Get Real Estate Blog: Salem Oregon Home Trends and Relocation Information

For those of you looking at short sales and foreclosed properties in Salem Oregon here is a little short and sweet update for you on where things are at in this market sector.

• 10% of homes listed this year in Salem Oregon have been a short sale or foreclosed property.
• 24% of homes listed as short sales were successfully closed.
• Short sales took, on average, 164 days (5.4 months) from list to close.
• Short sales averaged 13% off of the original asking price.
• 58% of the listed foreclosures have sold.

Having written up several offers for buyers on foreclosed properties, I can tell you that while this is a small market segment the foreclosed property market has some stiff competition.  Lenders are underpricing bank properties and driving up bidding.

As for short sales, so far there is a 25% chance of getting one of those homes to closure and the process is taking a while.  The good news is that due to the many short sale problems faced by other states that have been hard hit by the housing bubble, lenders are starting to try and streamline the process for short sales.  This is good news for our battered economy and our local families facing foreclosure.  In the coming months, this process might get a little bit easier.

Other articles of interest:

Alternatives to foreclosure

What is a hardship

The process of a short sale

I have been in many foreclosed homes here in Salem Oregon lately.  Some are in great condition and some…well aren’t.  Forget taking the cabinets, stripping the carpet out of the house, and grabbing the kitchen sink…this incident adds a whole new level of crazy to the foreclosure market.

The Atlanta Journal Constitution reported that in GA, two real estate agents went into a home after it went into foreclosure.  Noticing a little ol’ grenade on the floor, one agent went over to pick it up to see if it was plastic.  Seeing that it wasn’t and the pin was still in they called the police.

Athens-Clarke police and firefighters, along with technicians from the UGA Police Bomb Disposal Unit, responded to the call.

After taping off the cul-de-sac, officers informed neighbors of the situation and asked them to either stay inside or leave.

The bomb squad sent a robot into the house to pick the grenade up and move it to a pit the officers dug in the backyard. Officers then used an explosive counter-charge to blow the device up.

UGA police Chief Jimmy Williamson didn’t know if the grenade was real, but the bomb experts who examined it found no evidence that it was fake.

“When anything appears to be functioning, they are going to handle it as if it was a real device,” he told the Banner-Herald.

This is just a whole new level of crazy.

The $8,000 home buyer tax credit has been a source of confusion for Salem Oregon home buyers for a good chunk of the year.  There have been many false articles written about who can and can’t use the tax credit.

The IRS just prosecuted it’s first case of home buyer  tax credit fraud and is warning home buyers to be cautious.   The tax preparer that plead guilty to the charges is facing three years in jail and a $250,000 fine.  Doesn’t seem worth it for an $8,000 tax credit.

So, if you are looking to buy some real estate in the Salem Oregon area make sure you are 1) qualified for the current tax credit and 2) that your file for the credit in accordance with the laws.

I recently read an article in the Portland Business Journal about the spike in foreclosures in Oregon.  As I read it, I was dumbfounded by the statistics they quoted. Most of you know that I track and have written about our Salem Oregon area foreclosures on several occasions.  In the article it stated:

Salem ranked No. 64 with 1,724 actions, affecting one in every 69 households.

This statistic quoted refers to foreclosure actions as stated by RealtyTrac.  What you need to know is that the statistic quoted is poor statistics in my opinion…and here’s why…

It’s not unique.

What am I talking about?  Anyone who has an online presence tracks unique visitors.  We don’t care that we had 10,000 hits if only 3 people caused them.  We want to know how many individual people are looking at our online marketing at any point in time.  We care about unique hits.

What you need to know is that RealtyTrac isn’t reporting unique.  So if you live at 123 Main street and get served with a notice of default by lien holder #1, one by lien holder #2,  AND then it becomes bank owned, RealtyTrac counts this as 3 separate notices…for one property. So what this does it make the data seem astronomically high.

I read the fine print today for RealtyTrac

I don’t know about any of you, but I haven’t seen a property issued a notice of default and then become and REO in the same month or quarter.  So how many unique properties were served with a foreclosure notice in Salem Oregon MSA (all of Marion and Polk counties)  in the first half of 2009?

979 according to the data I get from Fidelity National Title here in Salem Oregon. That is a difference of 745.  If you don’t read the fine print about how they report their data, you would think that there are 43.2% more distressed properties somewhere out there in the Salem Oregon MSA.  They’re aren’t…at least not according to the information I get.

So if you are one of those bargain hunters bent on trying to find some of that “shadow inventory” be aware that it might be more appropriately called “mirage inventory.”  If you really think that there are 745 more unique distressed homes on the Salem Oregon real estate market…look ahead, I think I see something a mirage an oasis.

I wrote a post about our rise in foreclosure notices here in Salem Oregon.  I know many of the recent folks getting notice of defaults now were folks with good credit that have been laid off due to the recession.  Finding a job in the Salem Oregon area is very difficult right now and many folks are unable to pay their mortgages right now.

For folks that have been served with a notice of default who WANT to try and keep their house, I wanted to point out some choices for you about handling your current situation.

1. Call the lender and ask for a forbearance.  Most lenders have the ability to allow a short period of time with no or low mortgage payments.   This time frame is for situations like many of you are facing with job loss.  The missed mortgage payments during the forbearance get recapitalized and added to the mortgage at the end.
2. See about a loan modification.  A loan modification can be a lower interest rate, longer loan terms, or a combination of the two.
3. If you have a Bank of America loan see if you qualify for HomeSaver Advance.
4. See if you qualify for Making Home Affordable.
5. See if you can do a deed-in-lieu-of foreclosure.  In this case you deed the house back to the bank.  If you have two separate mortgages on your property this can be very difficult.  It is much easier to try and negotiate this if you have one loan holder.
6. You can look at declaring bankruptcy.  If you declare bankruptcy it puts a stay on any default proceedings.  If you can’t afford your home, this option may not make any sense.
7. Try and negotiate a short sale with the bank.

If you don’t want to try any of these options, then foreclosure is what will occur.  If you need help navigating a short sale or want more information about how that might work, please call me at 503-371-6515 for assistance.

I ran the real estate market reports for our local Salem metro area, Marion county cities,  and will run Polk counties as well.  With the recent news that Oregon held at 12.2% unemployment, I wanted to go ahead and write a new foreclosure post.

You don’t have to be a statistician to see the trending.  Clearly distressed properties have increased and while there are normal fluctuations, the baseline level has jumped.

It becomes more obvious when you look at the data, comparing 2nd quarters for the past couple of years.  Foreclosure notices went up 17.7% from the 2nd quarter 2007 to 2008.   Notices went up 46% from 2nd quarter 2008 to 2009.  That is an astonishing rate.  Now those bargain hunters out there are trying to figure out where these homes are because they aren’t on the MLS.  Some of these homeowners will be successful in avoiding  short sale and foreclosure.  Those homes will never make it to the real estate market.

With our 12+% unemployment rate, whether or not these rates continue to go up will solely depend on how well home owners saved for a rainy day.  If they didn’t save well, then I would expect to see prices continue to drop as short sales and foreclosures put downward pressure on home prices.

I figure we’ll see the fallout from our unemployment rate this fall.

This data used to create these graphs  is from information provided by Fidelity National Title Company.  If you want to watch the short sale/foreclosure market, contact me to get on the distressed property list.

I’m sensing some frustration on the part of Salem Oregon buyers as they try and seek out all of those short sales and foreclosures that are supposed to be all over the market.    The reason that local buyers are struggling to find these well publicized bargains is because there aren’t a lot of them out there.  In the past months, distressed properties have made up 10% of our local Salem Oregon market.  The current rate is 8.3% for the Salem Oregon real estate market.  The Keizer market has 8.6% of active listings listed in distress.

I also broke down by general area, where the distressed properties can be found.  Not surprisingly most are in the corridor east of I-5 (East on the chart).  Homes have traditionally been more affordable in these areas and folks that were unable to purchase homes in the past, purchased starter homes here.  The other areas tend to be more of a mix of starter and move up buyers.

So long story short…you are going to have to continue to wait a while if you are looking for one of those bank owned deals you read about in the newspaper.  Just not a lot of them here.

Data is based on information provided on the WVMLS.

“Buyer gets 50% off short sale listing!”…”Homes in Detroit selling for $1.”

I know some buyers are thinking this will happen here in Salem Oregon as well.

Smack!

That’s the sound of those buyers hitting their heads up against the wall because those stellar deals they read about on Google, aren’t coming to fruition here.  Now that’s not to say that there aren’t some really good deals out there…  There are, but not like that. Salem Oregon home buyers need to set their expectations.  Make no mistake the market will continue to decline here as unemployment rises…but how much?  That depends on how well people saved for a a rainy day.

Our Salem Oregon economy is in dire straights right now,and you can’t help but read some articles that talk about those great deals out there on homes.  So, once again, it is time to take a look and see if short sales are the end all be all for home buyers.

So…in Salem Oregon 15 short sales have closed so far in 2009, according to the WVMLS.  Yes…I am aware that some short sales won’t make it to the MLS, but hey…I can’t track that data.  There are 130 active short sales on the MLS right now so we are running about a 11.5% success rate in getting short sales closed here so far this year.

For those of you that think the sky is falling and that short sales are the only game in town, you need to understand that right now in the Salem Oregon real estate market that only 4.1% of total sold homes so far this year have been short sales.  4.1%.  That’s it.  Small potatoes here folks…so far.  Yes, I realize that unemployment is rising and yes…I would expect that number to head up this year.  Will we be like parts of Florida where 84% of sold homes are short sales?  No.   I really don’t need a crystal ball to call that one.

What does this mean?  Well if you are a buyer bent on purchasing a short sale home in Salem Oregon…you’ll probably be waiting for a bit.  There’s just not a lot to choose from.  Oh…and the ones that actually DID close sold for an average of 4.6% off of asking price.  Not 30%, not 40%, not 50%….4.6%.

Remember just because you read it on google, doesn’t make it reality.  Sometimes the media and reality collide.

Non-recourse.

If you are spending any time talking about real estate and loans, then you have probably heard the word recourse and non-recourse.  Here in the Salem Oregon area, most home loans are non-recourse loans. What this means is that if the bank forecloses on your home, the home itself is the sole means they have for collecting on the loan. The home is the collateral and that’s it.

A recourse loan means that if your home goes into foreclosure and it doesn’t sell for what the bank is owed, then they can come after you for a “deficiency judgement” that is what is still owed them.  Now here in the Salem Oregon area, short sales are starting to be more common. I see short sale listings on a daily basis these days.  With the words short sale the “in” buzz word in the media these days, it makes sense that homeowners struggling will want to try a short sale and partially salvage their credit.

What sellers thinking about a short sale need to know, is that banks are being sneaky…well, I think they are just counting on sellers to not read the fine print.  What is the fine print saying?

Recourse.

Yep…some banks, when they approve a short sale for a seller, are inserting language into the real estate contract, turning that non-recourse loan into a recourse loan.  They are agreeing to the short sale to clear the title, but are creating a contractual obligation for the seller to repay the loan, regardless.

Many sellers are taken unaware because they didn’t read the fine print and then the collection agencies start calling.  I know there are some of you out there are really struggling, but please make sure that you read everything the bank sends you before agreeing to the short sale.

In some cases, foreclosure makes more sense than trying a short sale.  Sounds crazy, but it’s true.

Short sales are not for everyone.

Foreclosures, short sales and bargains on the brain.

I get this. Buyer’s want deals and with the national news out there with some areas hit by tons of foreclosures, it is easy to see why buyers think every home is in foreclosure.  So here’s the deal…well at least the deal for the 30 minutes it will take me to write this post…Salem Oregon still doesn’t have a lot of foreclosures…relatively speaking.

7.5%

On the MLS that is how many homes are designated as a short sale or foreclosed home.  So that means 92.5% of homes for sale are just plain Jane real estate transactions. Now this percentage has gone up this year as it was at 6.8% in January of 2009 and with our current Salem Oregon unemployment rate of 11.4%, I can’t see how it won’t continue to climb.

I can also tell you, as someone that gets the list for homes being served with notice of defaults, that many of those homes aren’t listed on the MLS.  There are a lot of distressed properties out there, flying under the radar.  So what does our current foreclosure trending look like for Salem Oregon?

You’ll see that nice big peak in January with the nice drop off.  The drop off was nice, but what happens next remains to be seen. As some of you know there was a moratorium on foreclosures by Fannie and Freddie, and many of the ‘big guys” such as Citi and Chase followed suit, holding off on foreclosures until President Obama presented his stimulus package. That moratorium ended March 31, 2009, so whether we will see a spike in the next few months…possible.

With the end of the moratorium and our high unemployment rate, we could see a real surge in foreclosures by later this summer, early fall.  Whether or not our fellow Oregonians make it depends on how well they were able to save to weather this employment market.  I have definitely seen some homes in short sale that were the result of “buying a champagne home on a beer budget” but I am seeing a lot of true hardships as well.  These foreclosures are not necessarily about people spending beyond their means anymore.

If you have bargains on the brain and want to learn about purchasing a Salem Oregon  short sale or foreclosure, just email me and ask to be placed on the list (tell me what city you want, by the way).