Unfortunately, I don’t have that crystal ball nor do I know what 2011 will bring for our Portland real estate market. I would have made a bet that by now we’d be out of this financial crisis and that people’s lives would be better, that jobs would be for the taking, and that people’s finances would have stopped going down the drain. Unfortunately, that hasn’t been the case.
I also don’t put much weight into what economists say about our local market. Since I started writing in 2008 here on this Portland real estate blog, I’ve stated that the economists have been wrong in the past and more than likely will be wrong in 2011.
Our 2011 real estate market started on good footing. When the January stats come out I believe sales will be up and so will our listing inventory. Personally I believe people are more positive than they have been and are deciding to take advantage of low prices and low interest rates.
However, since they are considered the “experts” here’s what has been said about 2011:The end of 2010 saw:
¢ 11 million homes œunderwater, which is 21.5% of the total number of mortgages nationwide.
¢ 4.2 million seriously delinquent mortgage holders
¢ 6 million homes in œshadow inventory
¢ 9 months of listed housing inventory at all price points
However, there are those “glimmers of hope” yet again. Inasmuch as it is the start of 2011 and we are all hopeful, below are some of those signs I’m talking about.
JOBS
Here is an article that says Jobs are on the Increase.
œAs the economy gradually recovers, some big U.S. companies are cranking up their recruiting and advertising thousands of job openings, ranging from retail clerks and nurses to bank tellers and experts in cloud computing. Many of the new jobs are in retailing, accounting, consulting, health care, telecommunications and defense-related industries, according to data collected for The Wall Street Journal by Indeed Inc., which runs one the largest employment websites. It said the number of U.S. job postings on the Internet rose to 4.7 million on Dec. 1, up from 2.7 million a year earlier. The company daily collects listings from corporate and job-posting websites, removing duplicates. Its figures may under count available jobs because some companies don™t post all listings online, an Indeed spokesman said.
We all know by now that if people aren’t earning any money, they can’t pay their bills or mortgages. It’s jobs that we need for the economy to improve. Although it has been stated in the past that the housing has led us into this mess and that housing will lead us out, I think that is now old-school thinking and that jobs are the most important ingredient in getting our economy moving again. All indications point to the job market improving and the unemployment numbers in Oregon are slowly decreasing.
INTEREST RATES AT ALL TIME LOWS & HOUSING AFFORDABILITY
Freddie Mac reported that:
“Housing is at its most affordable level in many years. A new survey released this week by Freddie Mac showed mortgage rates in the U.S. have again reached record lows. Interest rates for 30-year fixed rate home loans, the most common type of mortgage, averaged 4.19 percent during the week before October 14. That is down from 4.27 percent the week earlier, which had been the lowest average on record, based on the survey taken since 1971.”
Not only are interest rates low, but they are predicted to go even lower by mid-2011. Further, the Feds aren’t expected to raise rates until at least 2012. ABC News recently reported that sales are increasing because prices are so low and affordability is at one of its best ever. Here’s a link to that news report about housing rebounding.
HOME VALUES TO APPRECIATE
With jobs increasing and the economy picking up speed, there are indications that home values should appreciate as well. At the very least, depreciation is seen to slow and be much lower than in the past.
œIt is noteworthy that depreciating forecasts remain much better than those from a year ago with nothing worse than 7 percent depreciation, Fox said. Fox continued, œA year ago, we were seeing some markets with depreciation rates in the double-digit range. So while things aren™t happening rapidly, the forecast indicates they are getting better.
PENDING SALES
Pending sales continued their climb in November, a good sign that housing is recovering albeit slowly. Some say, and I tend to agree, that a slower recovery is actually better than a huge spike that has in the past led to a housing bubble. Our National Association of Realtors ® posted their stats for the November pending sales. Here’s a link to that story.
FORECLOSURES AND DELINQUENCIES ARE DECLINING
A recent article stated that:
“TransUnion predicts that the number of delinquent accounts ” 60 or more days past due ” will drop to 4.98 percent from an expected 6.21 percent at the conclusion of 2010.The projected decrease would more than double the 9.87 percent yearly decline that is expected between the end of 2009 and 2010 (from 6.89 percent to 6.21 percent). TransUnion anticipates at least double-digit declines in mortgage delinquencies in every state and the District of Columbia through 2011.”
SALES OF HOMES TREND UP
Our National Association of Realtors reports that:
Lawrence Yun, NAR chief economist, is hopeful for 2011. œContinuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable, he said. Yun added that home buyers are responding to improved affordability conditions. œThe relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970, he said. œTherefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.
THE BOTTOM? ARE WE THERE YET?
Technorati reported:
It should be a buyers™ market for the next year or two. As the economy starts to improve and workers are in a better financial situation, the buyers and sellers will come closer together this year. With the added inspiration of increasing interest and mortgage rates, people who have been on the fence about purchasing a home should be more willing to buy.
The aftermath of the recession has left longer-term negative consequences in some industries such as construction, real estate, and manufacturing. As we just mentioned, it will take a while before the demand for houses really picks up. Unemployment is still quoted at close to 10% but the real figure that includes everyone: people still looking, those who have stopped looking, and part-time workers who want full-time jobs, is much higher. Read more here.
It’s been reported that we came out of the recession in June 2009 and those same economists say June 2010 was the bottom of our real estate market. Zillow now says that:
“We™ll see the bottom in national home values in Q2 or Q3 of 2011 (more likely the latter).”
PORTLAND REAL ESTATE MARKET
The Bad News
A recent Money Magazine article said that Portland is still over-valued by 24%. You can read the full article here. Housing Predictor posted their thoughts on the top 20 real estate markets and showed they expect Portland prices to drop -9.4% in 2011. We are only one of 8 markets that is considered over-valued.
CoreLogic’s recent report shows that Portland has one of the most depressed markets with one of the highest depreciation rates. “Including distressed sales, the five states with the greatest depreciation were: Idaho (-13.56 percent), Alabama (-11.18 percent), Arizona (-10.38 percent), Oregon (-9.26 percent) and Mississippi (-8.37 percent).” You can read the rest of their report here.
The Good News
However, Smart Money recently posted where they felt it was “safe to buy”. Portland, OR. was on their list as a safe real estate bet. Here’s an interactive map showing those cities throughout the U.S. that Smart Money recommends. Further, Portland ranked in the top 10 for being a good place as a business investment. That article is here.
In a recent article, Portland ranks #9 as one of the best places to purchase in 2011.And, the U.S. Census Bureau ranks our Portland/Vancouver/Beaverton area 2nd in the nation for having low vacancies at 4.8% for Q3 2010.
According to a recent PSU Housing Report, Lake Oswego has one of the lowest apartment-multi-family vacancies and once again the Kruse Way area has a low office vacancy rate.
I recently posted Lake Oswego and West Linn stats for 2010. West Portland and Tigard will follow shortly. In the meantime, want specific local information, neighborhood stats for an area you are interested in? Send me an email bettyjung.rebroker (at) gmail.com and I’d be happy to send you the information.
ALL ABOUT…..Portland.Oregon.Real Estate. © Copyright 2008-2011. Betty Jung. All Rights Reserved. Use of this article, photos and images without permission is a violation of federal copyright laws. Based on a Blog at WordPress. (For more local and national real estate information, go to my website).
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