West Linn Real Estate Activity, November 24-30, 2008
Jody McLeod December 1st, 2008
All categories in the West Linn market are down, which is not surprising for this time of year. The homes that did sell took a big hit from the original listing price to the selling price.
NEWLY LISTED
| ADDRESS |
LIST PRICE
|
# BEDS
|
# BATHS
|
TOTAL SQ FT
|
TYPE OF HOME |
DATE LISTED
|
| 2675 LANCASTER ST | $435,000 | 4 | 2.1 | 3,011 | DETACHD | 11/27 |
| 1393 Buck ST | $649,900 | 4 | 2.1 | 2,600 | DETACHD | 11/24 |
| 3415 CRESCENT DR | $825,000 | 5 | 3 | 3,937 | DETACHD | 11/28 |
| 20500 S SWEETBRIAR RD | $1,120,000 | 4 | 2.1 | 2,762 | DETACHD | 11/26 |
PENDING SALES
| ADDRESS |
LIST PRICE
|
TOTAL BEDS
|
TOTAL BATHS
|
TOTAL SQ FT
|
TYPE OF HOME |
DOM
|
| 2306 CHICKADEE CT | $425,000 | 3 | 2.1 | 2,639 | DETACHD | 196 |
| 805 NICOLE CT | $545,000 | 3 | 2.1 | 2,837 | DETACHD | 10 |
SOLD
| ADDRESS | ORIGINAL PRICE | SOLD PRICE |
# BEDS
|
# BATHS
|
TOTAL SQ FT
|
TYPE OF HOME |
DOM
|
| 20910 FAWN CT | $123,600 | $80,000 | 1 | 1 | 720 | CONDO | 176 |
| 2947 CARRIAGE WAY | $424,950 | $355,000 | 3 | 2.1 | 1,835 | DETACHD | 526 |
Criteria: Homes in the 97068 zip code, listed, pending or sold between the dates listed above as reported by the Regional Multiple Listing Service (RMLS ). DETACHD refers to Single Family Detached Residence, MFG refers to manufactured housing, and ATTACHD refers to single-family residences with some portion of the structure attached to another property, but not constituting CONDO ownership. DOM stands for days on market, or the number of days from when the listing became active and when it received an acceptable offer.
If links to ACTIVE properties do not bring up property information, the listing may no longer be active, but rather expired, cancelled, pending, or sold.
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I agree with you, Jody, that sales activity will be slow this time of year, and probably won’t pick up until February at the earliest. The caveat here though, is whether or not potential buyers feel secure enough with their jobs/businesses and their investments experience some sort of comeback. However, I have to respectfully disagree with your comment: “The homes that did sell took a big hit from the original listing price to the selling price” – this statement seems to imply that the homes that sold this week were picked up at “Black Friday” prices by bargains hunters, considering that they got these homes for 20-35% off MSRP. My view is that these homes were grossly overpriced from the start and the buyers picked these homes up at current fair market value. In fact, I believe the condo transaction was a fair sale, while the Carriage Way home was still overpriced even at the final transaction price. Despite much lower mortgage rates available, homes will continue to fall in price for the following reasons: (1) Banks have tightened lending standards. If a buyer doesn’t have a great credit score and 10-20% downpayment, then they can forget about getting a loan under favorable terms. (2) Most people’s investments are down over 50% from just 3 months ago. A lot of people are feeling much poorer right now, even if they are in the upper-middle/upper class income bracket. These people are going to hold onto their cash until their financial portfolios improve (3) Buyers are feeling a little bit insecure about their jobs/businesses at the moment. When this insecurity kicks in, then people hunker down and defer purchases that are deemed ‘wants’ and not ‘needs’. (4) It’s no secret that home prices are falling. Most people are not going to try to catch a falling knife, unless they have no choice. (5) If one were to crunch the numbers, they would see that it is cheaper to rent than it is to buy an equivalent home, even if they took into account the tax breaks. Why would anyone who is fiscally responsible buy now ? How many people do we all know (including ourselves) that fall into one of these categories ?
It is clear that serious sellers are looking for any offer, just make an offer. But pricing homes unrealistically high scares off any remaining buyers. The latest sales data shows that buyers have the courage to make “low-ball” offers and to get them accepted, which continues to demonstrate that listings continue to be stubbornly overpriced for today’s market. Come spring 2009, sales activity could pick because it’s the season for home shopping, but I seriously doubt it. Sellers, if you’re reading this and are serious about selling your home, cut your asking prices !
dj!
Did you see Sunday’s Oregonian? Front page news was a street in Happy Valley (you know, a hilly city outside of Portland with Mount Hood Views, but little to no real industry or economic base…) where everyone was rushing in buying those $600K+ homes for their piece of the American dream…. Well these developments went up just about three years ago, and now one in 5 homes on a street are in foreclosure!
http://www.oregonlive.com/business/index.ssf/2008/12/road_to_ruin_happy_valley_stre.html
As foreclosures decimate comparable sales prices and we have another bubble of ARM resets in 2010 (this time in the Option-ARM Prime-ARM and Alt-A areas rather than sub-prime) prices will only be heading further downwards. I do agree that sellers need to start getting realistic, or we’re just going to see buyers “holding”. Fine if you’re a seller who is “just fishing”, but for those in trouble who need to sell, it’s going to be a rude awakening.
Stuart, thanks for the link to Oregonian article. Didn’t get a chance to do my Sunday reading today but this was quite something. One thing that caught my eye in the article is that one of the homes foreclosed on was an owner who had purchased a $600K home while having a yearly income of $35K. How insane is that ? Naturally all geniuses involved had this buyer’s best interest at heart when the deal went through. Of course, the buyer should have known that the day of reckoning will come, and it did. How this applies to West Linn, according to Zillow, the median yearly household income is $72K and according to Ron’s Q3 analysis from 2 weeks ago, the median single-family home price is $440K. In today’s market, this median household in WL would need to have good credit, put 20% down, in this case about $90K, and then take on a $2100/month mortgage (assuming 5.75% over 30yrs), which represents 35% of a person’s take home pay before taxes. Include property taxes, insurance, HOA, maintenance etc and this median home is eating over 40% of a median WL citizen’s income. Ouch. Yes you can deduct the interest, but it is still a sizable chunk of money on housing. Typically, the average homeowner should not spend more than 28% of their income on housing. This means that the maximum mortgage should not exceed $260K and hence the median price should not exceed $325K, assuming the same loan parameters (20% down, 5.75% etc.). By this measure, the WL real estate pricing still needs to fall another 25% before it makes sense for any buyer to get into the market.