Improving Housing Markets | May 2012

Corvallis, Oregon ranked 73rd in improving housing markets index.

According to the National Association of Home Builders/First American Improving Markets Index (IMI), released 5/7/2012 Corvallis, Oregon is listed as one of the  housing markets showing measurable and sustained improvement.

The index takes into uses three independent montly data factors – employment growth (Census), house price growth (Freddie Mac) and single-family housing growth (Census) to identify the top improving markets.

Cities in the Northwest include:

View the full report: NAHB/First American Improving Markets Index (IMI)

 

 

SOLD! HOME FOR SALE – 9066 NW Lessie Place, Corvallis, Oregon

SOLD!

HOME FOR SALE – 9066 NW Lessie Place, Corvallis, Oregon – Pacific Northwest Dream Home on 1.34 acres

Beautiful in every way, open, light and airy floor plan invites the sunshine in. Gourmet kitchen is the hub of the home and features top of the line stainless steel appliances, granite counter-tops, island, breakfast bar, and walk-in pantry. Main level bedroom/office and full bath, to-die-for master suite with huge walk in closet and attached bath is a half flight up. 3 bedrooms and a full bath are clustered together just a half flight down from the main. Spacious family room is just a few more steps down. Outdoor living includes spacious decks at every level with steps down into the large grassy yard. Setting is private and sunny, bordered with trees to enhance privacy and you’ll love the sound of the nearby creek.  3 car attached garage and room for RV or shop.  5 bedrooms, 3 baths, approximately 3352 sq. ft., 1.34 acres.

Enjoy living close to Corvallis’ McDonald-Dunn Forest, managed by Oregon State University’s College Of Forestry. Within McDonald-Dunn Forest you can spend some time exploring Peavy Arboretum. Hike trails to Cronemiller Lake, picnic at the Firefighter Memorial Shelter, and learn about the native plant species that inhabit the arboretum. Located in a desirable area in northwest Corvallis on a cul-de-sac, this 5 bedroom, 3 bath home was built in 2007 and has territorial and wooded views, an ideal private setting that is open and light.  Convenient to all that Corvallis has to offer, with easy access to shopping, Good Samaritan Hospital and the Corvallis Clinic medical facilities, local schools and parks, and downtown Corvallis.

Make your home here in the great-room style living room. Large windows, vaulted ceiling, and skylights maximize views and natural light creating an atmosphere that’s warm and inviting as well as spacious and open. A nice combination of hickory hardwood flooring and carpet define spaces and provides additional warmth. Gas fireplace with stone surround, keeps it warm and cozy.

Let your inner chef reveal itself in this gourmet kitchen. Open to dining room with breakfast bar, island, walk-in pantry with glass door and sensor light, granite counter-tops and tile back splash with decorative accents, custom Beech cabinetry with an antique glazed finish, and top-of-the-line stainless steel appliances; Viking professional grade side-by-side refrigerator, Jenn-Air microwave, Electrolux electric convection double wall oven, Thermador warming drawer, Electrolux 6-burner gas cook-top, and Electrolux dishwasher.

Host your parties at home, this floor plan flows. Ideal for entertaining with the dining room open to both the living room and kitchen. Dining room has large windows, vaulted ceiling, and access to the covered decks and backyard.

A spacious bedroom/office (an excellent choice for guests), full bath, laundry mudroom combination and direct access to the house from the garage complete the main level floor plan.

Find your moment of relaxation. Leave the world behind…Spacious master suite has large windows to maximize views and natural light, serene master bath, and a walk-in closet that can easily hold enough for all four seasons. Enjoy a nice hot bath after a hard day’s work in the soaking tub, complete with wooded views. Master bath also has large step-in shower, dual sink vanity with granite counter-tops, ceramic tile flooring, and access to both the master bedroom and walk-in closet.

Take some time for you in a place you can call your own. Basement family room is an ideal place for fun for people of all ages. Spacious with large windows and storage alcove, the possibilities are endless; craft area, playroom, home office, man cave, teenager’s hideaway, adult lounge, home gym, or YOUR dream space. Access to large covered deck allows you to maximize the space in which you live.

A place where your backyard dreams can come true. Located on 1.34 acres, this home has manicured landscaping in the front, fire ring, stone retaining walls, and large expanse of lawn in the back, surrounded by your own personal forest. Enjoy the natural music of the nearby creek from areas both inside and out. Plenty of room for play, gardening of any kind, specialty landscaping, and more.


Search for more homes for sale in Corvallis here.

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.

Richard Smith Comments on Homebuyer Tax Credit Expansion/Extension

Richard Smith checks in with CNBC regarding the current condition of the real estate market, projections about the economy and mortgage interest rates, the condition of FHA (Federal Housing Administration). A very insightful and calm discussion about the anticipated response to the tax credit extension/expansion.


Richard Smith is CEO of Realogy (parent to Coldwell Banker Corporation and others) and the world’s largest brokerage operator.

Senate Passes Homebuyer Tax Credit…

Today the US Senate passed the Homebuyer Tax Credit witha 98 to 0 vote. The credit is included in the Unemployment Bill. In order for it to be effective The house must still pass this legislation and then President Obama must sign it into law. It is generally expected to be to The President by the end of the week.

In essence, the bill extends the $8,000 first-time homebuyer credit through April 30, 2010 and provides a $6,500 credit to new purchasers who have lived in their current residence for five or more years.

In Corvallis, Albany and Philomath, this should help create movement in the housing market by assisting the mid-range of the market to move-up into the currently slow upper range; assisting owners of lower cost “entry level” homes to move into the mid-range; thus, freeing up entry level housing for first time homebuyers.

Exciting news for the real estate industry in Oregon; and good news for buyers and sellers in Corvallis, Albany and the surrounding communities in the Willamette Valley of Oregon.

The extension was expected in late October, but has been slow in coming…

“People are going to wonder, how is it, that something that is just common sense and fairness should take so long to make its way through the United States Congress,”‘ Oregon Sen. Ron Wyden said after the vote.

Key Provisions of the Bill Follow (Provided by Teresa “Terry” Estergard, Wells Fargo Bank):

HOMEBUYER TAX CREDIT SUMMARY
S.A. 2712 would:

  • Extend through April 30, 2010 the tax credit for first-time homebuyers (up to $8,000 or up to 10 percent of the purchase price of the residence), allowing 60 days to close, provided that the homes are under a binding contract by that date;
  • Provide homebuyer tax credit of up to $6,500 to owners who have been in the same principal residence for five consecutive years during the previous eight years;
  • Increase the income limitations to $125,000 for individuals and $225,000 for joint filers;
  • Phase out the credit for individuals with incomes above $125,000 for individuals and $225,000 for joint filers at the same rate as current law (over the next $20,000);
  • Limit the credit to purchases of principal residences equal to or less than $800,000;
  • Eliminate the 36-month recapture requirement for military personnel, including members of the Foreign Service and intelligence community, forced to sell as a result of an official extended duty of service; and
    Extend the tax credit for one year for military personnel serving outside the United States for at least 90 days in 2009 or 2010.
  • S.A. 2712 would also include anti-fraud language. The measure would not extend the credit to taxpayers under the age of 18 on the date of purchase unless that person is married to a taxpayer above the age of 18. The amendment would also require a properly executed copy of the settlement statement to be attached to the tax return. Moreover, the substitute would expand the restriction on a residence acquired from a family member to include a residence acquired from a spouse’s family member.
  • S.A. 2712 would also extend math and clerical error authority to the Internal Revenue Service. 

How Recovery Will Come to America and Oregon

On Wednesday, October 14th, I attended a presentation titled: “How Recovery Will Come to America and Oregon”by Dr. Bill CReal Gross Domestic Product (GDP)onerly.  The focus of his talk was on the cause of the recession and the economic forecast for the next 18 months or so.  His presentation was well organized, down to earth and “plain language”.  A few of the key points were:

  • It is absurd to think that one person can change the jobs problem in a shorHousing Startst amount of time.
  • Housing starts drive the GDP (Gross Domestic Product1).  If this recession were truly a “housing problem” we would not have had a recession of this magnitude, nor would it have been global.
  • Demand for new housing tapered because construction of new homes exceeding demand.  At one point, the supply was 70 homes for every 100 people (people, not households); it should be at about 45.
  • Factors affecting housing demand:
  • Immigrant workers without jobs moving back to country of origin (migrate out)
  • Divorced couples staying in the same house become of economic factors (rather than creating new households)
  • Grown kids moving back to parent householdsVacancy Rates
  • There are too many vacant homes.  There is no immediate solution.  Vacancy rates will be slow to come down. The dip in “Owned” vacancy rate is attributable to first time home buyers moving from rentals to homes that they own.  This is pushing the problem from one sector of the market to another.Retail Sales
  • The public’s attitude drives the economy.  Fear creates an environment where there is no spending on discretionary items, which leads to a down turn on retail sales (“retail sales fell off a cliff”.)  The first component of the recovery is retail sales the second is money supply.  In the short run, this is difficult, but it also provides the seeds for recovery.  When people stop spending, they start saving.
  • 10% unemployment actually equals 90% employment.  The 90% that have jobs think that maybe they dodged the bullet; they have money in their pockets and create a pent-up demand environment.
  • The recession is over. The recovery is a process. It is like having fallen 9 feet down in a 10 foot hole, you have to climb out.consumer confidence
  • We are unlikely to see a big change in that (the non-spending) attitude — this recession has caused the “de-blingification” of America.
  • Change will happen in gradual shifts.
  • Challenges (factors that could limit economic growth) in the changing economy:
  • The financial stress of a growing economy
    1. Credit limitations
      1. Credit card companies cutting back (which was needed, but could have an impact anyway)
      2. The risk is main street business, small businesses especially, are not necessarily looking good for line of credit extensions (typically subject to annual review).  Bank examiners are afraid of looking bad, so are being very conservative.  Not necessarily taking into consideration that a small business surviving the bad economy is a good thing – looking strictly at profits, which may be minimal for the last year or so.
    2. Vendors may not be able to deliver
      1. Lack of ability to stock shelves—the current economy has created an environment where existing inventories have been reduced
      2. May be unable to gear up to meet demand
    3. Human resources – challenged to find staff to deliver in a change market
    4. Big companies may wait and hold off on large purchases; will be in “wait and see” mode before making decisions on spending.
  • It will be important to watch and track consumer trends to determine if they want to go upscale or take a more moderate approach.Money Supply
  • The biggest concern for the immediate future is to curb inflation.  This is a very contentious issue; the forecast is the Fed needs to slow the economy at the right time.  It is very likely that in March or April the Fed will hit the brakes hard.  Long-term interest rates are likely to climb even sooner.  If the Fed waits until later, it is likely that the inflationary period will be worse.
  • In the past, there have been economic downturns where Oregon was distinctly Oregonian.  This time it is a national recession. We have movement into the labor force affecting the unemployment rate, but it is actually, not that much worse if you look at jobs as a whole.  Oregon tends to be a large work force in manufacturing and construction, both of which were hard hit.  We have a high minimum wage, which affects job creation and retention, there are population shifts, where people are coming into the state, and start looking for work adding to the unemployment numbers.
  • What every business leader needs to think about are what are the challenges going to be?
  • Projected Interest RatesConsumers should prepare for tighter credit regulations, higher interest rates, and limited home price appreciation.  

1Gross domestic product (GDP) price index. Measures the prices paid for goods and services produced by the U.S. economy and is derived from the prices of personal consumption expenditures (PCE), gross private domestic investment, net exports of goods and services, and government consumption expenditures and gross investment. It differs from the gross domestic purchases price index in that it ignores price changes in imports of goods and services and includes price changes in exports of goods and services.

Charts provided by Bill Conerly, data used in these charts were obtained from government and private agencies. Visit Bill Conerly’s Blog