A Housing Shortage on the Horizon?

SmartMoney (7/26/10); Lisa Scherzer

A Housing Shortage on the Horizon?

If you take a step back from the current doom and gloom of foreclosures and declining sales and focus on the low construction levels over the past few years, some economists say a housing shortage might be in the offing. A 2009 report by Massachusetts Institute of Technology economics professor William Wheaton says that despite the glut of existing homes, with current depressed levels of construction, there might be “excess demand” for newly constructed homes. We’re only adding about 600,000 new housing units a year now, and the long-term growth in new households is 1.3 million to 1.4 million per year, says Ross DeVol, executive director of economic research at the Milken Institute. The household formation rate has fallen off somewhat because of the recession. But that decline is misleading because college graduates have chosen to live at home with their parents while they find their financial footing, and people defer getting married for a year or two. But long term, that household growth says that “if we build substantially less than that amount, which we’re doing now, in four, five or six years, if we don’t ramp up housing starts, we could see a shortage,” DeVol says. One risk is that so many home builders leave the field during the current downturn that there could be “capacity constraints” in the long term as the U.S. population continues to grow, says John Vogel, professor of real estate at the Tuck School of Business at Dartmouth. There won’t be constraints in overbuilt places like Las Vegas, Phoenix, Riverside, Calif., or Miami and Ft. Lauderdale. But if the pace of home construction doesn’t pick up, “we are going to begin to see some tightness in some areas of the country that didn’t have the boom and bust occur,” DeVol says. The regions most likely to be undersupplied by mid-2012 are those where supply and demand are now in balance, says Celia Chen, senior director of housing economics at Moody’s. Chen includes states like Washington, Oregon, New Mexico and Utah in this group.

New iPhone App For House Hunters

Have you ever been driving around, stumbled upon a house that’s for sale but there isn’t any information available?  Whether you’re just looking for fun or you’re actively looking for a new home, the “myAgent by IDX” is an awesome tool to receive local real estate listings at your finger tips.

Using GeoTracking, the app identifies where you’re located and pulls up all the actives listings in the area.  Plotted on a map you’ll see where each house is located – scroll over the little house image and you’ll get additional information about that specific home (price, number of bedrooms, bathrooms and the public remarks from RMLS). 

Here’s how to get it!  There are two ways to download and install:

1.       From your desktop computer, click here to open iTunes on your local system, which will bring up the “myAgent by IDX” application. Click to install the app – you will need to enter the agent code “7125-55” when prompted.  The next time your phone is synced to your computer, the app will be installed on your phone.

2.       Or, from your iPhone, go to the App Store, and search for “myAgent by IDX”. Click to install the myAgent app.   ***Important:  when you open the app for the first time on your iPhone, the program will ask for your agent code. Type in “7125-55”. This will give you permission to access the current data through your phone.

The data for this application is pulled directly from RMLS and works well within the Google mapping system when searching for properties, as well as viewing results throughout the greater Portland area.

Please share with your friends, family and colleagues.  No more wishing there were flyers in the box, no more questioning the list price or how many bedrooms – get the answers at the tip of your fingers on every active listing!  Of course, call me if you have additional questions – this app will only provide high level information.

Have a good one – Happy Hunting!

~Kori

RMLS Market Action – April 2010

Well, the stats are out for April and it looks like another great month – closed sales were up 49.1% when compared to April 2009 and pending sales were up 23.8% for the same period.  Inventory levels decreased – that’s a decreasing number we like to see – at least until we get to around 6 months of inventory, currently at 7.2 months.  While closes sales increased substantially, values were down 3.1% when compared to April of last year.

I will be interested to see what happens with May’s numbers.  The market up to April 30, 2010 was largely driven by the first time homebuyers and the tax credit which is why I believe we saw such a substaintual increase in closed and pending transactions (remember, buyers just needed to be under contract by April 30th – close by June 30th).  I think May will have a decent number of closings but down from April – ditto for June - and we will see a sharp decline in pending transactions in the coming months which by July will result in a decline in closed transactions as well.

All that being said, if rates remain low and confidence in the market continues to rise, I think we will see an uptick in the average sales price.  Remember, with an average, there are highs and lows.  With the market being dominated by the first time buyer for the past six months we have seen values soften simply due to their price range (and the limitation on income per the tax credit which limited the first time buyer to a home less than $300,000 on average).

I think the next few months will be very interesting.  As I said, rates are still at record lows but they cannot remain there forever and consumer confidence is on the rise.  When we see confidence return to all markets (retail, stock, housing, etc) we will also see an increase in interest rates.  It’s simple cost vs. demand economics. 

We saw an increase in new building projects in April (5.8% increase – the highest since October 2008) - shoot, my neighborhood (Vernon/Alberta Arts) alone has half a dozen to a dozen new homes going up within a 5 block radius.  On the flip side, new building permits fell sharply in April signaling builders are a little hesitant; however, a survey done by the National Association of Home Builders said its housing index, which ranks industry confidence, rose three points in May, the highest ranking since August 2007.

We are starting to see a shift in the market.  Unlike the early-to-mid 2000’s, where we saw home values increase rapidly, I think the recovery will be slow but fairly steady, creating a much more stable market and overall economy.  I’m looking forward to the next few months because I believe there is great opportunity in the real estate market in Portland but I do believe we are seeing the market turn the corner – at least in some areas of town.  I’ve spoke about this website before, but here is a link where you can look up property values by zip code (within Portland).  The same zip I used before – 97213 (close-in NE neighborhood) – shows values inching their way back up to 2006 levels.  It’s not rapid but it’s happening and will continue to show improvement over the next several months.

~Kori

RMLS Market Action – March 2010

As a Realtor, I get the question daily – so, how’s the market?  Even from other agents.  The market is the market – good or bad – remember, if  it’s a ”seller’s market” it’s not good for buyer’s and vice versa – the market is the market.  That being said, we had an exceptional March 2010!  I do believe it’s been driven by the federal tax credit; however, I’m working with a number of clients (both first time buyers and current home owners that qualify) that have said, the credit is motivating but they are moving forward with or without the credit.

Proof is in the numbers!  Closed transactions were up 51.9% in March 2010 over March 2009, pending sales were up 46.7% and new listings increased 35.3% year-over-year.  Month over month the numbers were up dramatically – March 2010 over February 2010 saw a 77.2% increase in closed sales, 29.8% increase in pending transactions and a 27.8% increase in new listings.  Even with listings being up we saw inventory levels decrease substantially from 12.9 months to 7.8 months.  Remember, six months of inventory is considered a “balanced” market.

Here’s some news… home values were also up month-over-month by 2.6%!  We are embarking upon a healthier market.  We do not want to see the increases in home values that we saw in the early to mid-2000’s.  The artificial inflation was not a ”good thing”, even for sellers at the time because remember, they probably turned around and purchased a new home at that artificially inflated price. 

Values are going up slowly, perfect.  Rates are still great but rising a bit.  The stock market is showing improvements.  Yes, Oregon still has an above average unemployment rate but we were the last into this recession and we will be the last out – the benefit, the impact on our economy was minimal when compared with other cities and states across the country.

So, how’s the market?  The market is the market but it’s looking great as we see the pendulum swing back to a more balanced market simply in favor of home ownership.

~Kori

Signs of Real Estate LIFE?

This past week, the headline article in the Portland Tribune was “Signs of Real Estate LIFE?  Builders, Realtors look for signals that home sales are bouncing back“, so what was the consensus?  It sounds like a broken record but it’s still a great time to buy and that’s not just me, that’s the first line of the article.

As a Realtor, I struggle everyday with the question – is the market getting better?  Well, that depends.  Are you looking at a downtown condo hoping it’s a good investment or are you looking at a free-standing house in one of Portland’s close-in neighborhoods?  Even then, the answer is still, it depends. 

I was out on the river last night with my fellow dragon boaters as we cruised past the South Waterfront – you’d think we were looking at some abused caged animal… ah, it’s too bad, can believe all those beautiful condos have been foreclosed upon and were auctioned off for practically nothing?  First of all, it was 50 units within the John Ross which has a total of 303 units.  Yes, the South Waterfront is a “distressed” area but I personally believe it’s a result of the overall economy, eventually, this will be a happenin’ area – it was just a little premature for the Portland Market.  Similar to beach front property, there is only so much river front property so eventually, this area will take off as it was intended. 

Similarly, other close-in neighborhoods have not felt the hit that the outlining areas have suffered.  Yes, values are soft when compared to 2005-2007 but we all knew, that bubble was going to burst because prices were rapidly becoming falsely inflated.  If a neighbor sold their house a month prior for $300,000, the new listings were coming on at $325,000 and also selling in days.  We are still seeing a market where properties are on the market for literally days – it’s happening all over the city. 

So, if you ask me if the market is getting better, I’d say, it depends.  What area of town?  What are your short and long-term goals in-regard to the home?  A home is still a great investment!  It’s one of the few remaining tax deductions other than children for the majority of Americans who are not self-employed (and trust me, the deductions for the self-employed are dwindling as well).  Interest rates are still fantastic – remember, when the market was booming we were at 6% – 7% and in the 1980’s we saw interest rates in the double digits!

Regardless of the tax credit, it is still a great time to buy – the credit was a wonderful motivator but the market is not going to come to a stretching halt on May 1st – remember, there were criteria that limited the credits to a particular segment of the population, not everyone who purchased a home this past year is collecting tax credit.

~Kori

What’s your home worth? Zillow may not know (in Portland, that is)

KATU news recently reported on Zillow in the Portland area – “What’s your home worth? Zillow may not know”.  I added the commentary in the title of (in Portland, that is) because depending upon your region and the local rules governing this data the information can be very different.

The professional appraisal of this home in the Alameda neighborhood of Northeast Portland turned up a valuation "definitely in excess of $500,000." But plug the address into Zillow.com, and you'll see a "zestimate" of only $424,000.

The article uses a subject property in the Alameda neighborhood of Northeast Portland(this is my stopping grounds – born, raised and still reside in the general area).  There are some very valid points about why using Zillow in this particular area is difficult – homes on “the ridge” can be two to three times larger than the homes on the side streets so for an electronic application that simply takes into consideration public records (i.e. tax records, title reports, etc.) these broad swings in property type create more of an average vs. a true valuation.

I like to use one of my client’s home as an example of the discrepancy of Zillow – an adorable bungalow, two blocks off Alberta on NE 27th (the heart of the Alberta Arts District).  She had refinished the hardwood floors, stripped the woodwork and re-stained, installed new “period” fixtures, fresh paint throughout, etc.  The value from Zillow – $20,000 in 2008.  Now this was not the height of the market by any means but $20,000.  Turns out, she had refinanced and given the $20,000 to an ex – he moved out, she kept the house.  Was her house worth $20,000, no – it sold for $312,00 with an offer in 30 days.

Now, I don’t think Zillow is a bad thing.  Zillow is a tool but it is not the final say.  One of the reasons Zillow’s data can be so skewed in Portland is because Zillow does not receive sales data from our local MLS system (RMLS); therefore, they cannot look at days on market (the longer you sit on the market the more your price will be impacted in a negative way - it’s best to price right and sell quick – you’re not leaving money on the table, you’re putting it in your pocket sooner and likely more than if you tried to hold out), it doesn’t see pending sales, and I’m not sure how it handles “distressed” properties (short-sale and foreclosures).  In the Seattle area, where Zillow began and still resides, the local MLS system has agreed to provide their data to Zillow which  results in more accurate “zestimates” than here in the the Portland area.

So, as with any on-line tool – take it for what it is, a tool.  Educate yourself by looking at a few different resources and then contact a REALTOR to run a current, local, market analysis.  Going back to the Alameda neighborhood, again, this is an area that I’m always talking about (the eastside in general) in my office meetings (my office is on the westside) – rules like “price per square foot” do not apply.  These homes range in age from the early 1900’s to present, some have finished basements, others not, some were “updated” oh, in the 50’s, 60’s or 70’s  and others today (as in now, not 1990).  All things must be considered (sorry for the little NPR pun) which is why it’s important to call in a professional who can give you a more comprehensive picture.

Zillow, Yahoo Real Estate, Realtor.com Home Values, Cyberhomes.com, etc… just tools like WebMD, Yelp, Ask, etc.  You might look at these sites to get an idea or a better understanding but you still go to the doctor or the mechanic for the solution.

Give me a call or drop me an email, I’d love to help you with your real estate needs.

~Kori

RMLS Market Action – February 2010

The February 2010 RMLS Martket Action Stats were published today.  Again, I keep saying it, and the proof is in the numbers, the market is picking up!  Slow and steady like the tortoise (we saw what happened when the hare lead the race in the late-90’s to mid-2000’s).

Sales activity was up in February 2010 both month-over-month and year-over-year.  We saw closed business rise 2.9% over January 2010 and 18.4% over February 2009!  No surprise, values are still down – the average sales price was down month-over-month 3.3% ($273,100 v. $282,400) – so what does this tell us? 

It’s still a great time to buy!  I hesitate to say it’s a buyers’ market, it’s THE market and everyone needs to adjust.  Sellers’ need to price their homes accordingly (which as we can see from above – right now, that’s 3.3% below what you would have listed it at last month).  It is still important to get it priced correct out of the gate and get your home sold – you’ll leave money on the table if you’re facing a price reduction in 30-45 days. 

So, does this mean it’s a terrible time for sellers?  NO.  Homes are still selling and selling quickly.  It’s about being ready for the market and pricing your home to compete!  Real estate is not a spectator sport and this is most definitely, not a spectator’s market. 

That’s why I hestiate to say it’s a buyers’ market – if you see a great property, it will be snached up.  Of my transactions over the past year – 67% were on the market for less than 30 days (that’s both buyers and sellers).  Again, it’s not a buyers’ or a sellers’ market – it’s THE market and you need to act accordingly if you want to take advantage of one of the best markets (and rates) we’ve seen in years.

~Kori

HouseLogic: A Resource for Homeowners

Click Image to Play Video

NAR created this site to help consumers become more informed, responsible homeowners which in turn results in a more stable housing market.  As a homeowner, it’s in your best interest to maintain and protect your home for your own enjoyment and your overall financial investment.

Footnote and Disclaimer: From time to time, NAR may ask you to partner on issues or legislation that may impact you as a homeowner.  It’s up to you whether to participate in these causes.

I hope you find this site beneficial.  I have already marked a number of articles for future reference – we all need a little guidance when it comes to knowing what, when and how to protect our homes.

~Kori

Barbara Corcoran – A Tycoon’s Tips

Okay, here’s another article from the March/April 2010 AARP Magazine – I’m sharing these articles because for those of us that are not yet subscribers, we wouldn’t get this information otherwise.

Now, I’ve got to tell you, I’m feeling “wise beyond my years” – last week I offered my commentary regarding the state of the market when I posted the RMLS Market Action – January 2010.  I specifically said, this is a great market… why, because values are still soft and money is cheap!  Here’s the advice of real estate mogul Barbara Corcoran from the current issue of AARP:

BUY NOW!  That’s the hot advice of respected housing expert Barbara Corcoran, who says she’s never seen a better time to purchase a home.  “Typically when real-estate prices are low, interest rates are high.  This is the first time I’ve seen cheap money and cheap prices simultaneously.  This is the good old days we’ve dreamt about.”

Corcoran has a knack for timing.  Having parlayed a $1,000 loan into the high-end New York City real-estate firm she started, The Corcoran Group, she sold the company for $66 million in 2001, before the market cratered.

Now, as an investor on ABC’s ”Shark Tanks”, Corcoran encourages buyers to jump at the abundance of good deals.  “It’s the perfect time to snatch a bargain or to up-grade,” she says.  And when does she think the market will rebound?  “Real estate is slow to unwind and fast to recover.  I suspect we’ll make up most of the loss of the last four years within the next 18 months.”

Now, that’s a bold statement but she is THE expert!  I said it’s a great time to buy for the exact same reasons and from a business perspective, I hope she’s right.  I believe we’ll see a rebound in the next 18 months, I’m just not sure if that will include a recovery of the losses we’ve seen over the past four years.  I actually hope that’s not the case- of course I want to see home values on the rise – as a REALTOR and as a home owner – however, I want to see a sustainable recovery.  If we regain the losses of the past four years in 18 months we will see inflated prices again and the dream of home-ownership out of reach for many first time buyers again.  Thankfully, Portland’s pendulum has not swung as aggressively to one side or another as it has in other markets (Arizona, Nevada, California, Florida) which also means our recovery should be less dramatic as well.  As Martha would say, “that’s a good thing”.

The moral of the story – it is a great time to buy.  Even if you miss out on the tax credit, values are still great and rates are still low.  I’d love to help you take advantage of this “perfect storm” and if you’ve been thinking about jumping into the market and have the means, you could still make the tax credit deadline as well – which is the whip-cream and cherry on top.  Give me a buzz or drop me a line and we can get started today building your real estate portfolio.

~Kori

Claiming The Federal Housing Tax Credit

Well, it’s tax time and for those of you who were first-time home buyers in 2009 or were “move-up” buyers in the last couple months of ‘09, may be eligible for the Federal Housing Tax Credit.  Hopefully, you spoke with your accountant, CPA or other financial professional prior to signing on that dotted line to make sure you actually did qualify if you’ve been expecting to get the credit (tax credit eligibility).

Now, how do you claim the housing credit?

The tax credit is claimed on your federal income tax return, specifically, home buyers need to complete IRS Form 5405 to determine their tax credit amount, and then claim that amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of hte 1040 income tax form for 2008 returns).  Please note that although the Form is titled “First-Time Homebuyer Credit,” this is the correct form for claiming both the $8,000 first-time homebuyer tax credit and $6,500 repeat buyer tax credit.

No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase. In cases where a HUD-1 form is not used, such as for construction of some new homes, you should attach a copy of the certificate of occupancy in lieu of the HUD-1. Homebuyers should be sure to read the instructions for the revised IRS Form 5405 to be sure they meet the new program requirements.

If you do not know which of thedocuments in your mound of paperwork is the HUD-1 or you’ve misplaced your closing documents, contact your REALTOR, they should have copies of everything in their files as well.

~Kori
*Source the National Association of Home Builders

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