Housing News from Harvard U

After digesting Wharton’s subprime research, housing wonks will want to grab a copy of Harvard University’s report, The State of the Nation’s Housing 2008, released today.

The report has little Portland-specific data, but shows some national graphics highlighting new housing starts, housing wages, rental stocks, immigrant population, and more.

Hat tip to Tom Cusack at the Oregon Housing Blog.

More at Harvard’s Joint Center for Housing Studies.

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1 comment June 23rd, 2008

Wharton Tackles Why The Housing Market Sucks

Not to end the week on a downer, but I ran across an interesting study on the current state of the national housing market (there are plenty of analyses to go around, I know).

The Wharton University School of the University of Pennsylvania tackles the housing crisis in a special report, The Subprime Crisis, How Wall Street Alchemists, Ambitious Lender, Overreaching Consumers and Enabling Lawmakers Pushed the Economy to the Brink of Recession, and How to Avoid a Repeat.

Here’s a summary:

Youtube link to Wharton Summary of the Subprime Crisis

With articles, interactive features, podcasts, opinions, etc., it’s a comprehensive view the of housing mess we’re in nationally.

Their conclusion? Bottom line, it comes down to greed. No surprise there. It’s part of the human condition.

6 comments June 20th, 2008

My Evening with the Bubble Bloggers

Tomorrow night (June 20) around 8pm, I’ll be walking into the veritable lion’s den.

More specifically, I will be sharing barley, hops, yeast, and water (that’s beer, folks) at the venerable Lucky Labrador with some of Portland’s most active housing ‘bubble’ activists and bloggers, as organized by the Portland Housing Blog and the Portland Real Estate Outsider.

For the uninitiated, the Portland Bubble crowd (sorry, I don’t have a succinct alternative) is a vocal blogging community that has been sounding klaxons that the Portland real estate market was/is primed for a crash–fueled by lax mortgage standards, poor REALTOR ethics, and irrational economic exuberance that artificially drove up home prices in Portland.

If you follow these downturn blogs, the rhetoric can get a little thick, particularly when it comes to comments relating to real estate ‘insiders’, like agents. Interestingly, though, for all the passion that goes in to posting and commenting about real estate matters, most participants remain anonymous.

Nevertheless, many readers of these two blogs have been the most active commenters at re:PDX and a few of the other top Portland real estate broker blogs. And while the tone sometimes gets a little snippy, often the ideas and thoughts expressed are well-reasoned and challenging.

It certainly keeps me on my toes.

I’ve often wondered if the views shared by many bubble followers are mainstream. So, my question to all you quiet, non-bubble bloggers is, “What would you like me to ask the bubble crowd?” If you are apprehensive, you can comment to this post as ANONYMOUS, or send me a note privately.

Here are a just a few questions on my mind:

• What do you do for a living? (I know a couple work in health care and in financial services).
• Do you believe REALTORs are immoral for representing clients while buying or selling properties in a declining market (or appreciating market, for that matter)?
• Why aren’t you more transparent about your identity when posting to blogs that you don’t agree with (or even those you do)?

Due to the anonymity of most participants, if I am the only broker that attends (and I hope I’m not), I will likely be the only participant that anyone recognizes. It should be interesting….

Photo by tlindenbaum. Used under Creative Commons license.

11 comments June 19th, 2008

HOPE Speeds Up Mortgage Workout Programs

With the foreclosure rate in Portland nearly double last year’s pace, help (or HOPE, rather) is on the horizon for some beleaguered homeowners–at least a quicker and more orderly process for working out non-foreclosure options.

In 2007, the Bush administration stepped in to organize a coalition of mortgage servicers (including heavyweights like Countrywide, Washington Mutual, Wells Fargo, IndyMac, HSBC, and twenty or so others), and has settled on new guidelines that will inform homeowners of approval (or denial) of their mortgage workout options within 45 days of application.

Called HOPE NOW, the collection of loan servicers has agreed to a set of guidelines that offer a full range of mortgage solutions to borrowers — including repayment plans, loan modifications, short sales, and suspending monthly payments temporarily.

Critics of the HOPE NOW program say, to-date, the program has only helped about 25% of defaulting homeowners since the start of the year and is not strong enough to stem the foreclosure wave across the country. Rep. Barney Frank, D-Mass., stated,

“I supported the HOPE NOW program when it came out and I continue to think it is worth trying, but it is now clear that much more aggressive action is needed and reinforces the need for legislation to expand the FHA program to help refinance at-risk borrowers into viable mortgages.”

Frank is in support of an expansion (to the tune of $300 billion) of the FHA loan guarantee program that would refinance owner-occupied homes under certain conditions.

In any event, if you are in danger of entering foreclosure proceedings, read more at the HOPE NOW site or call 1-888-995-HOPE. In contrast to other organizations’ ‘workout’ plans, services provided by HOPE NOW participants is free to those consumers accepted.

1 comment June 18th, 2008

FHA Lifts 90-day Flip Rule

In a move that might help move some latent bank-owned inventory, the federal government will temporarily lift its 90-day waiting period for resale properties that use FHA-guaranteed mortgages.

Since 2003, properties financed with FHA programs could not be resold within the first 90 days of the loan term–a guard against predatory lending and flips with cursory rehabs. FHA is removing that anti-flip rule for a one-year period. Other conforming loan programs (Fannie Mae and Freddie Mac) never did adopt similar rules.

The problem I see with this move is that many bank-owned (REO) properties aren’t in the physical condition that qualify for FHA mortgages. If defaulting borrowers couldn’t pay their mortgage, they likely couldn’t maintain the home, either. Consequently, many of the REO properties I’ve seen are distressed.

But FHA financing is back in vogue, and perhaps it will provide incentive for banks to make the necessary repairs to make their holdings financeable under FHA guidelines–growing the market for their growing portfolio of orphaned properties. Rehabbing foreclosed homes could also stabilize overall values of neighborhoods and adjoining properties by minimizing the deep discounts given to all-cash buyers.

Image by BombDog, used under Creative Commons license.

1 comment June 13th, 2008

Update - May 2008 Market Results for Portland

The Portland multiple listing service released their official May 2008 results today and I was pretty close in my early analysis of May’s real estate results for the metro area. RMLS reports a little lower median price ($287,500) and a few more total sales (1,863) than my early survey. A few additional notes from the RMLS report:
Year-to-date (vs. 2007):

• New listings up 2%.
• Closed sales down 35%.
• Pending sales down 34%.

Comparing May 2008 to May 2007:

• Average sale price down 4%, median sale price down 3.2%.
• New listings down 12%.
• Pending sales down 30%.
• Closed sales down 33.5%

Here is how each market area is faring:

Source: RMLS, May 2008. Appreciation is calculated using a rolling 12-month sample and comparing it to a sample from 12 months prior. DOM stands for Days On Market (or average market time) and is a calculation of how long a home stayed on the market until receiving an acceptable offer.

8 comments June 12th, 2008

A Preview of Portland’s May 2008 Real Estate Results

The Portland real estate market bounces back from a lackluster April with increased sales and higher average and median prices, but still lags in comparison to May 2007 results.

Note: These numbers are an early survey, and may differ slightly from RMLS calculations which will come out around the 15th.

Unit sales (1,830 homes) are up 15% over April (1,582), but down 35% from May 2007. Historically, May sales run 5 to 10% higher than April sales, but 1,830 homes is more in line with winter season averages. It is the lowest May figure since 1996.

The median price of $288,900 rebounded from April’s $275,000 result. Compared to May 2007, it registers as an 8% decline ($297,000). The average sale in the Portland metro area was $335,500 (vs. $325,000 in April), again down about 7% from a year ago.

Sales prices for homes sold in the month averaged 93% of their original list price and took an average of 71 days to sell. With available homes running around the 17,000 level, it would take over 9 months to absorb inventory at the current sales pace.

On a market area basis compared to April, NE Portland, SE Portland and Gresham saw gains in both sold properties and average price (NoPo took the month off). Southwest Portland, Lake Oswego/West Linn, Tigard/Tualatin/Wilsonville/Sherwood improved in units sold, but made price concessions to get inventory cleared. I’ll follow up with full community results when the RMLS stats come out around the 15th.

1 comment June 6th, 2008

Portland Receives a Visit from Dr. Yun

As the Portland real estate market shows symptoms of the national housing flu, the REALTOR association’s top prognostic doctor paid a house call.

In a conference this morning, I had the opportunity today to hear the latest forecast from the National Association of Realtor’s chief economist, Dr. Lawrence Yun. Over the past few years, the public profile of the economist position in the NAR has become more prominent than the actual NAR president.

Yun was recently named by USA Today as one of its top 10 most accurate economists. But Yun has plenty of detractors, too. Yun and his predecessor, David Lereah, have been widely criticized for their sunny, exuberant forecasts over the past several years, and for not anticipating the severity of the housing slowdown affecting many metro markets. Yun has taken a more self-effacing approach in the past several months.

Dr. Yun’s roadtrip brought him to a Portland Metro Association of Realtor Regional Homeownership Opportunities Summit (more on that in a future post), where he presented his “After the Cleanup” speech.

A summary of Yun’s takes on the national and local real estate scene:

• Real estate is not just local, it’s neighborhood local. Huge variations exist not only between markets, but also between neighborhoods (price declines are concentrated in ’subprime neighborhoods’).
• The foreclosure rate (2.0%) across all mortgage types is double the historic average primarily due to the poor performance of subprime loans.
• National home sales are at 10-year lows, primarily due to fewer homebuyer candidates (no subprime loans), expensive jumbo loan terms (vs. conforming loans) and the effects of FannieMae and FreddieMac agencies placing “declining market” premiums on loans in certain markets.
• Subprime effects have peaked, stable FHA financing is becoming more prominent, and speculators have already defaulted.
• Housing affordability is improving, especially in markets with rapid price declines.
• He expects a stronger housing market for Portland in the 2nd half of 2008.
• He expects a rise in both sales and prices in 2009 for Portland.
• By 2013, home prices in Portland could easily be up 30%

Yun and NAR are clearly beating the subprime drum. The REALTOR forum limited his time for open Q and A, so I didn’t get to ask about his views on the effects of the Alt-A and other non-conforming (but not subprime) loan products, that some readers of re:PDX feel is the next upcoming nuclear winter of the mortgage crisis. He was hustled off to an interview with KOIN News and then to the Oregonian, who I presume will do a write-up on his visit.

As expected, Yun is upbeat in general about the prospects of housing recovery, starting next year. He cites pending legislation for tax credits for homebuyers, rates on jumbo loans coming in line with conforming mortgages, improved affordability in areas with steep price declines, increased reliance on traditional FHA programs, and a resilient national economy as factors for his optimism (he does not believe we are in a recession). His forecast states that 99% of US housing markets will have higher values in 5 years than today.

Shorter term recovery will depend much, he says, on either persistent or dissipating consumer ‘anger’. Pretty tough when filling the tank is $75 a pop, but we’ll see.

More: Video from KOIN News and a copy (PowerPoint) of Dr. Yun’s presentation.

21 comments June 5th, 2008