Archive for Economic news
Quick Real Estate News
The Oregon Association of Realtors Reports the Following as of Today (07-01-2010):
Congress Extends Closing Deadline for Homebuyer Tax Credit
After a close encounter with the deadline, the United States Senate passed an extension of the Homebuyer Tax Credit closing deadline last night. The extension applies only to transactions that have approved contracts in place as of April 30, 2010 and have not yet closed. The legislation should create a seamless extension and the new closing deadline for eligible transactions is now September 30, 2010. There will be no gap between June 30, 2010 and the date the President signs the bill into law.
It’s important to note that this does not extend in any way the time frame for buyer’s to make a contract or get into one. It helps the approximately 180,000 individuals that have already entered into binding agreements as of April 30th and have not been able to finalize their transactions–this is espeically true for those that are involved in Short Sale transactions or are bogged down in the lending process.
National Flood Insurance Extended
Last night, the Senate also passed the National Flood Insurance Program Extension Act of 2010, which extends flood insurance until September 30, 2010, and will allow transactions to move forward. The bill is retroactive and covers the lapse period from June 1, 2010, to the date the extension is enacted.
Hopefully, before September 30th, they’ll come up with a more permanent solution. The lack of flood insurance creates instablility in the market and is potentially damaging to many homeowners.
Increases in Home Loan Interest Rates | Odd use of the word “Surge”
Typical drama spin to the headline: “Real Estate Notes: Rates for 30-year home loans surge” in today’s Washington Post Real Estate Notes.
And, how ridiculous too! Since when is slightly more that 1/8th of 1% increase considered a surge? Even when compared to the historic, record low of 4.71% we saw in December 2009, current rates are just 1.5% higher than the record low. Hardly a surge. Market rates for interest rates change all of the time. And, yes, the market is poised for rate increases (recovering economy, less federal intervention in the process and anticipation of inflationary times will all impact interest rates). But, in reality, these are still historically low rates–And, absolutely a very good reason to act now if you are considering entering the market… while rates are still at record lows.
I found this chart of interest rate history at MortgageNewsDaily.com. Interest rates were significantly higher in 2000 (non-recessionary times). Certainly a leap to those levels would be considered a “surge”.
Isn’t it funny how the words make such strong impact… “up slightly” or “up-tick” or “up just over an eighth” just wouldn’t cause the same stir would it? It makes me wonder how much of or “bad” economy could be blamed on “bad” headlines. Designed to grab the reader, but don’t really paint a true picture.
Corvallis Real Estate Projection | Corvallis sits at #7 with projection of 4.1% Increase
Most recent Money Magazine projections…
Money Magazine’s latest projections for some of the Nation’s largest metro areas places Corvallis, OR as a top gainer in real estate price appreciation for the period Q1 2010 – Q1 2011 at average price increases of 4.1%. Good numbers in a sluggish economy, but fairly close to expected numbers in a “typical” year. Eugene, OR ranks #25 at 1.6%
Check out the snap shot synopsis of why Corvallis…
So, is it a Good Time to Buy Real Estate in Corvallis, Oregon?
1) Low Interest Rates
2) Federal Tax Incentives
and
3) Value Increase Projections…
What do you think?
Corvallis Included in 5 Metro Areas on the Real Estate Mend…
Corvallis, Oregon included in top 5 metro market that show promise.
Smart Money, part of the Wall Street Journal digital network is reporting that overall the real estate market is not looking good (of course, there is no such thing as a national real estate market…but that’s another discussion). However, there are a few “pockets” that are seeing “strength” in the market. Corvallis, Oregon is reported as being third of five of the best performing markets derived from a model created by Moody’s Economy.com which evaluated 384 metro areas. Read the full Smart Money article here.
It’s great for Corvallis to get this kind of press. The real estate market is not all doom and gloom.
Statistics, the Media and Real Estate | The problems with housing market data: What does it all really mean?
The problems with housing market data: What does it all really mean?
I recently came across this blog post about housing market data, headlines and statistics. Honestly, I couldn’t agree more to what has been presented in terms of the daily news and how data is manipulated. Average, median and other “statistics” have even less contextual meaning in a “small” community because of the relatively small sample size and nearly no market significance when compared to an individual property.
The “quality” of the data has an impact. Is the reporting accurate? Do the reported sale prices include concessions (things the seller gives up to make the sale happen)? When a market has a limited data sample, the variances and inaccuracies have a larger impact.
Price per square foot has to be one of the worst benchmarks ever. Homes are not produce. They do not sell by the pound. Bananas are produce… Square footage is only one factor in determining price: style, location, fit & finish all affect price (and therefore price per square foot), lot size has an impact.
Another less than meaningful statistic is the “average number of days on the market”. There are too many factors influencing this number including: method of calculation for number of days; does a re-list count as new? does the days-on-market include the escrow period (it does here, and as such it’s a variable controlled by the needs of the clients, certainly not the “market”). There are plenty of other factors influencing how long a specific property is on the market (e.g. new construction listed prior to build out; poor location; unique style; condition of improvements, potential to obtain financing; price point…).
National statistics have very little meaning in a local market. It’s a little like trying to use the average temperature in the U.S. and compare it to a specific location. Not meaningful, especially if you’re in the warmest or coldest location. What’s more important is how robust is a local economy? How is the job market? What are the supply and demand levels?
As stated in the post, these kinds of statistics become more meaningful when compared to similar properties in similar neighborhoods.
The bottom line? The public needs to be very careful before they embrace any “news” with broad based statistical data. It’s interesting, but of limited value in a given market.
If you are interested in what’s happening in the Corvallis, Albany or other areas of the Mid-Willamette Valley, I’d be happy to help you figure out what the statistics mean to you.
IndyMac, Loan Modifications, Short Sales and Foreclosures–Way More Complicated than it Seems
IndyMac, Loan Modifications, Short Sales and Foreclosures–Way more complicated than it seems and maybe more complicated than it should be…
Two recent video blogcasts from a mortage industry source are taking issue with “deals” made between some Banks and the FDIC. The video implys that there may be some individuals with “influence” involved and that huge profits stand to be made subsidized, by the American Tax Payer… You and me.
This information has been getting quite a bit of attention within the industry. The first video caught enought attention that the FDIC contacted the “ThinkBigWorkSmall” guys to rebut some of the statements made (so they got someones attention).
Orginal IndyMac Video and FDIC Rebuttal
FDIC Responds to TBWS Indymac Video. 02.16.10
The format of the presentation has put some people off (loud guys); but listen to the message. I’d be really interested to hear opinions about this.
- What is a reasonable profit for a reasonable risk (in other words, by taking on the potential for loss, is the bank “entitled” to whatever profits they can get, no matter how they get them?
- When the bank purchased the loans at a discount, regardless of default/non-default, was that all the profit to which they were entitiled (interest, servicing fee)?
- Have the ”deals” made in bank “bail outs” created a banking environment that prevents “good business” from being worth doing?
- Do the American people end up financing the bank bail out over and over again?
- Do the entities in the banking industry (and their potential “friends” in high places, really want to fix the economy?
- Are some of the “cures” worse than the “disease”?
- Do videos like this hurt or harm the potential for the issue to rise to the forefront and be addressed or does the mode of delivery create a credibility gap?
- What do you think?
Additional links that may be useful in wading through–credibility of the sources to be determined by you.
Please note: comments made on the TBWS site are not necessarily mine and are not monitored by me. Comments to this blogsite are monitored for appropriate content prior to posting.
Corvallis, Oregon Real Estate Market: Over or Under Valued?
Corvallis, Oregon Housing Market Ranked 9th Most Over Valued – Is that a Fair Assessment?
Recently, I answered a posted question on Trulia.com, which related to a CNNMoney.com post that ranks Corvallis, Oregon as the 9th most overvalued housing market. I’ve been asked about the study in person a few times… here’s what I think.
The study was done by IHS Global Insight and PNC Financial Services. The terminology used are “overvalued” and “undervalued”. The study ranks Corvallis, Oregon as the 10th most “overvalued” market in the study (there were only 399 markets included in the study—one has to wonder about the sample size) .
On one hand I’m completely aghast at the use of the terminology. The definition of market value is “a price at which buyers and sellers are willing to do business” (Webster’s ninth new Collegiate Dictionary). So, by the very definition of market value, how can a market be “over” or “under” valued? The published article is unclear about what the “percent” relates to (percent of what?). Is it the number of homes on the market that are “over/under valued?” Or is it the total number of homes in the community (if so, where did they get that “value” from)? Is it a comparison of number of home on the market or sold in relation to the median house price? None of the data I reviewed tells you what any of it really means. I searched the web in general and the web site for both PNC Financial Services and IHS Global Insights could not locate to the actual study.
With only a surface evaluation at my disposal, I have to say, I am more than a little skeptical about comparisons or rankings of such diverse cities. Seriously, Corvallis is in a list with Honolulu, Hawaii; Bangor Maine; and Bakersfield, California? Not much commonality. Perhaps it would make more sense to compare college towns to college towns (See the Coldwell Banker Home Price Comparison Indexes — there’s one index for College Towns and one for select markets) or towns with similar features and sizes.
The study says it is based on select data: “These judgments are determined by comparing median home prices, local interest rates, population densities and income, plus historical premiums or discounts that areas have exhibited over time.”
If you want to look at the “premiums” that Corvallis has to offer and length of time for the “history”, I have to say, Corvallis is not the same place it was 20 years ago. What are the “historical premiums or discounts”, and who is deciding which of these factors is significant. The term “overvalued” may be relative to who is doing the shopping and what the current “premium” list is…
How long is the history? It does not appear that there is any consideration for supply and demand; and important factor in a community like Corvallis.
Interest rates are very much based on national pricing (at least as long as Fannie Mae and Freddie Mac are still around) not locally set, so the rate climate really has a limited effect.
Corvallis is a very small market. Median home prices fluctuate (and drop) when the upper end of the market is slow and/or when there is limited inventory in the entry level available. For a significant portion of 2009, entry and mid level housing was more active than any other price point because of low interest rates, inventory and tax incentives. When more homes sell in the entry and median levels, the median and/or average is bound to move down. It is simply how the math works (Median is the center point between the highest high and the lowest low, more weight at the lower end, drives the median down.) Based on what I know about individual home sales and the market in which I work, I am not clear on how the median can be a valid statistical point in our market. The sample is simply too small.
The variance in the study between 2006 and 2010 for Corvallis is under 5%–many of the communities on either end of the scale exhibit much wider variances between the 2006 study and the 2010 study. That (almost 5%) is not much of a difference when you are comparing the same figure to other communities. To me it is an indication of a comparatively stable market (relative to the overall economic climate). Other communities, especially those where the bottom dropped out, show wider variations. The communities that are now rated extremely undervalued took big employment hits, have high foreclosure rates, did not control growth and/or a combination of those factors.
Do not get me wrong. I do not think that any community that is immune to the impact of the current economy. However, I do not think that we are in for the fall that one might derive from this report. Jobs will determine that.
It was not until this last housing cycle that homes were considered short-term investments. In the past, most investors were looking at purchasing investment properties on the basis of cash-flow. Appreciation was a bonus. Flipping was done only by the most experienced investors and with appropriate types of financial backing.
The last paragraph of the article is the most significant. “The bottom line, at least for a few years, is that the average buyer should forget about home purchases as investments. The good news is that, long-term, their home values should appreciate.” That sounds more like a return to normal to me.
I’d like to know what you think? Please post your comment or question.
Five things I’m looking forward to in 2010 | Changes that will Affect the Corvallis Real Estate Market
Five things I’m looking forward to in 2010 and Change in the Corvallis Real Estate Market
As 2009 comes to a close, it will be nice to put a cap on it and move onto a better 2010. I, for one, am looking forward to some positives in the economy and the Corvallis real estate market. Recent economic activity would lead one to believe that the country is coming out of an extremely difficult economic period — some say the longest recession in decades.
What I think we’ll see in the coming new year:
1. Slightly higher, but still very appealing interest rate environment, at least for the first half of the year. Not the really extra-ordinary rates hovering at five or slightly under, but more like the low sixes, which historically (and if you can remember the early 1980s really very much better than seventeen percent or higher.)
2. Buyers, both first time and move (up,over,down) buyers taking advantage of tax incentives (written contract must be in place by 4/30/2010; closing by 6/30/2010)
3. Locally good levels of inventory without the impact of extreme high levels of foreclosed properties. Basically, a more balanced market. Making it a better market for everyone. As the markets that tend to feed Corvallis and the mid-Willamette Valley continue their recovery they will provide a little “stimulus” to our economy.
4. Better employment rates as the economy crawls out of the recession hole. Employment is the one factor that will really change the course of the current economy.
5. Along with higher interest rates, may come a more relaxed, perhaps I should say, sound, approach to underwriting. Not the take a pulse, give a loan attitude that helped create the mess, but realistic and reasonable, as banks re-enter the mortgage business and become less fearful of risk.
All in all, no matter what the economy does, how the real estate industry deals with ups and down, we are all just and we will continue to adjust and do what we need to do to live our lives the best way we can.
Wishing you all a happy, healthy and prosperous 2010.
Related posts:
Questions and Answers about the Expanded/Extended HomebuyerTax Credit
Homebuyer Tax Credit De-Mystified
Richard Smith CEO of Realogy on CNBC about the Tax Credit
Philomath, Oregon | Absorption Rates through November 2009
Includes all single-family residential properties on less than two acres
as reported by WVMLS.
Data taken from WVMLS 12/9/2009
| Price Range | Active Listings as of 12/9/2009 | Sold Listings Last 6 Mos. | Average Sold Per Month | Months of Inventory | Av. Days on Market Solds |
| $0 – $99,999 | * | 1 | 0 | * | 55 |
| $100,000 – $149,999 | 4 | 9 | 2 | 3 | 181 |
| $150,000 – $199,999 | 10 | 7 | 1 | 9 | 118 |
| $200,000 – $249,999 | 9 | 8 | 1 | 7 | 198 |
| $250,000 – $299,999 | 6 | 3 | 1 | 12 | 301 |
| $300,000 – $349,999 | 3 | 2 | 0 | 9 | 77 |
| $350,000 – $399,999 | 3 | 2 | 0 | 9 | 143 |
| $400,000 – $449,999 | 1 | 2 | 0 | 3 | 93 |
| $450,000 – $499,999 | 1 | 1 | 0 | 6 | 153 |
| $500,000 – $599,999 | * | * | * | * | * |
| $600,000 – $699,999 | * | * | * | * | * |
| $700,000 + | 1 | 1 | 0 | 6 | 14 |
| 38 | 36 | 7 | 133 |
Lebanon, Oregon | Absorption Rates through November 2009
Includes all single-family residential properties on less than two acres
as reported by WVMLS.
Data taken from WVMLS 12/9/2009
| Price Range | Active Listings as of 12/9/2009 | Sold Listings Last 6 Months | Average Sold Per Month | Months of Inventory | Av. Days on Market Solds |
| $0 – $99,999 | 11 | 20 | 3 | 3 | 84 |
| $100,000 – $149,999 | 44 | 48 | 8 | 6 | 131 |
| $150,000 – $199,999 | 43 | 31 | 5 | 8 | 155 |
| $200,000 – $249,999 | 19 | 14 | 2 | 8 | 247 |
| $250,000 – $299,999 | 14 | 2 | 0 | 42 | 249 |
| $300,000 – $349,999 | 3 | * | 0 | * | * |
| $350,000 – $399,999 | 1 | 1 | 0 | * | 67 |
| $400,000 – $449,999 | * | * | 0 | * | * |
| $450,000 – $499,999 | 2 | * | 0 | * | * |
| $500,000 – $599,999 | * | * | 0 | * | * |
| $600,000 – $699,999 | * | * | 0 | * | * |
| $700,000 + | * | * | 0 | * | * |
| 137 | 116 | 13 | 156 |
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