Comments on: West Linn Real Estate Market Activity — November 9-15, 2009 http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/ News, Statistics, and Commentary about West Linn Oregon Real Estate Wed, 23 Jun 2010 15:10:28 +0000 hourly 1 http://wordpress.org/?v=3.0 By: dj http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-843 dj Mon, 23 Nov 2009 05:58:51 +0000 http://www.move2westlinn.com/?p=1119#comment-843 Stuart, you're an encyclopedia ! Thanks for the links to the data. I look forward to seeing more of your market analysis. Stuart, you’re an encyclopedia ! Thanks for the links to the data. I look forward to seeing more of your market analysis.

]]> By: Stuart http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-841 Stuart Sat, 21 Nov 2009 22:41:24 +0000 http://www.move2westlinn.com/?p=1119#comment-841 http://www.youtube.com/watch?v=pmeBSWI9sF8 - old, but very explanatory video regarding CA alt-A and the trends of alt-A borrowings. http://www.newyorkfed.org/regional/States_AltA.xls shows 32,000 alt-A loans in OR vs 604,000 in CA. so when you adjust for population, they have it about twice as bad as we do. Maybe. Depending on where our loans are concentrated. http://data.newyorkfed.org/creditconditions/ shows a heat map with lots of drill down data and xls data that will be useful. Oregon was not immune when it came to alt-A. The loans tend to be bigger and the borrowers were all predominantly high credit score, high income types. The big difference between OR and CA is that OR is not a non-recourse mortgage state. So while it can make financial sense to walk away from your underwater house in CA (as you've raped all the equity out long ago), the math isn't quite the same for the wealthy in OR who stand to lose "everything" when they walk away from their "investment" that went bad. http://www.youtube.com/watch?v=pmeBSWI9sF8 – old, but very explanatory video regarding CA alt-A and the trends of alt-A borrowings.

http://www.newyorkfed.org/regional/States_AltA.xls shows 32,000 alt-A loans in OR vs 604,000 in CA. so when you adjust for population, they have it about twice as bad as we do. Maybe. Depending on where our loans are concentrated.

http://data.newyorkfed.org/creditconditions/ shows a heat map with lots of drill down data and xls data that will be useful.

Oregon was not immune when it came to alt-A. The loans tend to be bigger and the borrowers were all predominantly high credit score, high income types. The big difference between OR and CA is that OR is not a non-recourse mortgage state. So while it can make financial sense to walk away from your underwater house in CA (as you’ve raped all the equity out long ago), the math isn’t quite the same for the wealthy in OR who stand to lose “everything” when they walk away from their “investment” that went bad.

]]> By: David http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-837 David Fri, 20 Nov 2009 22:32:02 +0000 http://www.move2westlinn.com/?p=1119#comment-837 Even if the reset wave do not hit Oregon, I think the local market will still be affected. Think of it this way, what has been driving the market for the past 10 years? People moving from CA or other states into Oregon. People in CA sell their little houses for 750K and end up with a pile of cash (tax free gain). And then buy a bigger home for the same price 750K. Those people have pretty much disappeared from this market. That's why the 500+K homes are in a world of hurt. You need out-of-staters coming in with big piles of cash in order to support a market of 750K homes. They got that pile of cash by selling their homes into the bubble market. The bubble has burst so they either defaulting in CA or staying in their own homes. Or selling at current prices (low). They aren't moving to Oregon with big piles of cash. So the market in CA has direct consequences for prices in Oregon/Washington. David Even if the reset wave do not hit Oregon, I think the local market will still be affected. Think of it this way, what has been driving the market for the past 10 years? People moving from CA or other states into Oregon. People in CA sell their little houses for 750K and end up with a pile of cash (tax free gain). And then buy a bigger home for the same price 750K.

Those people have pretty much disappeared from this market. That’s why the 500+K homes are in a world of hurt. You need out-of-staters coming in with big piles of cash in order to support a market of 750K homes. They got that pile of cash by selling their homes into the bubble market.

The bubble has burst so they either defaulting in CA or staying in their own homes. Or selling at current prices (low). They aren’t moving to Oregon with big piles of cash.

So the market in CA has direct consequences for prices in Oregon/Washington.

David

]]> By: Stuart http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-836 Stuart Fri, 20 Nov 2009 16:47:21 +0000 http://www.move2westlinn.com/?p=1119#comment-836 dj - yes, I think from anecdotal evidence that the "conforming" market (sub $500K) in Oregon has a small share of conventional ARM's (which aren't much of an issue right now) but it's the high end that could have been playing fast and loose with the Option ARM's and other esoteric financing. The "aspirational" market ($500K to $800K) may have had a bit of this, but it's the $800K+ properties owned by "The smartest people in the room" (LOL) that may have a higher volume of this. Doesn't affect many (although WL/LO have their share of high end properties) and the compression at the low end has pretty much hit a bump-stop (IMHO), but it will be interesting to watch the high end nevertheless. But until somebody outlaws having to rent what you already own from the government, there's not much to attract, even for those who could stretch. dj – yes, I think from anecdotal evidence that the “conforming” market (sub $500K) in Oregon has a small share of conventional ARM’s (which aren’t much of an issue right now) but it’s the high end that could have been playing fast and loose with the Option ARM’s and other esoteric financing. The “aspirational” market ($500K to $800K) may have had a bit of this, but it’s the $800K+ properties owned by “The smartest people in the room” (LOL) that may have a higher volume of this. Doesn’t affect many (although WL/LO have their share of high end properties) and the compression at the low end has pretty much hit a bump-stop (IMHO), but it will be interesting to watch the high end nevertheless.

But until somebody outlaws having to rent what you already own from the government, there’s not much to attract, even for those who could stretch.

]]> By: dj http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-835 dj Fri, 20 Nov 2009 09:09:48 +0000 http://www.move2westlinn.com/?p=1119#comment-835 Stuart, thanks for providing the link to the mortgage reset wave chart. It looks very scary. One quick question for you or to the readers of this blog - I assume that the Alt-A and Option ARM loans were mostly in the extreme bubble markets like California, Phoenix, Florida and Nevada, due to rampant speculation and unrealistic price appreciation that forced buyers at the time to take on these exotic loans. Oregon in general was late to the bubble party, and also late when the national bubble deflated. Housing here has generally been affordable up until about 2004. Therefore, I assume that a lot of Oregonians did not fall prey to the Alt-A and Option ARM loans like the rest of the nation, but rather should have 5/1, 7/1, 10/1 ARMs, or 15/30 yr conventional fixed, with very few having jumbo loans. Again, this is an assumption on my part, but I could be wrong. The question is: do you or anyone else think that Oregon, and specifically West Linn, is going to get hammered when the next wave of Alt-A and Option ARM resets hit the nation ? Stuart, thanks for providing the link to the mortgage reset wave chart. It looks very scary. One quick question for you or to the readers of this blog – I assume that the Alt-A and Option ARM loans were mostly in the extreme bubble markets like California, Phoenix, Florida and Nevada, due to rampant speculation and unrealistic price appreciation that forced buyers at the time to take on these exotic loans. Oregon in general was late to the bubble party, and also late when the national bubble deflated. Housing here has generally been affordable up until about 2004. Therefore, I assume that a lot of Oregonians did not fall prey to the Alt-A and Option ARM loans like the rest of the nation, but rather should have 5/1, 7/1, 10/1 ARMs, or 15/30 yr conventional fixed, with very few having jumbo loans. Again, this is an assumption on my part, but I could be wrong. The question is: do you or anyone else think that Oregon, and specifically West Linn, is going to get hammered when the next wave of Alt-A and Option ARM resets hit the nation ?

]]> By: Stuart http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-834 Stuart Thu, 19 Nov 2009 23:43:08 +0000 http://www.move2westlinn.com/?p=1119#comment-834 Jumbo ARM's have another wave of resets coming, and the alt-A and Option-ARMs are coming too. The OptionARMs were popular among the "I'm even more financially sophisticated" types who continually preach the mantra of borrowing at 4% to 6% in order to get 12% on the stock market, or other even more risk-laden venture. You know, the guy who refinanced at every opportunity and put everything in the stock market. http://www.forbes.com/media/flash/2009/10/mortgages_chart/mortgages.html shows another peak in June 2011, and these neg-amortization loans are going to suck, even if they reset to rates similar to what they were nominally at originally due to the accelerated amortization schedule. Never have so many people ended up poor in the process of trying to look rich. Jumbo ARM’s have another wave of resets coming, and the alt-A and Option-ARMs are coming too.

The OptionARMs were popular among the “I’m even more financially sophisticated” types who continually preach the mantra of borrowing at 4% to 6% in order to get 12% on the stock market, or other even more risk-laden venture. You know, the guy who refinanced at every opportunity and put everything in the stock market.

http://www.forbes.com/media/flash/2009/10/mortgages_chart/mortgages.html shows another peak in June 2011, and these neg-amortization loans are going to suck, even if they reset to rates similar to what they were nominally at originally due to the accelerated amortization schedule.

Never have so many people ended up poor in the process of trying to look rich.

]]> By: Ron Ares http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-833 Ron Ares Tue, 17 Nov 2009 19:29:30 +0000 http://www.move2westlinn.com/?p=1119#comment-833 I do not know of any unusual situation with the two Bland Circle listings. They just may coincidentally be wanting or needing to sell in a tough market for luxury listings. I do not know of any unusual situation with the two Bland Circle listings. They just may coincidentally be wanting or needing to sell in a tough market for luxury listings.

]]> By: David http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-832 David Tue, 17 Nov 2009 19:25:12 +0000 http://www.move2westlinn.com/?p=1119#comment-832 dj, I totally agree. The DR Horton homes on Winkel are priced for entry level buyers. I think homes in the 300-400K range are a good deal. Especially if they're new! I looked at all the new subdivisions in West Linn. Renaissance, Arbor, DR Horton. Renaissance is definitely higher quality, but they are way way overpriced. I think they'll do quite well if they price their entry level home starting at 399K. Arbor Homes do have homes starting around 350K. But the lots are really really small though. David dj, I totally agree. The DR Horton homes on Winkel are priced for entry level buyers. I think homes in the 300-400K range are a good deal. Especially if they’re new!

I looked at all the new subdivisions in West Linn. Renaissance, Arbor, DR Horton. Renaissance is definitely higher quality, but they are way way overpriced. I think they’ll do quite well if they price their entry level home starting at 399K.

Arbor Homes do have homes starting around 350K. But the lots are really really small though.

David

]]> By: dj http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-831 dj Tue, 17 Nov 2009 07:38:48 +0000 http://www.move2westlinn.com/?p=1119#comment-831 Multi-million dollar mansions aside, it's quite humorous to see homes like 2731 Ridge Lane stuck in a 2005 bubble time warp. Quite frankly, I'm not sure why Renaissance insists on pricing standard-fare McMansions on 7000 sqft lots for over $200/sqft (bubble pricing) when similar quality homes in established neighborhoods are selling for around $150/sqft. You would think that a company battling bankruptcy would be motivated to price these homes to sell. What perplexes me even more is that there are actually buyers out there that will pay the prices that Renaissance is asking. Sorry, but at these prices, these Renaissance homes are a really bad investment. Of course, if someone really likes the home then by all means go ahead and purchase it. But as an investment, they really suck, and it will take *years*, perhaps even a generation, before buyers of these homes recoup their investment. DR Horton got the message loud and clear and held a fire sale to get rid of their inventory on Winkel Way. Multi-million dollar mansions aside, it’s quite humorous to see homes like 2731 Ridge Lane stuck in a 2005 bubble time warp. Quite frankly, I’m not sure why Renaissance insists on pricing standard-fare McMansions on 7000 sqft lots for over $200/sqft (bubble pricing) when similar quality homes in established neighborhoods are selling for around $150/sqft. You would think that a company battling bankruptcy would be motivated to price these homes to sell. What perplexes me even more is that there are actually buyers out there that will pay the prices that Renaissance is asking. Sorry, but at these prices, these Renaissance homes are a really bad investment. Of course, if someone really likes the home then by all means go ahead and purchase it. But as an investment, they really suck, and it will take *years*, perhaps even a generation, before buyers of these homes recoup their investment. DR Horton got the message loud and clear and held a fire sale to get rid of their inventory on Winkel Way.

]]> By: David http://www.move2westlinn.com/2009/11/16/west-linn-real-estate-market-activity-november-9-15-2009/comment-page-1/#comment-830 David Tue, 17 Nov 2009 05:08:57 +0000 http://www.move2westlinn.com/?p=1119#comment-830 Ron, thank you for the update. Do you know if there's an "inside story" on 22911 S BLAND and 22903 S BLAND? These two mansions share a common entry gate. I find it quite interesting that they're both for sale. The bigger 12K square foot one went on the market earlier. David Ron, thank you for the update. Do you know if there’s an “inside story” on 22911 S BLAND and 22903 S BLAND? These two mansions share a common entry gate. I find it quite interesting that they’re both for sale. The bigger 12K square foot one went on the market earlier.

David

]]>