Really, this isn’t unexpected, is it?

The real estate hangover

You go to a party, drink way too much, and end up regretting it the next day.  Many college students go through this unfortunate experience and it is how we learn our limits and how to make better choices for our bodies.  The tax credit intervention was kind of the same way…we knew the hangover would come to the real estate market.  So what does a real estate hangover look like in Salem Oregon?

The blue outline is what home sales have looked like so far this year. The red is the year 2003.  I just wanted you to see what a more normal real estate cycle looks like for the Salem Oregon real estate market, specifically.

Typically as the year goes on we ramp up our sales, then slow down for the rainy season.  I get that…who wants to move in the rain in Oregon?  You don’t have to be a data geek to see the huge early boom we had.  Our market was premature due to the tax credit.  Sellers are stressed who expected this summer to be “prime real estate season” to be dealing with a lack of showings, but we all new things were happening too early.

For every action there is an equal and opposite reaction.

Well our real estate market didn’t realize that we weren’t dealing with physics here, but Sir Issac Newton’s laws of motion certainly apply to our market.   Home sales plunged 47% from last year’s July.   I told you that we would see a drop in sales a couple of months ago, but it did drop more than I expected.   I could feel the slowness of the market, which continues to be slow right now. August’s numbers won’t be stellar, I can tell you that already.

July’s average home price was down 7% from last year’s $204,727 to $190,222.  The median shifted downward a mere 2.5% to $183, 750.  The biggest concern I see right now in the housing market is that inventory in Salem Oregon proper  surged to 18.9 months.  This is NOT a good thing.   Our distressed property sector is holding fairly steady at 12.3% of the market.  This will climb a bit over the next year, I think, but it won’t ever be like the really hard hit areas of the country.

• So, the distressed property sector is remaining fairly steady.
• Real estate sales are down.
• Home prices are down.
• Inventory is seriously up.

So, what do I think?  I’ll get back to you after October.  Fall is typically a good real estate season in our city.  If things don’t perk up in the market for fall, as is typical, then the massive inventory that we have on the market right now will have no choice but to pummel real estate prices.

Stayton Real Estate Prices

I wrote six months ago that I fully expected Stayton real estate home prices to continue to drop.  That didn’t happen this quarter, but quite frankly I don’t see how prices can’t go down.  Back in January, Stayton had 36 months of inventory.  Right now, it has 33.  Pretty much none of the excess inventory was eaten up by the tax credit home buyers out here.   Despite the fact that it looks like things are working themselves out in terms of home prices, I just can’t see that continuing.

Stayton Home Sales

You know as I was looking at this graph, I couldn’t help but notice the nice wave action going on…kind of looks like an ocean wave.  Stayton, like all the other metro area cities sucked less than 2009.  I think that will be my new motto “2010:  The year that sucked less than 2009.”

So, the average and median home prices were up.  Home sales are up.  What is wrong with me that I think this is a problem?  It’s that 33 month inventory number, and this…

those dang foreclosure notices.  2Q 2010 was twice as much as 2Q 2008.    Foreclosure notices aren’t going down in Stayton.  That coupled with the high inventory really means price corrections are headed this town’s way.

If you are thinking of moving to Stayton, here is what is available for sale there.   Contact me for a showing or sign up to get new homes sent to you as they hit the market.

Home sale and home price data was crunched from the WVMLS.  Foreclosure information was obtained from Fidelity National Title Co.

I’ve been busy working and playing at North Fork Park rather than doing my quarterly real estate market reports, so I’m a bit behind…So for those of you waiting for these, my apologies…now onward!

Silverton Oregon home sales

Finally seeing home sales rise in Silverton.  Like the other Salem metro cities, sales stunk in 2009.    Home sales volume in the second quarter was where it was back in the early part of the decade.

Silverton Oregon Average Home Prices

The steep drop in home prices in Silverton has slowed.  This is not unexpected.  Silverton is a nice place to live and as prices come more in-line with consumer expectations prices will stop dropping.  That time isn’t yet though.

Silverton Oregon Foreclosures

Unlike Salem where the notice of defaults are dropping nicely, Silverton foreclosure notices are holding steady.  Not a good thing for the  health of the Silverton real estate market.

My opinion

I think Silverton is in for a bit more pain.  Foreclosures haven’t decreased there which is keeping the distressed property funnel full.  The fact is that distressed properties pull home prices down, so I would fully expect to see ongoing home price declines in Silverton for a while.   I don’t think prices will plunge 20% mind you, but I do think with the large inventory of homes, 12.5 months as of today,  on the market and ongoing foreclosure woes, Silverton has a ways to go before they are done correcting.

If you are wondering what kinds of properties are in foreclosure in Silverton, here they are in the slide show. Check it out and then see what other homes are for sale in Silverton.

P.S.  All home sales and home price data was crunched from the WVMLS and all foreclosure data was crunched from information received from Fidelity National Title Co.

Keizer home price trends

Well true to form, what goes up must come down.    Thankfully for Keizerites, the correction seems to have come and gone for the most part.  Keizer Oregon real estate has been pretty much flat-lined for a year.  The second quarter statistics are continuing that same pattern.  Inventory is running at 7.7 months right now, which is decent, but it would be nice to see it a bit lower.  The average home price was down just a mere 1.5% from last year, and currently is $196,030.

Home sales in Keizer Oregon

Keizer home sales were up, but that isn’t a surprise.  The tax credit helped to boost second quarter numbers, but also 2009 stunk so bad in the Salem metro area, it would have been really difficult to beat those dismal numbers.   Technically home sales were up 59% this quarter over 2009, but some of that is caused by the tax credit.  I still think without the tax credit these numbers would have gone up anyway.

Keizer Oregon Foreclosures

So home prices are essentially flat after a big drop last year, home sales are up, but what about foreclosures.  Now, I talked the other day about the CoreLogic data and their Salem data includes Keizer, but Keizer has its own identity.  Foreclosure notices are almost essentially the same as they were last year.  Not much of a drop for Keizer data.

So what does all this mean?

A whole lot of nothing…little movement up or down, in my opinion.  Keizer is just hanging out in purgatory while it waits for those notice of defaults to come down.  Then we will start to see a slow steady climb out.

You can see homes in Keizer that are in foreclosure, or just shoot me an email to get on the automatic foreclosure list.

The home sales and home price data was crunched from the WVMLS.  Foreclosure data was crunched from data provided by Fidelity National Title.

Recently the Statesman Journal and Salem-News.com spread the word that foreclosures in Salem Oregon had increased.  They used CoreLogic as their source of data and they are reporting an increase for Salem.  I disagree with their presentation of the data and here is why…

Interpreting the foreclosure data

First of all CoreLogic and I look at different things.  First,  they have their foreclosure rate calculation. This is a calculation based on the number of mortgages involved in the foreclosure process at any given point in time. Think about their data this way.  In January,  10 loans get served with a notice of default.  5 works things out with the bank, 5 don’t.  Those 5 homes are slated for auction in April.  April comes and 2 of the 5 delay their auction to do a short sale.  The other 3 go to auction and 10 more people get served with a notice of default.  So CoreLogic says that there are 12 homes (the 2 short sales plus the 10 new properties)  in their foreclosure rate in April which is a 20% increase over January.  It isn’t that 20% more homes got served with defaults, it is just that there are 20% more homes in the system.   CoreLogic’s “foreclosure rate” isn’t a foreclosure rate the way more lay people think about it.  There wasn’t an increase in the number of homes that went into foreclosure in Salem Oregon.  There was an increase of the number of homes in the system.  Essentially, CoreLogic’s foreclosure rate is really a shadow inventory rate.

The other difference in our data is that my data is Salem Oregon proper.  I don’t include Keizer, Gervais, Turner, etc in my calculations.  Just Salem.  They include a wider birth of zip codes in their data, where I pull by address and not zip code.  In fact,  the CoreLogic data showed a 16.4% increase in the foreclosure rate for the zip of 97307, which is the zip for PO boxes.  What I don’t know is if they have any doubling up of their data with two addresses (the physical address and the PO address).   Apparently,  people with PO boxes in 97307 are late on their mortgage payments lately.

Salem Oregon foreclosures

While I do think shadow inventory is important because at some point it will hit the market, I also care about how many physical properties are being served with default notices.  At some point we have to sell a real house and my data is showing that the number of properties being served with defaults in Salem Oregon  has in fact decreased for the second quarter in a row….by 14.3%.

So what does my data vs. CoreLogic mean for the Salem Oregon real estate market?  Pretty easy interpretation, I think.  Short term…not so hot.  That shadow inventory being tracked by CoreLogic will hit our real estate market at some point and continue to keep prices down and inventories up.  Long term…we are going in the right direction and we are starting to decrease the amount of properties feeding into the shadow inventory black hole.

If you want to see the homes for sale in Salem Oregon that are in foreclosure, just click the link, then contact me for a showing.

Data provided in this post was calculated from information received from Fidelity National Title Company.

Well June is over and you’d think that we’d have sun in Oregon by now, but it is seriously cool outside as I am writing this post. Typically I get to write my summer blogs outside soaking up my year’s worth of Vitamin D, but today…wearing polar fleece in my office.   Since this is a real estate blog for the Salem Oregon area and not a weather blog I should probably get refocused and talk about real estate but I just wanted to complain for a moment and hope the locals commiserate with me.  Our summer weather stinks this year.

Now that I have that complaint out of the way, onto real estate.  The second quarter has ended so we have more data to work with to get a better feel for how things are trending.  So how are things trending?

Salem Oregon Home Sales: Trending Up

Last year has consistently been the worst year for homes sold in Salem Oregon.  Home sales have gone up since last year and I do expect in terms of homes sold that2009 will be the worst year for sales volume.  The large peaks are due to the tax credits, but even without those, I still expect more homes to be sold this year over last year.

How about homes listed vs. sold?

How to read the graph?  The closer the lines the less inventory.  The farther apart means more inventory.   As for this quarter, the listed vs. sold ratio is 48.9%.  Compare that with 2005’s 76% and 2002’s 64% and you can see that while an improvement from last year, our home sales are still off.   We still have too much inventory.

Salem Oregon Home Prices: Trending down

This is economics 101 at work.  Too much inventory (ie lack of demand) means prices must go down to compensate.  Home prices continue to go down and will probably continue that way for a bit here.

Home prices are averaging an 8-10% decline since last year and I would expect that pattern to continue through this year.  With the Salem unemployment rate hovering in the 10% range and a real estate imbalance in inventory there is no choice but for basic economics to kick in and downward pressure remain on home prices.

I have been asked so many times “How is real estate doing?”   My answer is still the same. It depends on what you are asking me.  Are things improving?  Yes.  Do we have a healthy, good real estate market?  Nope.  Inching our way there, but we’ve got a ways to go.

P. S.  Data was crunched from data provided by the WVMLS.

Of all the local mini-real estate markets in the Salem Oregon area, I’ve long talked about how Keizer was not as hard hit or as bad as some of the others, including Salem.  This continues to be true and in fact Keizer saw a small pop in median home price this month over last year’s numbers.  Granted…last year stunk, but unlike Salem which has slowly descended to the bottom, Keizer had a big plunge and seems like it might flat line this year.  Just to give you an idea…Dec 31, 2009 the median home price ended at $185,000 YTD (year to date).   The median home price for Keizer at the end of May 2010 YTD?  $185,000.

With 7.2 month of inventory, the excess inventory that doused the market prior to the tax credit is slowly being absorbed as part of the regular real estate season.

I think Keizer is within just 1-2% of bottom.  It has been hovering really close to last year’s numbers.  Now, that doesn’t mean I think that real estate is going to skyrocket there anytime soon, but I think the averages and medians are going to hang here for a bit while the economy tries to improve.  I’m thinking flatline.

Home sales were up in May over last year, but that isn’t a big surprise. Fueled by the tax credit, buyers were out looking for deals.  The real test will be later this summer and early fall.

Overall though, Keizer is looking pretty good as far as real estate markets go.  The market is flat lining and heading towards a neutral real estate market.

Data was crunched by the WVMLS.

Tax day has come and gone, and with it…real estate season in Salem Oregon has begun.  Now, that is the normal real estate season, which will be funky this year due to the tax credit.   We should have two more months of really good sales numbers and then we should see a bit of a drop.    Even if we drop, I still think it will be an improvement over last year’s sales numbers…which were beyond dismal.  So my prediction will be sales will be up and prices will be down for the next few months.

May was up 24%, which is not a big surprise as buyers that were eligible for the tax credit were out trying to take advantage of that and last year was such a dismal year in real estate here in Salem Oregon, that I can’t imagine the numbers being too much worse…from a sales volume perspective.

Inventory is 9.9 months right now, which is still high, but I’ll take it.  The fact is that it will take a while to eat up all this inventory.  A while being a couple of years.

Home prices dropped, not unexpectedly from last May because in order for sales volume to go up home prices needed to come down to put that supply and demand thing back inline.  Home prices were about the same this month as in 2005.

So, what does all this mean?  I still stand by my opinion that we will have ongoing mild price declines for this year.  I’m still predicting that next year will be relatively flat and will probably be the official bottom of the real estate market.

Data was crunched from the WVMLS.

10.9 months.

That’s the current inventory level for the Keizer Oregon real estate market.  Like the spike in the Salem market, Keizer saw a big jump as sellers put their homes on the market for the tax credit.  Inventory is up since last month, but what I would expect to happen is that fewer than normal listings will come on the market for the summer months as people entered the market early. As such, I would expect this number to continue to come down as the year progresses.

Where are things?  If we compare this year to date,  to last year, then the median is up a  smidge (that’s offical statisical language by the way) 2.5%.  I don’t think this increase will last just because I do think prices will continue to correct.  Sellers were aware that some buyers were going to get $8,000 and I think that prices were propped up a bit.  Last month’s increase in price is pulling the overall averages up…for now.

Comparing April to April though…the average home price was down 10.8% and home sales, of course, were up by 80%.  Honestly, they couldn’t get much worse than last year in Keizer.  It would have been pretty hard to not beat those dismal numbers from 2009.

Where is the market going from here?  The same as all of the other Salem area markets…heading towards bottom.  I do think Keizer will mostly likely bottom out this year.  We’re close.

The tax credit is over, except for our military personnel that have been overseas, so we are on unsupported territory from here on out in the world of real estate.  I’m totally fine with that.  I say let’s start creeping our way out of this mess.  We really won’t have a gauge on what is happening, specifically in the Salem Oregon market, for a few months yet.  The fact is that some first timers really wanted the tax credit so we will have a bump in home sales for April through June.  I would expect a drop off and then some sense of what things will look like  come August and September.

So where is the market?  same ol’ same ol’…home prices are down and home sales are up.  It’s funny how that whole supply and demand thing works.  So the average home price was down just 2.3% from the same time last year.  I had talked before that the rate of descent of home prices has slowed.  This trend is continuing…make no mistake home prices are still declining, but we are in a much slower decline than before.  That indicates that we are nearing the bottom of the market.  If all goes according to my crystal ball that will happen at the end of this year at the earliest, but more likely next year some time.  Really the deciding factor will be the employment rate which is directly impacting our foreclosure rate here.

Earlier in the year inventory surged, and I told you all not to panic. All that was happening was that sellers were getting their homes on the market early to take advantage of the buyers for the tax credit.  As expected, inventory is coming down.  Right now it is 11.9 months which is better than the 18 that it was at earlier. This number should head back into the 8 month range as transactions close in the next 60 days.

As expected home sales surged for April in Salem Oregon by 43%.  Y’all know this isn’t going to last…right?  As long as we are all being honest and know that the surge isn’t a natural market surge, then we are fine.  The surge, of course, is due to the requirement that home buyers be under contract by April 30th for the tax credit.

So where will things go from here?  Well at least for the next two months the numbers will most likely be up.  After that, I would expect a drop since the market was coerced into improvement earlier than normal.  Then…the real healing begins.

P.S.  All data was crunched from the WVMLS.