Marketing Copy Gone Awry

I’m all for using evocative copy to creatively promote listings, but please, if I ever pull something like this…have my license revoked:

[Actual listing somewhere in California, click on the image for the full impact.]

Complete plagiarism on my part. Credit to Jay Thompson, the Phoenix Real Estate Guy and contributor to AgentGenius. I couldn’t help myself.

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3 comments April 28th, 2008

Oregon Mortgage Market Conditions

One test for the health of the Portland metro real estate market is the mix of sub-prime vs. traditional (or prime) mortgages. In a recent National Association of Realtors survey, subprime loans account for only 9% of homeowner mortgages, but they comprise 54% of foreclosures nationally.

The survey, which includes data from the Mortgage Brokers Association, reports that as of early 2008, 32% of homeowners across the U.S. have their homes paid in full, and of those with a home loan, 53% are in a prime mortgage and the balance are in a sub-prime (9%) or FHA/VA loan (6%).

Here’s a look at how Oregon compares to the nation and California by mortgage type:

Does this mean Oregon will continue to outperform national and Californian averages? Maybe, maybe not. But certainly the mix of mortgage products is encouraging.

Source: 2008 State-by-State “Mortgage Market Conditions” Reports, NAR.

Photo by denn, used under Creative Commons license.

3 comments April 24th, 2008

Real Estate’s Effect on the Oregon Economy

The National Association of Realtors has released its 2008 State-by-State “Economic Impact of Real Estate Activity” Reports. These reports evaluate the total economic impact of real estate related industries on the state economy, as well as the direct and subsequent expenditures that result from a single home sale.

Their net result? The average home sale in Oregon drives an additional $81,600 in state income (presumably most of which is taxable). Here’s their numbers for Oregon (based on 2006 results):

Real Estate’s Economic Contribution in Oregon
The Real Estate Industry accounted for $27,675 million or 18.3% of the Gross State Product in 2006.

Economic Contributions are derived from:

• Home construction
• Real estate brokerage
• Mortgage lending
• Title insurance
• Rental and Leasing
• Home appraisal
• Moving truck service
• Other related activities

When a Home is Sold in Oregon…
Income generated from real estate related industries is: $25,776
Additional expenditure on consumer items such as on furniture, appliances, and paint service is: $5,171

When a Home is Sold in Oregon…
It generates an economic multiplier impact. There is a greater spending at restaurants, sports games, and charity events. The size of this “multiplier” effect is estimated to be: $14,854

Additional home sales induce additional home production. Typically one new home is constructed for every 8 existing home sales. Therefore, for each existing home sale, 1/8 of new home value is added to the economy which is estimate in the state to be: $35,800

The Total Economic Impact of a Typical Home Sale in Oregon
Median Priced Home in Oregon: $286,400
Total Income Derived from a Sale of a Home: $81,601

So, while the market may be going through a necessary correction period, a prolonged slump will create a real drag on the state’s economy.

Data: NAR Research Department, April 2008.

2 comments April 21st, 2008

Portland Real Estate Activity - March 2008

For March 2008, the Portland-area real estate market showed its normal seasonal increase in activity, but continues to lag behind 2007’s pace by nearly 33% in sales volume.

A slower rate of sales plus a consistent pace of new listings entering the market means more inventory. April started with 15,412 active properties in the multiple listing service. It’s taking on average 83 days to sell a home in the Portland market (vs. 65 in March 2007). A couple higher-priced markets (Lake Oswego/West Linn and NW Washington County) are now over 100 days on average.

You would expect pricing to be affected by higher inventories and longer sales cycle, and it has…although not on par with other national markets. Comparing year-to-year, March’s average sale price of $336,700 is virtually the same as last year (336,300). Median prices are even, too ($286,500 vs. $286,200).

Below are the year-to-date results through March 2008 for average and median sale prices, appreciation, and time on market (or DOM*), sorted by average sale price. (Remember, the appreciation numbers are a 12-month rollup compared to the previous 12 months and may not reflect recent months’ price declines.)

Source: RMLS, April 2008.

Appreciation percentages are based on a comparison of average price from the last 12 months (04/01/07 - 03/31/08) with 12 months before (04/01/06 - 03/31/07).

* Note: DOM or days on market may exhibit reporting inconsistencies and should be used to analyze trends only.

5 comments April 17th, 2008

Portland Real Estate Auctions Becoming Commonplace?

Auctions aren’t new around here, but on the heels of two high-profile auctions by Buena Vista Homes comes yet another large-scale sell-off of homes.

This time, it’s not by a single builder, but several builders, agents, and owners. On May 4, 2008, over 60 pre-owned homes and new construction will go on the auction block, in an event put on by The Taylor Group, a local real estate broker. They’ve created a website, www.properties2auction.com, designed for this auction, and as a platform ostensibly for more local (and not-so-local) auctions.

In the May 8 round, a mix of townhomes, general single family homes, and luxury properties for bid are located in Portland, Lake Oswego, Beaverton, Tigard, Gresham, Wilsonville, Vancouver WA, Sunriver, Bend, and on the coast. I saw a Street of Dreams home or two on the list. It appears several smaller builders are looking to clear the books of stale inventory, like Buena Vista did earlier.

Similar to the Buena Vista auctions, buyers will need a $5,000 cashier’s check for a bidder’s paddle, enough funds for a 3% earnest money on a winning bid, and a healthy stomach for risk to participate. Inspections and due diligence must happen prior to the auction, and each property offers several times for such inspection.

The live auction takes place at the Hilton Hotel at noon on May 8. Buyer and Seller agents can participate in this and future auctions. More information on the FAQ.

2 comments April 15th, 2008

Market Talk with The Oregonian

I had an opportunity to talk with Dana Tims for today’s “Dealing With The Downturn” feature in the SW Weekly section of the Oregonian, which covers Tigard, Tualatin, and Sherwood.

Tims interviewed a homebuilder, supplier, remodeler, homeseller, and real estate agent to gauge how each sector is adapting to a slower housing market.

Here is the text, in case the link goes away:

Trying to adapt to the new housing market
A builder, a Realtor, a seller, a remodeler and a supplier discuss their strategies
Thursday, April 10, 2008
DANA TIMS
The Oregonian Staff

Until recently, a vibrant housing market provided many of the jobs and much of the income that stoked the southwest suburbs’ economy for the past half-decade.

Much has happened in the past year to erase the double-digit profits that home sellers were taking for granted.

The number of houses on the market, for instance, has increased almost sixfold since 2006, giving buyers the upper hand.

Houses are lingering on the market far longer than they did two or three years ago. The multiple offers and bidding wars common among prospective buyers as recently as 2005 have been replaced by sellers trimming asking prices 10 percent and more to keep buyers from shopping elsewhere.

Some areas are feeling the pinch more than others. Below are brief profiles of five people and their accompanying market sectors. Each is trying to find new strategies for coping with the downturn.

The Realtor
Ron Ares jumped from his job as marketing director for a high-tech company to a family-run real estate business in West Linn three years ago. That may as well have been a lifetime ago.

“Inventories were half of what they are now, full-price offers were commonplace and if buyers didn’t have all their ducks in a row, they were likely to miss out on houses that were selling the same day they came on the market,” said Ares, a Tigard resident who specializes in the southwest suburbs. “It was one open house, one advertisement and ‘Katie bar the door.’ ”

The market hit its peak, in terms of median sales prices and number of houses sold, last July or August, Ares said.

Ultimately, he expects that this year will see a considerable dip in closed sales when compared with 2007, but the drop will be less than the 35 percent chalked up so far this year.

Successful agents — that is, those not among the nearly 1,100 Portland-area Realtors who decided not to renew their licenses at the beginning of 2008 — need to pay close attention to the market and be willing to expand their skills sets, he said.

Some agents, for instance, are focusing on so-called short sales, where the balance owed on the mortgage is more than a house’s market value. The endeavor involves negotiating with lenders, who may be willing to settle for less to avoid foreclosing.

In Ares’ case, he is working only with longtime lenders who have endured down cycles before and know how to source solid loans.

“What I’m telling clients is, if you need to sell and don’t want to get stuck, look at what the peak pricing was and take 5 percent off the asking price,” Ares said. “Otherwise, they’ll just be chasing the market down.”

Read the full interview for how the other interviewees are coping with a slower real estate market.

1 comment April 10th, 2008

Sneak Peek at March 2008 Results

The March numbers are still trickling in, but stable enough to draw some early conclusions as to the state of the Portland metro real estate market.

Sales
Compared to March 2007, residential sales are down 39%, continuing the 2008 trend of being 30-40% off last year’s monthly pace.

Average / Median Price
Despite the slow sales performance, pricing is up (!) ever-so-slightly up from March 2007. Average price was $337,200 vs. $336,300 (March 2007). The median is up $1,000 from March 2007 ($287,000 vs. $286,000). Note, however, that the average sale price in March is down about 2% from February’s result.

Pending Sales
Perhaps the bright spot, pending sales (homes under contract) are roughly equal to this time last year (within 100 units) at 2,960 pending. AMENDED: Like sold inventory, pending sales are actually down about 40% from March 2007–RMLS contacted me regarding a difference in reporting methodology.

Inventory
Around 15,700 homes are now being offered, somewhere around 9.5 months at the current pace of sales. March 2007 showed just 10,577 homes.

Market area data available next week.

Photo courtesy of draggin, used under Creative Commons license.

8 comments April 9th, 2008

Maps Track Markets’ Foreclosure Risk

To date, excessive foreclosure activity in the Portland metro area has been kept bay, perhaps due to generally stable housing prices and less participation by Oregonians in riskier subprime mortgages than other national housing markets. (Note, I’m not saying we’re immune–just less affected.)

RealtyTrac.com is the default oracle for foreclosure information–showing Oregon at #24 nationally for foreclosure activity with 1,415 in January, up double that of January 2007.

Recently the the Federal Reserve Bank of New York has released an interactive mortgage map for owner-occupied (non-investment) homes, tracking subprime and Alt-A loans.

Users can start with a view of the entire U.S. and drill down to state, county, and zipcode levels to view various risk areas such as percent of low FICO score loans, resetting adjustable rate mortgages, delinquencies, and foreclosures.

These interactive charts show the “regional variation in the condition of securitized, owner-occupied subprime, and alt-A mortgage loans” according to the Mortgage Bankers Association.

You can check out the map here (or click the image). and read more about the Fed’s foreclosure resources for consumers.

To be honest, I did not see a lot of variation within the metro area to note. The data is to be updated monthly, so perhaps we’ll see more activity as ARMs reset and local housing inventory remains high. Perhaps the non-owner occupied properties are the lion’s share of defaults and won’t be reflected on the Fed’s map. A couple disturbing Oregon trends: 35% of subprime loans have had 1 payment late in 12 months, and 41% of subprime ARMS are resetting in 12 months.

(Hat tip to Mike Rohrig and Scott Bridwell.)

8 comments April 7th, 2008

Is a Zil-Loan in Your Future?

The real estate blogosphere is pretty well awash with today’s announcement of Zillow.com’s Mortgage Marketplace, but it may take some time to filter down to the home-shopping consumer. Here’s a quick overview…

You remember Zillow.com, the glossy property valuation site for real estate voyeurs–type in an address, get a Zestimated property value, snoop on neighbor’s houses, and wallow in maps, neighborhood data, etc.

Pretty entertaining, particularly where it came to how Zillow calculated home values (often wildly). They took their early lumps but have gained more market information and improved their methodology to the point now where you can make some broad judgments based on their site’s findings.

But the Mortgage Marketplace potentially offers much more value to the consumer. This service will allow you to anonymously shop for mortgages (for free) from an unlimited number of registered lenders. You can contact the lenders of choice when you’re ready to take your due diligence to the next level.

You can shop for a primary mortgage or home equity line of credit (HELOC). All loan fees will be disclosed upfront. Lenders that don’t perform well get scored as such (ala eBay or Angie’s List). Zillow brings new transparency to what has been a high-pressure, high-stakes part of the home-buying experience.

They’ve done their homework. From the CEO’s blog post:

At Zillow we believe in information transparency. We believe informed consumers are empowered consumers. We believe these informed consumers make better customers for real estate professionals. We believe consumers should be able to shop anonymously, so that they are not approached by a salesperson until they ask for assistance. Finally, we believe in open and free marketplaces.

Borrowers have told us via focus groups and surveys that they spend woefully little time shopping for the mortgage they have – 5 hours. About the same amount of time they spent buying their last computer and nearly half the time they spent shopping for their last car. They also tell us that they want their personal contact information to remain private and that they want to see real rates that are accessible to them, not “teaser” rates that don’t reflect reality. They would also like to shop across their options and be able to do an apples-to-apples comparison of loan quotes from multiple lenders in a standard format. Finally, they’d like to be able to understand the reputation of the broker or lender as seen from the perspective of other borrowers, much like they can judge a seller’s reputation on eBay or a hotel’s reputation on TripAdvisor.

If you’ve tried getting mortgage advice or loan bids through LendingTree and others of their ilk, you probably know what Rich Barton is talking about. And it’s probably why people spend so little time evaluating the financing side of a home purchase. Check it out here.

I’m curious to hear if any of you try the service and what your reactions are. Also, if any loan officers are reading, what is your take? Will you participate?

3 comments April 3rd, 2008