Distressed property sales in the Portland metro area dipped in the second quarter of 2014 as the spring buying season heated up. Short sales dipped from being 6.1% of total sales to being 4.1% of total sales for the first and second quarters of 2014 respectively. Bank owned foreclosures (REO) properties experienced a less abrupt drop from 4.9% down to 4.7% when the first quarter of 2014 is compared to the second quarter of this year. Inventory of available homes offered on the market throughout Portland remains quite low and this low inventory may be fueling the drop in short sales as rising prices move more sales into the non-distressed category. Also, national politics may be playing a role as congress has failed to reach an agreement extending the Mortgage Debt Relief Act due to partisan bickering. As such, many struggling home owners may be stalling or otherwise dragging their feat on the short sale to see if debt forgiveness is extended to them. Still other home owners are holding out for improving prices to allow them to break even or realize a profit on their properties and for some higher real estate values are enough to make that a reality. Short sale specialists in Portland, Oregon have witnessed the effects of this decline in terms of fewer new short sale listings and a greater competition amongst potential buyers. Also worthy of note, is the anecdotal evidence of a slowing of new offers on our current listing inventory which seems to be roughly in step with the declines in buyer activity seen at the national level.
Fewer Distressed Properties: Slow Recovery
On a nationwide outlook The National Association of Realtors reports that adjusted annual sales of homes is on the rise but numbers of sold properties are still somewhat lower than the same periods in 2013 citing rising interest rates and increasing property values as reasons for the fewer completed transactions. Other market indicators that may be slowing down price increases include wider economic factors such as household income, wage increases, ballooning college debt and stubbornly low wages for younger workers entering the job market. A recent Wall Street Journal article opines that these factors will combine to make housing sector improvements slow and more fitful than the last two years’ gains may indicate.
Wall Street Down Slightly On Sluggish Home Sales News
Stock markets in the United States were somewhat lower as of Monday with the S&P500 down four points to 1,973 while the Dow Jones Industial lost 30 points and the NASDAQ dropped 17 points. According to the National Association of Realtors pending home sales fell by 1.1 % in June and cited factors including lackluster family incomes, the high cost of housing and increased interest rates among other factors. Interestingly enough, the increase in property values is following an inverse correlation to pending home sales where prices are going up while pending sales are going down. According to MarketWatch.com, year on year pending sales are down 7.3% as compared to last year which clearly illustrates how property increases are directly translating into reduced home-buyer demand. Echoing a similar theme,the New York Times recently published an article stating that the typical American household lost 36% of its wealth in the last decade. It’s important to note that the ship upon which Americans’ wealth sailed was the housing market and that during the housing boom much of the increase in net worth was tied to increased real estate values. The bubble’s sharply increasing values may have hid the fact that wealth was actually reducing in that greater percentages of household incomes were being devoted to high mortgage payments. The wealthiest 5% of Americans seem to have recovered from the recession and show a 14% net worth increase as compared to a decade ago. The wealthy Americans’ 14% worth increase compared against the average Americans’ 36% decline makes for a new wealth gap in America that has increased by 50%. With the majority of American households losing the rat race it seems that future financial woes may be just beyond the horizon.
In closing it must be said that in any market there are good deals and offers better passed up. And, if you need a place to live and can easily afford the payments then the cost savings associated with owning a home may still mean that buying makes fiscal sense for you and your family. For others needing to upgrade, now may be a chance to sell an existing home and put the equity into a new property that better suits one’s lifestyle. If you want to sell but are unsure as to whether you’d be in short sale or not don’t hesitate to call us to learn more about all of your options. Recent months have seen a greater bank compliance to federal short sale incentive programs meaning that you do have options. Or, if you were previously on the line about selling these increased prices may be just enough to nudge you off the fence. Give us a call and let us know how we can help you.
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