July - What's going on in the Portland market?

Between everything you've probably been hearing on the news and reading in the newspapers regarding "falling home values" and the demise of the mortgage lending industry, many of you must be terrified of what is happening in the Portland market.

For the moment, I'm not going to touch upon the finance fiasco, as my business partner, Vince Kingston of Ridge Mortgage Services, is much more qualified to handle that topic. Suffice to say, interest rates are volatile. The sub-prime market has taken a major hit and the ripples have certainly effected the rest of the industry. The good news is that a well qualified borrower (someone with decent credit, a job, a few assets) can still secure virtually any type of financing they want (0 Down, 100% one-loan, 80/20, conventional downpayments, etc.). To make things even better, interest rates are still very low. People with questionable credit and/or employment records will have a much more difficult time finding suitable financing, but my major point is all is not lost. If you'd like specific finance information, please contact Vince at vincek@rmscompany.com.

I know that national real estate news has been equally gloomy. In many markets, new home starts are down and the average sales price of new homes are not doing as well as last year. First, I do not believe "new home starts" to be an accurate indicator of the Portland market. We're just a very unique market. Also, I do realize that many cities across the nation are having "housing slumps" with low to no growth in appreciation. Yes, some markets have even had price corrections.

Having said that, the Portland market continues to do well. While we're not enjoying the nearly 20% appreciation we had a few years back, we are still growing at a very reasonable rate. For July, the average appreciation across Portland Metor was 8.1%. That's still some very good growth, especially when you consider that most homes are financed. So in investment terms, that's an 8.1% increase on borrowed money. That doesn't even take into account your tax savings, which represent a large portion of what makes real estate such an attractive investment.

Appreciation rates in specific parts of Portland are even better:

SE Portland - 10.2%
Gresham - 12.7%
Hillsboro - 10.8%
Lake Oswego/West Linn - 9.3%

As you can see, appreciation is holding firm.

So why all the negative stories...even locally? What HAS happened is a slow down. Our market is turning at a slower rate than we've become accustomed. Average days on market has risen to 58 days for the year vs. 42 for last year at the same time. This is due, in large part, to the glut of new listings. As our new listings increase and our older listings are taking longer to sale, we have a large supply of inventory. Is this a bad thing? Depends on what side of the fence you're standing.

Admittedly, this is not the best time to be a seller in Portland. However, this is an excellent time to be a buyer. Low interest rates coupled with a ton of inventory, means buyers are getting great deals. Just look at real estate investors, they're snatching up investment properties as quickly as they can. Why? Buy low, sell high. Basic economics. Supply and demand dictates market price. At the moment, we have a fairly large supply (at least compared to recent years), so prices are fair. Prices have not dropped, but they're not soaring to the wild heights they were just a couple of years ago. Now Portland Metro as a whole, compared with the rest of the nation, has a supply and demand shortage. Our population continues to climb at an extraordinary rate, while the urban growth boundary and other factors keeps our supply relatively low. This should equate to continued appreciation in the coming years.

Basically, if you've thought about buying but are nervous due to the "news", give me a call. It really might be a great time for you to make a move.

As always, my business is built on giving outstanding customer service. I do almost no marketing and rely on word of mouth and referals from my past clients. I very much appreciate any referals you send my way.

Also, Home Buying 101 - Demystifying the Home Buying Process is going strong entering its second year. Our bi-weekly first time home buyer workshop has helped hundred of people become new home owners. The next one is this coming Monday evening. If you or anyone you know would like to attend, please contact me.

Thanks,
Jesse
Jesse Knight
Principal Broker
The Realty Network GMAC Real Estate

1505 NW 23rd Ave.
Portland, OR 97210

Office Phone: 503-595-5100 x1445
Direct Phone: 971-219-4939
Fax: 503-595-5262
Email: jesse@therealtynetwork.net

www.jesseknight.net