Comments on: West Linn Real Estate Market Activity – June 15-21, 2009

By: david

david — Sat, 27 Jun 2009 07:40:36 +0000

I’m curious as to your opinion of million dollar homes in West Linn (and Lake Oswego). The RMLS has 44 homes listed at 1+ million. From what I can see hardly anything has been sold at 1+ million in 2009.

Either it’ll take years to clear that inventory or prices must drop.

The calculatedriskblog.com has posted several very good articles on
the rise in median home prices and how that signals a false bottom. People see the rise in median prices and assume that the market is turning. Hey prices are going up! But what is really pulling up the median prices is the DROP in higher priced homes. The low end home are bought by first time buyers. And that market will bottom first.

Then comes the 750K homes sold 2 year ago and now selling for 500K or less. An increase in the number of those homes being sold will pull up the median price. But that doesn’t mean that the overall market is going up.

If the high end continues to drop, do you see those million dollar homes eventually selling in the 500-600K area soon? Basically turning back the clock to 1997-1998 levels.

By: dr

dr — Wed, 24 Jun 2009 23:49:38 +0000

Thanks, dj. I must add, though, that we don’t know the seller’s situation. Sure they bought it for $138k long ago, but home equity loans have been given out like candy. It’s possible they may have had to take a loss (not including interest) on this sale. I have seen some other homes go into foreclosure that were purchased even in the 90′s with foreclosed amounts much more than the purchase amounts.

And I think you are right. When buyers see good deals, there will definitely be sales in even the $500k+ range. It is a good time to buy as long as interest rates stay low. So sellers must realize that being greedy is not going to sell their house in this market.

I believe, as in most (if not all) recessions, corrections are taking place. Homes have been unbelievably over valued and over priced. This is a correction that has to take place and where it bottoms out is anybody’s guess. I also think we have a ways to go…

By: dj

dj — Wed, 24 Jun 2009 21:19:06 +0000

Excellent analysis, dr. It just goes to show that as a potential buyer, you really have to scrutinize the listings. I don’t blame the sellers though, since they are trying to get the most value out of their home, but the way these listings work, you really need to have access to the inside track (i.e. the info accessible to agents only), to get the full story on a particular property. For example, if you go to Zillow, then you see the same home listed for $489K. Still, the buyer was able to knock off another $70K off the price, but in reality, that’s what the market has dictated the home is worth. Still, if Zillow is accurate, the sellers made a nice profit on their home. they paid $138K in 1986, so they still walked away with cash in their hand. Maybe not as much as they had hoped for, but they still got a lot more than they paid for the home. What surprises me this week, though, is the number of homes that sold for $500K+. While the sales activity wasn’t that great (6 homes sold), 4 of them were higher than the $500K threshold that I said was a dead market. The other thing that is interesting this week is the $/sqft is trending upwards. I was very surprised to see it at $180/sqft this week, probably due to the large plots of land each home has, but still, looks like buyers are ready to pounce if a good deal is available. Where is the market trending ? Have we hit bottom ? I still believe we have quite some way to go, but I could be wrong…. Insights anyone… ?

By: dr

dr — Wed, 24 Jun 2009 18:53:58 +0000

Indeed, 30683 SW Peach Cove Rd is a great example of sporadic listings over a prolonged period. If the other readers of this site are watchful of the current market, they would take notice of a seller who accepts $418,000 for a house they listed just 7 days before for $649,000. This listing has had a colorful listing history. It originally listed in June 2007 for $899,000 (per this website). Then after going pending more than once and relisted several times, no wonder it finally sold for a much lower price. Even though the location is amazing and it has over 3 acres, it clearly was a stretch at $899,000 at a time when the market was at a decline.