2010: The Year of Growth as Projected by NAR Chief Economist

The following is an excerpt from an article by Robert Freedman, senior editor of REALTOR magazing-January 2010 Edition

2010: The Year of Growth

If 2009 was the year of economic recovery, 2010 will be the year of growth, says National Association of Realtors (NAR) Chief Economist Lawence Yun.

Existing-home sales in 2009 rose to an estimated 5 million units for the year, a 2 percent increase over the 4.9 million sales in 2008. For 2010, Yun is forecasting sales of 5.7 million units, a 13.6 percent increase.

The key to recovery in 2009 was the lower end of the existing-home market. Fueled by the huge number of distressed sales—which drove down prices nationally by an average of 13 percent for the year—buyers returned to the market looking for bargains. 

Also helping were continuing low interest rates (5.2 percent on average for 2009) and the first-time home buyer tax credit, which the IRS says had been tapped by an estimated 1.4 million households halfway through 2009, a figure that includes 350,000 to 400,000 consumers who wouldn’t have bought without it, according to NAR and other industry estimates. Close to 2 million buyers were expected to use the credit by the end of November, according to industry projections.

As a result of the sales pick-up, inventory for homes priced at $250,000 and under, which is well under the $417,000 conforming loan limit, improved to just 4.6 months in 2009, according to NAR data. That’s below what’s considered sustainable and has been inviting multiple bids in high-demand markets.

In part because of the difficulty of obtaining jumbo financing, no such turnaround was seen in the upper-end housing market. Indeed, nationally the inventory of homes above the $729,750 threshold remained above 40 months throughout 2009.

But Yun is forecasting improvement in 2010, as the strong performance at the lower end helps kickstart the upper-end market. In time for the spring selling season, spreads between jumbo and conforming loans are narrowing considerably. In the fourth quarter of 2009, spreads narrowed to about 70 basis points from about 150 basis points a year earlier, and that trend is expected to continue with more lenders returning to the jumbo space.

The new-home market is expected to improve as well. NAR estimates sales this year to jump to 549,000 units, up from 397,000 units in 2009, and housing starts to reach 752,000, compared to 564,000 units last year.

Yun and Chris Varvares, president of the national economic forecasting firm Macroeconomics Advisors in St. Louis, make clear that, even under their best-case scenarios, the performance of 2010 will lag behind what they consider to be a market in equilibrium. Although Yun’s estimated 2010 sales volume of 5.7 million is close to what it was in pre-boom 1999, that level is low when the country’s population, now 30 million larger than it was a decade ago, is factored in. Ideally, sales should be closer to 6 million, he says.

One reason for the subpar performance is continuing slow household formation, a key precursor to home sales. Until young people stop doubling up in rental units or living with their parents in such large numbers, sales will continue to lag, Yun says. That shift will be fueled by job growth and consumer confidence.

Once household numbers increase, sales may ignite because the market is seeing a lot of pent-up demand. More than 16 million renter households at the end of 2009 had sufficient income to buy a median-priced home, up from just 11 million in 2000, before the boom, Yun says. Once they get off the fence, sales will start heading up to a level reflective of the population.

Click here for the complete article.

~Kori

Exhibit Opening Tonight – Artifacts & Archives at the AHC

Join us at the Architectural Heritage Center for the opening of “Artifacts & Archives”

Reception – January 15, 2010
6 pm – 8 pm
Architectural Heritage Center
701 SE Grand (map)
Refreshments Served 

Not only did the founders of the Bosco-Milligan Foundation/Architectural Heritage Center, Jerry Bosco and Ben Milligan, leave us a wonderful collection of building artifacts, they also left us books, catalogs, photographs, drawings, and other materials that are tremendously valuable for understanding the Portland region’s architectural heritage. In recent years, the Bosco-Milligan Foundation has received additional generous donations, including the libraries of the late architects George McMath and Richard Ritz, as well as other longtime friends of the organization. The BMF archives have become a significant resource for researchers and for the development of our own education programs at the AHC.

Nearly every artifact – or building – started with a drawing, whether conceptual, rudimentary, or detailed, intended for the craftsperson or builder to construct it. In a century before computers, the documents such as descriptive letters, catalogs, and eventually entire “mail order houses” were the means of acquiring materials and achieving artistry in the crafting of artifacts. Artifacts + Archives will illustrate the essential connection between paper-based archival materials in our collections and the artifacts themselves.

This exhibit draws upon the Foundation’s ever-expanding artifacts and archives collections, with emphasis on items that have not been seen by the public, including photographs, architectural drawings, maps, personal papers, and rare books.

Hope to see you there tonight!

~Kori

January Home Maintenance Tips

January Home Maintenance Tips: resolve to do more home maintenance
 
Tip #1
Yep, it is time to check your furnace filter again:
If you changed your filter in October it has be collecting dust and dirt for 90 days. Remember that the cleaner the filter, the more air that will flow through the filter.  This in turn will make your furnace run more efficiently, saving you money on your gas and electric bills. Even if the filter is only kind of dirty, changing it will save you more money than the cost of the filter.
 
Tip#2
Caulking around Showers, Tubs and Toilets:
While you are cleaning the floors, look at the caulking along the tub and shower. If there are any small splits, gaps or sections that are loose and peeling, re-caulk them. A squeeze tube of caulk is about $2 and you can use it again and again. Repairing lifting vinyl floors or dry rot damage will once again cost much more.
 
Tip #3
Water Heater:
Look at the piping connections and around the top of the water heater. The gaskets and threads of the piping connection deteriorate over time. A small drip may not cause much of a puddle, but it can short out electric elements and/or rust your glass-lined water tank from the outside in.
If the water heater is gas, look at the flue – is it rusted? Are there scorch marks above the burner access panel? In either case there is a problem and you should have a professional look at or repair it.
 
Tip #4
Let there be light:
Now that we are in the darkest month of the year, your lights will be on longer than any other time of the year.  Using too high of wattage bulbs than a fixture is rated for will produce excessive heat inside the fixture.  This can lead to fire inside the fixture, ceiling or wall.  Make sure the light bulbs in your fixtures are the correct wattage for the fixture or use a florescent light bulb if you want more light than your fixture is rated for.  Florescent lights use less energy and produce far less heat, as little as 25% less than a standard bulb producing the same amount of light.

Tips provided by Assurance Home Inspections

~Kori

RMLS Market Action Report – December 2009 & Annual Wrap-Up

The RMLS Market Action stats have been released for December 2009 with an annual wrap-up for 2009.  Closed sales were up by 52.6% in December 2009 compared to December 2008, which is to be expected since we spent half the month of December 2008 under a sheet of ice and snow.

Looking at the stats for 2009 vs. 2008, you might think we didn’t come that far in the market but let’s look at some of the factors.  Total sales volume (acutal $$$) in 2009 was down about 12% when compared to 2008 – although that sounds like a depressing fact we must take into consideration the impact of the first time home buyer tax credit.  Effective, April 2009, the first time home buyers drove the market for the majority of 2009.  The 2009 tax credit had an income limitation of $75,000 for an individual and $150,000 for a couple filing jointly driving the sale of sub-$300,000 properties.  

I expect we will see an increase in the sales volume in 2010.  The home buyer tax credit will continue to play a significant role in the real estate market; however, the 2010 credit has some significant advantages – one, first time home buyers can now make up to $125,000 as an individual and $225,000 as a couple filing jointly to qualify for the $8,000 tax credit; two, the credit was extended to current home owners who have occupied their primary residence for the last 5 years – current home owners may purchase a new primary residence in 2010 (up to $800,000) and receive a $6,500 tax credit.  The caveat, buyers must be under contract (an accepted offer) by April 30, 2010 and close by June 30, 2010 to collect the credit.

As in 2009, the tax credit may be extended; however, I wouldn’t count on it until it actually happens.  It’s like depending upon a bonus you think you might be getting from work to find out the day before checks would typically be cut that the company is not offering bonuses at that time.  Coupled with the tax credit nearing is current deadline, analysts are also expecting interest rates in 2010 to rise. 

The stats might look frightening when just looking at the numbers and in some areas the market is still very distressed.  That is why it is so important to work with an experienced Realtor. 

Over the holiday I showed a client a property off of Alberta, the house was amazing – 4 bedrooms, 2 baths, new Warsbo plumbing, duel flush toilets, tankless water heater, new energy efficient washer & dryer (included), original charm throughout, etc… on the market for only 3 days when we toured the house.  We had been looking for quite some time and I told my client, this one is going to move quickly.  We put in an offer, slightly below asking price – the next morning the listing agent called to say another offer came in at full price.  Because we had presented a strong offer (it’s not always just about the price) the seller opted to counter our offer at full price before responding to the second offer.  We accepted – that was Christmas Eve.  Over the course of the weekend two more offers came in over list price.  You need to know the market of each specific neighborhood. 

I heard someone comment the other day, ‘yeah, offer 5% below the asking price – that’s standard in this market.’  First of all, this person was not a Realtor and second, anyone making a blanket statement like that has no clue about what is happening in the market.  Moral of the story, the market is improving – just look at the ”Inventory by Months” chart on the first page of the RMLS Market Action Report – we have half the inventory we had in December 2008 and almost 2/3 less inventory than January 2009, since January 2009 we have seen inventory levels decrease exponentially.  If you are on the fence about buying a home and you have a stable income, now is the time to buy.  Take advantage of the tax credits and great interest rates.

~Kori

Did you know?

Wow, it’s been a busy start to 2010!  The market is hopping with activity, there are a number of new policies and procedures in place from lending to energy tax credits and we’re only in week two! 

Today I thought I’d just share a little did you know.  I know many of my friends and colleagues have set New Year’s resolutions – there are the same old culprits… loose weight, quit smoking, save money, etc. but I’ve also heard a number of your talk about becoming more “green” and taking strides in your everyday life to leave behind a healthier planet for the next generation.  So, here’s a little did you know about water to get you thinking…

10 Water Trivia Facts:

1. How much of the earth’s surface is water? 
80%
2. How much of the earth’s water is suitable for drinking water?
1%
3. How much water does an individual use daily?
 Over 100 gallons (all uses)
4. In which room is the most water used? Bathroom
5. How much water can you save by turning off the tap while brushing your teeth in the morning and before bedtime? 8 gallons a day
6. How much water can a leaky toilet waste each day? 200 gallons
7. How much water is used in the average five-minute shower?
15-25 gallons
8. On the average, how much is used to hand wash dishes?
 9-20 gallons
9. How much water is used to produce a single day’s supply of U.S. newsprint? 
300 million gallons
10. How much water is used during the growing/production of a single orange?
13.8 gallons
    Source: Environmental Protection Agency

So, what can we do – well, we can turn off the water while we brush our teeth, take a shorter shower and make sure our water supplies are in good working order (i.e. facets, dishwashers, toilets, etc.).

With that being said, if you’re thinking about making any updates to your home this year – take a look at the Energy Trust of Oregon’s web site first.  You might be surprised, with the added tax incentives what might seem like a more expensive option (often the “greener” option) could be just as expensive or even less expensive than the less efficient model.  The Energy Trust offers incentives for dishwashers, clothes washers and water heaters in addition to other incentives for weatherization, lighting, solar and small wind options. 

For other ideas about how to make greener lifestyle changes for yourself and your home, check out EcoHatchery.com.  Make it a resolution to help preserve our planet!

~Kori

Looking to Build Your Business in 2010?

Maria and I have been participating in weekly networking group, perhaps you’ve heard about it – Business Networking International (BNI) - it’s the world’s largest referral organization.  Our group is young, we just turned a year old but have had great sucess already and are seeking additional members.

If you’re not familar with BNI, “the concept”, to create “chapters” of business professionals who know, like and trust one another enough to pass even your must sensitive referrals.  Unlike other networking groups, BNI only allows one particular profession per group.  For example, Maria and I are the Oregon Property Team, a real estate team, therefore, our chapter is not accepting applications for other real estate agents but another chapter may have a need.  We call it locking out the competition within the chapter.  The point is to develop relationships and to create a non-competitive environment within the group.  The group meets weekly and again, unlike other groups you may have participated in, attendance is a requirement.  This insures the development of those relationships and regular passing of referrals.

If this sounds like something you might be interested in for the coming year, join us Tuesday, January 19th from 7 AM to 9 AM for an open house.  Seating is limited so if you’d like to attend, please drop us a line and we’ll reserve you a seat.  The fee for the event is $15 and breakfast will be provided.

Location: George Fox University - Portland Campus
12753 SW 68th Avenue (map)
Portland, OR  97225

A few key professions we are currently seeking:

• General Contractor
• Plumber
• Electrician
• Carpet Cleaner
• Life Coach
• CPA, Tax Preparer
• Book Keeper
• Hair Stylist
• Interior Designer
• Painter
• Printer
• Lawyer
• And more…

If you have questions or you’re wondering if your business would be a good fit, don’t worry, that’s what the open house is all about.  If our professional group is “full” there are a number of other chapters throughout the Portland Metro Area.

~Kori