Archive for Economic news
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 |
Corvallis, 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 | * | * | 0 | * | * |
| $100,000 – $149,999 | 8 | 8 | 1 | 6 | 100 |
| $150,000 – $199,999 | 34 | 40 | 7 | 5 | 101 |
| $200,000 – $249,999 | 45 | 84 | 14 | 3 | 112 |
| $250,000 – $299,999 | 39 | 62 | 10 | 4 | 160 |
| $300,000 – $349,999 | 21 | 33 | 6 | 4 | 136 |
| $350,000 – $399,999 | 24 | 16 | 3 | 9 | 170 |
| $400,000 – $449,999 | 20 | 10 | 2 | 12 | 149 |
| $450,000 – $499,999 | 7 | 4 | 1 | 11 | 166 |
| $500,000 – $599,999 | 17 | 10 | 2 | 10 | 195 |
| $600,000 – $699,999 | 5 | 2 | 0 | 15 | 108 |
| $700,000 + | 7 | 3 | 1 | 14 | 198 |
| 227 | 272 | 8 | 145 |
Albany, 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 | 18 | 17 | 3 | 6 | 104 |
| $100,000 – $149,999 | 60 | 73 | 12 | 5 | 116 |
| $150,000 – $199,999 | 123 | 129 | 22 | 6 | 121 |
| $200,000 – $249,999 | 83 | 63 | 11 | 8 | 165 |
| $250,000 – $299,999 | 45 | 35 | 6 | 8 | 180 |
| $300,000 – $349,999 | 28 | 10 | 2 | 17 | 116 |
| $350,000 – $399,999 | 19 | 8 | 1 | 14 | 240 |
| $400,000 – $449,999 | 3 | * | 0 | * | * |
| $450,000 – $499,999 | 1 | 1 | 0 | 6 | 78 |
| $500,000 – $599,999 | 3 | 1 | 0 | 18 | 157 |
| $600,000 – $699,999 | 1 | 1 | 0 | 6 | 337 |
| $700,000 + | * | * | 0 | * | * |
| 384 | 338 | 9 | 161 |
Expanded and Extended Tax Credit Information–From the Expert
Questions and Answers from the Expert about the Expanded and Extended Tax Credit
Sellers and Buyers in and around the Corvallis and Albany, Oregon real estate markets can benefit from a clear understanding of the opportunities the Expanded/Extended Home Buyer Tax Credit provides.
An excellent source for answers to questions you may have about the expanded and extended tax credit for First Time Home Buyers and Long Time Home Owners that are thinking of making a change can be found at the Q & A page for the I.R.S. The ultimate resource for information about taxes, tax credits and all other information that relates to the Expanded and Extended Tax Credit for buying a home.
It is possible to have parent (or other family members) assist in the purchase and still be eligible for credits.
If you are currently a homeowner and meet the other requirements, you do not have to sell your existing home (you could rent it out), but you do have to occupy the newly acquired home and meet all the other requirements.
You do not have to “buy up” or, in other words pay more for the new house.
Read the Questions and Answers about the tax credit for Home Buyers. This is truly a limited time opportunity.
I.R.S. Information about the Expanded and Extended Tax Credit
As always, seek the advice of a qualified tax advisor if you have questions about tax laws and how they pertain to personal circumstances.
Philomath, Oregon | Absorption Rates through October 2009
Includes all single-family residential properties on less than two acres
as reported by WVMLS.
Data taken from WVMLS 11/10/2009
| Price Range | Active Listings as of 11/10/2009 | 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 | 8 | 1 | 3 | 177 |
| $150,000 – $199,999 | 9 | 5 | 1 | 11 | 122 |
| $200,000 – $249,999 | 9 | 8 | 1 | 7 | 198 |
| $250,000 – $299,999 | 5 | 3 | 1 | 10 | 301 |
| $300,000 – $349,999 | 3 | 2 | 0 | 9 | 117 |
| $350,000 – $399,999 | 3 | 2 | 0 | 9 | 143 |
| $400,000 – $449,999 | 2 | 1 | 0 | 12 | 106 |
| $450,000 – $499,999 | 1 | * | * | * | * |
| $500,000 – $599,999 | 1 | * | * | * | * |
| $600,000 – $699,999 | * | * | * | * | * |
| $700,000 + | 1 | 1 | 0 | 6 | 14 |
| 38 | 31 | 8 | 137 |
Lebanon, Oregon | Absorption Rates through October 2009
Includes all single-family residential properties on less than two acres
as reported by WVMLS.
Data taken from WVMLS 11/10/2009
| Price Range | Active Listings as of 11/10/2009 | Sold Listings Last 6 Months | Average Sold Per Month | Months of Inventory | Av. Days on Market Solds |
| $0 – $99,999 | 10 | 22 | 3.67 | 2.73 | 84 |
| $100,000 – $149,999 | 41 | 45 | 7.50 | 5.47 | 126 |
| $150,000 – $199,999 | 43 | 28 | 4.67 | 9.21 | 147 |
| $200,000 – $249,999 | 18 | 12 | 2.00 | 9.00 | 249 |
| $250,000 – $299,999 | 12 | 4 | 0.67 | 18.00 | 248 |
| $300,000 – $349,999 | 3 | * | 0.00 | * | * |
| $350,000 – $399,999 | * | 1 | 0.17 | * | 67 |
| $400,000 – $449,999 | 1 | * | 0.00 | * | * |
| $450,000 – $499,999 | 2 | * | 0.00 | * | * |
| $500,000 – $599,999 | * | * | 0.00 | * | * |
| $600,000 – $699,999 | * | * | 0.00 | * | * |
| $700,000 + | * | * | 0.00 | * | * |
| 130 | 112 | 8.88 | 154 |
Equal Housing Opportunity. Each Office Is Independently Owned and Operated.