Here's an excerpt from an interesting article that came down the pipeline from our friends at "Keeping Current Matters" today:
Last week, the National Association of Realtors (NAR) released their Existing Home Sales Report. The report announced that the median existing-home price in June was $236,400. That value surpasses the peak median sales price set in July 2006 ($230,400). This revelation created many headlines exclaiming that home prices had hit a “new record”:
Wall Street Journal: Existing-Home Prices Hit Record
USA Today: Existing home sales surge, prices hit record
Though the headlines are accurate, we want to take a closer look at the story. We do not want people to believe that this information is evidence that a new “price bubble” is forming in housing. NAR reports the median home price. That means that 50% of the homes sold above that number and 50% sold below that number. With fewer distressed properties (lower valued) now selling, the median price will rise. The median value does not reflect that each individual property is increasing in value. Below are the comments from Bill McBride, the author of the esteemed economic blog Calculated Risk. McBride talks about the challenges with using the median price and also explains that in “real” prices (taking into consideration inflation) we are nowhere close to a record.
“In general I'd ignore the median sales price because it is impacted by the mix of homes sold (more useful are the repeat sales indexes like Case-Shiller or CoreLogic). NAR reported the median sales price was $236,400 in June, above the median peak of $230,400 in July 2006. That is 9 years ago, so in real terms, median prices are close to 20% below the previous peak. Not close.”
Earlier this week, the Wall Street Journal covered this issue in detail. In this story, Nick Timiraos explained that this rise in median prices is nothing to be concerned about:
“Does this mean we have another problem on our hands? Not really…There may be other reasons to worry about housing affordability by comparing prices with incomes or prices with rents for a given market. But crude comparisons of nominal home prices with their 2006 and 2007 levels shouldn’t be used to make cavalier claims about a new bubble.”
Home values are appreciating. However, they are not increasing at a rate that we should have fears of a new housing bubble around the corner.
Thanks again to the team at KCM for a thoughtful piece and an interesting insight.
All the best,
I've been asked a number of times over the past several weeks to predict the short-term future with regard to interest rates. Thankfully, I've become rather adept at reminding folks that I abandoned prognostication years ago. These are, however, intriguing times, with sellers playing offense and upward twitching interest rates heightening apprehension that a long-awaited steady climb may be next. There is reason to believe it, but no reason to panic – Yes, every upward movement in interest rates undermines purchasing power, but a moderate climb to more sustainable rates would likely be accompanied by expanding inventory. A bit less monetary strength but a bit more to choose from – certainly no crisis. Above all, buyers should remember that any interest rate below 7% is, from a historical perspective, remarkably low. There's a lot of distance between today's 4.125% and that benchmark, so be advised: For buyers and sellers alike, these are the good old days.
I spent some time with an Orenco Station client today studying the past 15 months' market trends in zip code 97124. We looked specifically at single family detached resale properties sold straight, and I figured others might want to see it as well.
A great post today from John Downey on the Keeping Current Matters blog points us to the fact that 10,000 people turn 65 each day in the United States. The implications for the real estate market are profound – It is my opinion that there is not nearly enough standing inventory designed to meet the specific demands of an aging population. To be precise, single level dwellings with footprints that focus on space efficiency are hard to find in a world where developers are focused on maximizing livable square footage. Builders tend to maximize their return on lot investment (a noble objective, to be sure) by adding second, and sometimes third, floors to their product. The whipsaw effect of too strict an adherence to that model, however, is that the product becomes obsolete as knees, ankles and balance wear down with age. Thankfully, population growth should allow for second and third generation homeowners to move up into these properties, but it is disturbing to think that our elders will have very little choice as they contemplate where to go.
My message to the investor clients with whom I work is very consistent. Grab yourself a ranch-style home built with good bones in an established neighborhood. Doesn't have to be flashy, and it doesn't have to be new – Rent it out and bide your time until the Silver Tsunami of demand brings the market to you…
It was great to learn that the long-awaited Windermere search app has been released to the public. This is a long-awaited development, and a real point of pride for the technnology team at Windermere. Head for the AppStore on your device and give it a whirl – The search functions are very precise and the technology underlying the database provides for great depth of detail. We've become familiar and very comfortable with with the apps from Zillow and other third-party purveyors of listing information, so it's fun to recognize and appreciate a unique viewpoint as seen through the lens of the West's finest brokerage.
It was a kick this morning to announce Windermere West's Community Service Day project for 2013.
Each year, we join our colleagues from througout the Windermere network in devoting a day to meet a community need. This year, we'll meet at Barnes Elementary on Friday, June 21st to provide maintenance for the school's community garden, paint interior and exterior features, and assist in general repair needs throughout the campus.
Neighbors and clients are always invited to join us, and they often do – It's a great tradition and a lot of fun too! If you're interested, please contact our front desk staff at 503-349-4884.
As a Windermere broker, I look forward each quarter to the release of the Gardner report so that I can keep a careful eye on regional trends for the housing market and the economy at large. Matthew Gardner is a renowned land use economist and is considered one of the foremost real estate analysts in the Pacific Northwest.
While the full content of the report for Q1 2013 can be found here:
I found these notes to be the most intriguing:
- Oregon's employment gains of 1.5% over the past year matched the average for the US.
- Washington County's employment gains of 1.3% over the past year was equal to Multnomah County's.
- Washington County's unemployment rate is now 7.1%, while Multnomah County's is 7.8%.
- The net non-agricultural employment gain over the past year for Washington County was 3100 jobs.
- YTD closed sales of exisiting residential units is up 3% in Washington County and 11% in Mulnomah County.
- Washington County homes registered a 16.1% year over year price increase, to an average of $295,000.
Great stuff – The market is on the move!
Just a quick post to thank the gracious leaders at the Hillsboro Chamber of Commerce and particularly the members of their Awards Committee for blessing me with the Outstanding Professional Award at last night's ceremony. Above all, I wanted to reiterate what I said, somewhat clumsily, upon receiving the honor.
Hillsboro is a spectacular community, beautifully represented by those at the celebration – From the elected leaders to the drivers of industry & commerce to the educators to the police & fire professionals to the tireless workers for charitable causes to the students who put such inspiring talent on display.
Association with the Chamber of Commerce itself is a special delight, as that body works under extraordinary leadership to support Washington County as Oregon's economic engine – To be included among its honorees was a stunning and profoundly humbling surprise.
The loyalty and encouragement of my colleagues at Windermere provided the fuel to thrive, and only standing on their shoulders could I have been recognized. My beloved wife Kerry and my wonderful kids Roger, Kincaid and Grete play a critical role in each day's efforts – I would be lost without them.
It has been an unmitigated luxury to work with and alongside my Hillsboro neighbors & friends for nearly 12 years, and it is impossible to imagine having been more warmly welcomed or strongly supported. I am deeply grateful and know for certain that Hillsboro has done more for me than I could ever hope to do for her.
Here's to a great city with a magnificent future – Cheers!