Real Estate Talk Blog for the Willamette Valley

Despite Jim Cramer's *(BOOYAH!) advice to the contrary yesterday on CNBC, now might still be a great time to buy a home.

Ok, first of all, I really enjoy listening to Cramer, and I know that lots of people have made LOTS of money listening to his advice on stocks...but I think he may have missed the boat on this recommendation and here's why:

(1) All real estate is LOCAL and you have to evaluate your LOCAL market conditions to make a good decision.

(2) There are 2 variables that you have to take into account; Housing Prices (which Cramer assumes are going to fall over the next 12 months), and Interest Rates.  These 2 variables are inter-related, and whether or not NOW is a good time to buy depends on what you expect from each of these in the future.

(3) The intangible that Jim doesn't mention; your personal situation.  Do you HAVE to buy?  Have you been saving and correcting your credit to put yourself into a good position to buy?  Have you identified the house that you really want (and it's FINALLY coming on the market!) 

(4) What is the Cost/Benefit analysis?  How much difference is a change in the market ultimately going to make to you?

Let's take a look:

Using a $200,000 home loan and an interest rate of 6.25% your monthly payment today would be approximatley $1,231 (Principal and Interest). 

•  In the worst case scenario the prices RISE 4% in the next 6 months and the interest rate RISES .25% - your payment on the same loan is now $1,315.
•  In the BEST case scenario the prices FALL 4% and the interest rate also FALLS .25% - your payment on that loan is now $1,151. 

The question is - Will $80 in your monthly payment be worth missing out on the home you WANT? 

Could prices fall more than 4% in the next 6 months?  Maybe, again you have to do the figuring on your local real estate market.  In the mid-Willamette Valley, you might see some decline in ASKING prices due to the increases in inventory, but no one I know is betting on a huge decline in market prices.  Most of the safe money is on a neutral position - thinking that the market might stagnate for a while until the mortgage market mess gets straightened out.

Are there sellers who are extremely motivated?  You Betcha! 

What is the most likely scenario? 

     In my opinion, I think we are going to see prices remain stable or suffer a slight dip over the next 6 months.  Inventory will likely decrease as the holidays approach, with some people trying again in the Spring to get SOLD signs in their front yards.  Assuming that the credit crunch eases a bit, interest rates will remain steady as well.

Why give up 6 months of mortgage interest deduction if the outcome in March is going to be nearly the same as it is today?

Don't get lost in the hype!  If you are thinking about buying a home in today's market

1. Get some professional advice (a good lender and a good REALTOR®). 

2. Do your research and learn YOUR market. 

3. What the evening news tells you may NOT apply to your town - - - and you won't have any way of knowing that unless you educate yourself!

Have a great day!

Dave

Real Estate Talk Market Update for 29 September, 2007

(1) “SOLD” statistics include both SOLD and PENDING

(2) Months of Inventory Calculation based on the rate of sales in the previous 90 days.

(3) Added this week – MEDIAN Sale Price of those homes SOLD over the past 90 days.

Albany

• SOLD/Pending (past 90 days) – 281
• Average price – $225,559
• Median Sale Price – $209,945
• Average Days on the Market – 112.5
• Average Dollar per Square Foot - $133.22
• Current Active Listings – 461
• Average Price of Active Listings - $261,721
• Months of Inventory – 4.9

Lebanon

• SOLD/Pending (past 90 days) – 58
• Average price – $164,782
• Median Sale Price – $155,975
• Average Days on the Market – 119
• Average Dollar per Square Foot – $120.88
• Current Active Listings – 160
• Average Price of Active Listings - $219,246
• Months of Inventory – 8.28

Corvallis

• SOLD/Pending (past 90 days) – 200
• Average price – $292,672
• Median Sale Price – $274,950
• Average Days on the Market – 77
• Average Dollar per Square Foot - $169.88
• Current Active Listings – 221
• Average Price of Active Listings - $359,101
• Months of Inventory – 3.32

Today’s guest (29 September) ––– Jeannie James – Fidelity National Title Company of Oregon was here to talk about Construction Liens, the Home Buyer’s Protection Act, and Early Issue Title Insurance. If you are thinking about buying a new home, or a home that has had a major remodel you need to listen to this show!

6 October - Chip Cover – Conser Design and Construction. Chip will be here to talk about home maintenance and things to do to get your home ready for the Fall.

11 October (a special Thursday edition of Real Estate Talk) Guest TBD

20 October – Kelly Gardner, Pinnacle Mortgage will be here with some information and advice on how to harness the equity in your home

Think about it for just a second and I'm sure you'll agree with me that there are TWO housing markets out there, and they are NOT the same

The Rational Market

... is the one that is based in the facts (Just the Facts Ma'am...Sgt Friday used to say).  This is the one that is easy to understand because we can look at the statistics and the trends.  It moves up and down as a direct result of interest rates, the local economy, job growth/retraction, and new construction costs.  As a REALTOR® I like this market because I understand it!

The Irrational Market

...is based on the emotional responses of the consumers.  It generally moves in response to hype and hysteria.  It is the movement in the market HERE as a result of a news story about the housing market somewhere ELSE.  It is also the INTERPRETATION of the movement in the first (the rational) housing market through some other lens.

An illustration - How'd we get here?

   The housing market has been an engine of equity for the past 6 years and house prices have risen at a brisk pace, maybe a little more quickly than it should have.  This is in large part because of the "California Buyer" who came to our little town without the benefit of sticker shock.  1600 square feet for 250,000! WOW, I'll take it!  CASH deal - no appraisal required. 

   Seller's got dollar signs in their eyes and saw what their neighbors were selling their houses for and began to think of taking the equity out (refinancing...and SELLING to get the cash, maybe downsize?).  The most effective strategy appeared to be price it high.  Who knows, that California Buyer might come along and you'll get lucky.  Worst case, you'll sell at a reasonable price because the market was appreciating at 6, 7, 8%.

   Then...OMG, the mortgage market stumbled and fell!  Sellers who had their homes on the market (at an inflated price) couldn't sell.  The California Buyer was not coming anymore (their market crashed too...HARD).  They REDUCED their prices to get their homes sold. 

Take note, the housing prices really haven't dropped, they just readjusted to what they rationally SHOULD have been...and no one is losing any money (instead of making $100,000, they are only making $90,000).  But what is the PERCEPTION?

PANIC in the streets - housing prices are plummeting!  Buyers who were ready to buy decided to sit back and wait, because with prices falling, no one wants to buy at the peak of the market.  Let the prices fall...we'll get a better buy.

The market continues to slooooooooowwwww!  Soon, there is real desperation on the part of some of the sellers who NEED to sell. 

Summary

The fundamentals of a solid housing market still exist in the mid-Willamette Valley.  For example, in Albany there is only 4 months of inventory (well within bounds for a traditional SELLER'S market)...but the emotional component has put the market in neutral.  Buyer's aren't buying and seller's are getting nervous. 

The bottom line for Sellers: If you want to be in the best position, watch the statistics, but also watch the psychology of the market.  If you are selling, price your house RIGHT at the start, don't overinflate in the hopes that you'll find an irrational buyer (you won't). 

The bottom line for Buyers: Get solid financing FIRST, shop well and be willing to shop and look at lots of houses.  There are bargains out there, but you will still have to act quickly (nice houses, competitively priced are still moving briskly).

Real Estate Talk Market Update for 22 September, 2007

(1) “SOLD” statistics include both SOLD and PENDING

(2) Months of Inventory Calculation based on the rate of sales in the previous 90 days.

Albany

• SOLD/Pending (past 90 days) – 286
• Average price – $224,416
• Average Days on the Market – 111
• Average Dollar per Square Foot - $133.12
• Current Active Listings – 459
• Average Price of Active Listings - $265,432
• Months of Inventory – 4.81

Corvallis

• SOLD/Pending (past 90 days) – 202
• Average price – $300,612
• Average Days on the Market – 80
• Average Dollar per Square Foot - $170.89
• Current Active Listings – 219
• Average Price of Active Listings - $363,667
• Months of Inventory – 3.25

Lebanon

• SOLD/Pending (past 90 days) – 62
• Average price – $165,965
• Average Days on the Market – 122
• Average Dollar per Square Foot – $121.41
• Current Active Listings – 161
• Average Price of Active Listings - $215,827
• Months of Inventory – 7.79

Today’s guest (22 September) ––– Beryl Westby – No More Chaos (www.nomorechaos.biz). Beryl gave us some great tips on getting organized, both for people in business and at home.  We also spent some time discussing home staging to help YOUR home stand out in a crowded market. 

Upcoming guests:

29 September - Jeannie James – Fidelity National Title will be here to talk about Construction Liens, the Home Buyer’s Protection Act, and Early Issue Title Insurance. If you are thinking about buying a new home, or a home that has had a major remodel, you won’t want to miss it.

Coming in October

Don Robertson, Principal Broker Heritage NW Realty will be here to discuss the Lebanon, Oregon housing market.

Chip Cover, Conser Design and Construction will be back to give us some home owner maintenance tips to get your home ready for the Fall.

Real Estate Talk airs every Saturday from 10 to 11 AM only on
1580AM KGAL.  Your only live, local resource for information on real estate issues in Oregon's mid-Willamette Valley.

Real Estate Talk Market Update for 15 September, 2007

(1) “SOLD” statistics include both SOLD and PENDING
(2) Months of Inventory Calculation based on the rate of sales in the previous 90 days.

Albany

• SOLD/Pending (past 90 days) – 290
• Average price – $225,124
• Average Days on the Market – 112
• Average Dollar per Square Foot - $133.30
• Current Active Listings – 446
• Average Price of Active Listings - $265,205
• Months of Inventory – 4.61

Corvallis

• SOLD/Pending (past 90 days) – 214
• Average price – $303,752
• Average Days on the Market – 82
• Average Dollar per Square Foot - $171.22
• Current Active Listings – 216
• Average Price of Active Listings - $371,076
• Months of Inventory – 3.03

Lebanon

• SOLD/Pending (past 90 days) – 69
• Average price – $161,681
• Average Days on the Market – 109
• Average Dollar per Square Foot – $121.50
• Current Active Listings – 155
• Average Price of Active Listings - $216,546
• Months of Inventory – 6.74

Today’s guest (15 September) ––– Polly Cappalo, Windermere Valley Real Estate. This was a great discussion on how to get your real estate license; the options for education, the various additional costs, considerations in choosing a brokerage, and the first year in business.

Upcoming guests:

22 September - Beryl Westby – No More Chaos. Beryl will be here to talk about home staging and organization.

29 September - Jeannie James – Fidelity National Title will be here to talk about Construction Liens, the Home Buyer’s Protection Act, and Early Issue Title Insurance. If you are thinking about buying a new home, or a home that has had a major remodel, you won’t want to miss it.

Real Estate Talk airs every Saturday morning from 10-11am
only on KGAL 1580AM. 

JUST LISTED - $275,000

Quiet, established NE Corvallis neighborhood and lots of square feet for your dollar. This is one of the best values in Corvallis today and it won't last long.

Plenty of space down stairs for entertaining.  

• 2,081 square feet
• 4 bedrooms
• 2.5 baths
• 0.17 acre lot
• 2 car attached garage
• Living Room / Dining Room / Family Room

Directions: Take Conifer Blvd to Conser, From Conser, turn Right onto Glacier Way.

MLS - 584619.  Listed by Dave Pautsch, REALTOR® of Conser Realty and Associates

Conser Realty and Associates
1010 Airport Rd SE
Albany, OR  97322

541 990-9368

dave@conserrealty.com or realestatetalk@kgal.com

I thought I’d give you my perspective on 4 things to take into consideration for Buyers in today’s housing market.

Money, Money, Money  In deciding if now is a good time to buy is mostly a function of YOUR personal financial situation. Do you have cash for the downpayment?  Are you pre-approved by a lender for loan?  If so, you may be in a strong negotiating position and have the best chance of finding a good deal. Individual seller’s may who may be more interested in trading time for money could see a reasonable offer from a qualified buyer who can close quickly as the deal to take, and this could save you thousands!

How long are you intending to own the property?  Deciding if now is a good time to buy depends on whether or not you are able to ride the waves in the market cycle. Housing markets have their ups and downs, if you are only going to be in the house for 2 years, you should consider renting until there is an absolute bottom discovered. If on the other hand you are planning on being in this home for at least the next 6 or 7 years…you will likely have time to ride out any dips and see some reasonable appreciation on your investment. No one can predict the valleys, and watching the National news doesn’t tell you what is going on in your neighborhood of interest…but if you can find a good deal and you can stay in it for the long haul…now could be a great time to buy.

Location, Location, Location This old adage still holds true… Buying the nicest home you can in the nicest neighborhood, with good schools…tends to offer the best chances for appreciation. If you are looking to buy, target one or two homes that meet your needs and watch them. In today’s market, you are looking for nice homes in nice neighborhoods with motivated sellers…I said above that you should be buying for the long haul, but don’t discount those things that will eventually impact YOUR ability to sell the house down the road…(busy streets could be a negative, and good schools are always a plus.  Consider a minimum of 3 bedrooms and 2 bathrooms...).  There are things about any house that you can change to improve the value; but there are also things that you can't do anything about.  You've got to have good fundamentals.

Get Smart A local housing market is NOT a direct reflection of the national market, and the stories on TV don’t have the same impact on us in the mid-valley for example. If you are considering buying a home, you need to educate yourself about the local market conditions and understand the trends. Work with local professionals that you like and trust, this means a lender and a realtor…target homes in the best neighborhoods and, if you have the financial qualifications, you can find a reasonable deal.

Oh...One last thing…you should ALWAYS have inspections done to make sure that you are making a solid investment.

For more information e-mail me at dave@conserrealty.com     

Real Estate Talk Market Update for 08 September, 2007

(1) “SOLD” statistics include both SOLD and PENDING
(2) Months of Inventory Calculation based on the rate of sales in the previous 90 days.

Albany

• SOLD/Pending (past 90 days) – 292
• Average price – $226,876
• Average Days on the Market – 111.31
• Average Dollar per Square Foot - $133.77
• Current Active Listings – 451
• Average Price of Active Listings - $264,623
• Months of Inventory – 4.63

Corvallis

• SOLD/Pending (past 90 days) – 216
• Average price – $308,781
• Average Days on the Market – 84.34
• Average Dollar per Square Foot - $170.88
• Current Active Listings – 216
• Average Price of Active Listings - $368,574
• Months of Inventory – 3.00

Lebanon

• SOLD/Pending (past 90 days) – 70
• Average price – $158,527
• Average Days on the Market – 108.43
• Average Dollar per Square Foot – $122.20
• Current Active Listings – 163
• Average Price of Active Listings - $217,164
• Months of Inventory – 6.99

Today’s guest (8 September) ––– Mark Fulwiller, Coldwell Banker Valley Brokers. Mark is a REALTOR®, and Certified Residential Specialist. Our topic is the Corvallis housing market and Mark’s overview of how the market is different than other parts of the mid-Willamette Valley and what you as a buyer or seller can do to put yourself in the best possible position.

Upcoming guests:

Jeannie James – Fidelity National Title will be here to talk about Construction Liens, the Home Buyer’s Protection Act, and Early Issue Title Insurance. If you are thinking about buying a new home, or a home that has had a major remodel, you won’t want to miss it.

Beryl Westby – No More Chaos. Beryl will be here to talk about home staging and organization.

Real Estate Talk airs every Saturday from 10-11 AM only on KGAL 1580.  The mid-Willamette Valley's number one live, local real estate resource.

Listen for the Real Estate Minute every day during the Morning Update (about 8:55).

Well, it's Friday of the first week of school.  Ok, it was a short week (Monday holiday...I LOVE that!)  The hardest part was getting back into the routine.  You see, I am the alarm clock for my family.

I wake up normally about 5:00AM each mornining...go downstairs and begin my process of waking up. This doesn't change from season to season, its just habit from 23 years in the Navy.  At 6:00 I wake up my oldest daughter and at 6:15 the youngest.  This is totally new for us...last year she didn't have to wake up until an hour later...why is it that, LAST year it wasn't uncommon for her to be awake at 6:10, but now that she HAS to, it is so horribly painful?

The hardest change is for my bride.  She used to wake up with the youngest daughter; about 7:15...and now she's getting up at 6:15 with the rest of us.  Yikes!  I love her...but she is NOT a morning person and it is a tough adjustment for her too.

This first week was a challenge for all of us.  Even though I haven't changed my wake up time, my routine is now different too and the peaceful morning hours when I used to catch up on work (including blogging) is now invaded by breakfasts, packing lunches, keeping the troops on track (I have to yell out 15 minutes to go, and 5 minutes...get your teeth brushed!) because apparently I am the only one in my family who can wear a watch or read a clock at this ungodly hour!

I wouldn't change it for anything though.  I have a great family who I love very much.  My daughters are both good students and (generally) enjoy school and their friends.  My wife is a gem who manages to keep us all happy and healthy (as long as its after 7:15 am) and comfortable.

So...as I adjust to the new school year, I hope that you will too.  Change is good if you embrace it and find the positives.

Have a great day!

Dave

Real Estate Talk Market Update for 01 September, 2007

(1) “SOLD” statistics include both SOLD and PENDING

(2) Months of Inventory Calculation based on the rate of sales in the previous 90 days.

Albany

• SOLD/Pending (past 90 days) – 285
• Average price – $227,024
• Average Days on the Market – 111.64
• Average Dollar per Square Foot - $134.09
• Current Active Listings – 440
• Average Price of Active Listings - $257,476
• Months of Inventory – 4.63

Corvallis

• SOLD/Pending (past 90 days) – 216
• Average price – $309,212
• Average Days on the Market – 83.84
• Average Dollar per Square Foot - $170.88
• Current Active Listings – 206
• Average Price of Active Listings - $370,461
• Months of Inventory – 2.86

Lebanon

• SOLD/Pending (past 90 days) – 67
• Average price – $158,823
• Average Days on the Market – 112.36
• Average Dollar per Square Foot – $120.98
• Current Active Listings – 165
• Average Price of Active Listings - $218,670
• Months of Inventory – 7.39

Today’s guest (1 September) ––– Bobby Walker, Branch Manager Pathfinders Mortgage. We discussed the President’s proposal from Friday (31 August) for FHA Secure, temporary changes in the tax regulations, risk-based pricing to ease some of the impact on home owners who need some additional flexibility.

Upcoming guests:

Mark Fulwiller – Coldwell Banker Valley Brokers (Corvallis) will give us an update on the ins and outs of the Corvallis market.

Jeannie James – Fidelity National Title will be here to talk about Construction Liens, the Home Buyer’s Protection Act, and Early Issue Title Insurance. If you are thinking about buying a new home, or a home that has had a major remodel, you won’t want to miss it.

Real Estate Talk with Dave Pautsch, MBA, CSP, REALTOR® of Conser Realty and Associates airs every Saturday from 10am to 11am only on KGAL 1580AM (Albany, Lebanon, Corvallis)...Live...Local...your real estate resource.