It’s likely they have been spooked and thus we see the sharp jump in inventory. I wish I could get at the raw numbers, but that MLS is tight with its data.
Ben,
Thank you for your blog. It has encouraged me through this last year.
First time posting as I have not had anything of added value to relate, until now.
Re: Oregon and Washington MLS being tight—major understatement! There are many Multiple Listing Services for different areas within both states. Much hunting is required to get an idea of just what is on the market.
I was fortunate to befriend an 89 year old realtor in a small,coastal Oregon town [yes,89 and still active] . Sweet old lady, talked me out of buying anything! She said the realtors were posting fraudulent pending and for sale signs, and suspected they were manipulating the MLS somehow.
Mostly out of state buyers; California, Texas, Chicago.
She lost out on a number of listings because she couldn’t bring herself to list properties for the prices requested by potential sellers. She also lost potential sales by being honest about the value and the problems with certain properties and locations. Definitely old school.
Anyway, that’s a VERY SMALL piece of the picture inside the realtors camp.
OR and WA has alot of smug investors- last into the tank
but tank it will
Will the first inventory waves of the California and Arizona market start to lap on the shores of the Northwest, particularly Washingtons Seattle Metro area? We shall see. March is now here and so far inventory has remained even since January, although price reductions are starting to show more consistently. Just a few months ago, you coulnd’t find a price reduction, never mind sales commission incentives for agents.
http://www.washington-realestate.blogspot.com
Why all these comparisons to January 2004? Are the 2005-2006 numbers so poor?
The median price of homes sold in January was $201,400, 20.6 percent higher than the median price in January 2004…There were 510 new residential listings in January, 16.7 percent more than the 437 new listings reported in January 2004.
I’d like to see the #’s for 2005.
When folks on this blog earlier predicted that we would soon start seeing 2006 data compared to 2004 instead of 2005, I thought that was far fetched… But now its happened in a couple of markets.
This article is strange in that it sometimes compares to 2005, and for other components compares to 2004. I guess their tactic is to use 2005 data when its not so bad, otherwise use 2004.
Also could just be sloppy journalism and editing.
Cut and paste the price change segment from the previous month’s article, plug in the new numbers, and change ‘December’ to ‘January’ without remembering to bring the year forward.
Don’t be surprised to see comparisons to 2003 data soon, then 2002, and so on. Spin, spin, spin…..gotta love it!!
The more the media piles on to this story, the more skittish buyers will get and the more panicky sellers will get. It’s a vicious cycle that feeds on itself. I love it.
Now that the numbers are supporting the idea of the bubble I expect the media to turn more gloomy. Sources that stay to possitive will be ignored.
Which means they can blame the media for it rather than the reality of it.
The OFHEO published the Housing Price Index data today. I have the data plotted for all 350+ metro areas in the US and all 50 states.
http://www.housedata.info
Friendly suggestion: Change your QOQ appreciation numbers to annualized by raising them to the fourth power; e.g.,
Annualized Q4/Q3 Appreciation = (Q4/Q3)^4-1.
Then the YOY and QOQ numbers will be on a comparable vertical scale.
CA looks like it is headed south YOY, and maybe QOQ as well, but it is hard to mentally adjust given noncomparable vertical scales…
GetStucco,
Can I ask what your profession is? Just wondering why you are so F’n brilliant in many of your posts. (no sarcasm intended in THIS post…)
SB BubbleBeliever
Good suggestion. Qtr-over-qtr appreciation is now annualized.
One other suggestion:
Have an “Absolute (CPI-housing) adjusted” graph as well.
I’m considering some sort of inflation adjustment. Not sure if the CPI is the best for that.
Question for the board: Does anyone know what percentage of home owners own two or more home?
Well, sales have been at record levels but home ownership rates have been flat so I imagine it’s also close to record levels.
I just ran some numbers. Prices are way up over 1954!
Cory Neu is a f’ing genius and real estate psychic.
Yeah, it’s leveling off alright.
But, I thought in every market we’ve heard about lately, that all the sub-$250,000 homes were selling just great. Guess that’s not happening in Oregon.
He’s feeling “it” alright. I don’t know what it is, however. I can assure Mr. Neu that there are powers far greater than simply low inventory driving prices up.
and finally this gem:
That’s amazing, inventory is going up because more homes are coming on the market than are being sold. I didn’t know that that’s how that whole inventory thing works.
I’m glad that things are merely leveling off, though. I’d sure hate to see the Oregon market crash, possibly putting this guy out of business.
Off topic but some guy got photos of a condo opening in downtown San Diego, fake model/neighbors included!
http://www.capitalstool.com/forums/index.php?showtopic=7644
There are some hilarious captions under the photos. Thanks for the laugh.
That is really crazy!
This is OT but I was surfing the listings on craig’s list today and in addition to “reduced” and “motivated”, I’ve noticed a new word starting to pop up a lot - “negotiable”. This spring is going to be very interesting!
In a few months, they will probably have NUDE MODELS…
THE ONLY WAY TO LURE UNSUSPECTING BUYERS TO these properties
Might even work on a few, if they use nice models. Sex sells.
The comments on the photos are priceless. I love the scantily clad staged neighbors! Gotta make it look like you might actually be sharing the building with someone. Wonderfully tiny and ugly units! Sign me up!
I think that, in 2006 and 2007, it will be difficult to get a feel for prices.
Sellers will continue to believe that their house is ‘worth’ what it was at the peak. Inventories will be abnormally high, and so we will not see true ‘market-clearing’ prices, since the market will not be clearing.
Many sellers believe that all they need is a ’seasonal pick-up’. There are many such sellers waiting in the wings, who will add more inventory when they give up waiting for the ‘pick-up’ which they hoped would inflate their home prices again to bubble mania levels.
By 2008-2010, sellers’ painful memories of how much they might have got by selling at the peak will fade. Sellers will realise that the purchase price of the house they want to buy has fallen too. And so, market-clearing prices will be seen and inventories will stabilise.
I am from California…We just puchased some investment (Commercial) real estate in Southern Oregon…I do not have any raw data but, since November, based on my general observation driving around, the number of for sale signs is 3 x…
I think that, in 2006 and 2007, it will be difficult to get a feel for prices.
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I respectfully disagree with this assessment. It’s real easy to get a feel for prices……..LOWER THEM! Smart sellers are already doing just that even here in the good ole OC!
Also, based on what I see everyday with peoples personal finances, when the next wave of ARMS reset, there’s gonna be blood all over the place. Most cannot handle a significant payment bump.
Chillin is spot on with the ARM’s…If you blend a higher payment with less net income (If you are a housing related employee) you could be toast…
“some guy got photos of a condo opening in downtown San Diego, fake model/neighbors included!”
Do the babes come with the condo?
It’s cheaper to rent one of those condos at 1/2 the mort payment from a moron flipper and use the resulting savings to “rent” the babes.
front page headline in large type USA today newspaper “realestate continues to cool” january sales fall for fifth month in a row.
Good Call AZrenter…
HERE’S an SNIPPET:
“Fran Floyd took her Houston townhome off the market Saturday after nearly six months — even though she was willing to sell it for $3,400 less than she paid in 2002.”
“It’s just sad,” said Floyd, 81. “I’ve got to sell. I don’t know what I’m going to do. What I’m thinking about and praying about is renting it for a year, hoping the real estate market gets better.”
Uuhhh Oohhhh……
That’s just sad.
Maybe the grandkids can chip in to help out granny with her upside-down TH. That’s what family is for.
Bottom,
You Bathstard…
at 81 years old she should just give the keys to the bank.