Q: The media continues to report declining property values in Portland and even the possibility of a “Double Dip” decline coming soon. What’s going on?
A: Unless the economy falls apart going into 2011, economists I have heard recently give forecast presentations state there is very little risk of a “Double Dip” decline happening:
Market trend reports locally for October, 2010 were pretty negative with declines in Pending Sales of -21.5% and Closed sales of -35.7% compared to October, 2009. What the media left out of their report is they are comparing today’s volume against the fall of 2009 when the Federal First Time Buyer Tax Credit program was in full swing and we were selling low end homes like hot cakes. So while October’s closed volume for Portland was hardly robust at 1,292 units, it only declined 7.7% compared to September, 2010. And Pending sales went up 3% in October versus September. That got left out too. Unless the economy falls apart going into 2011, economists I have heard recently give forecast presentations state there is very little risk of a “Double Dip” decline happening.
The market locally is beginning to turn in a positive direction very slowly and activity is building as consumer confidence improves and there are glimmers of positive economic news nationally. John Mitchell, a local economist, stated in a speech a few weeks ago that 2011 will be the year things start a real estate recovery locally in “fits and starts”. It feels like it is starting a bit early.
Another positive sign of market improvement is mortgage interest rates have gone up over ½% in the past two weeks. Directors Mortgage believes this is in part due to increased demand. They are reporting an increase of about 14% for loan “Purchase Applications” in November. People are apparently coming off the fence and getting themselves positioned to be a “loan pre-approved” real estate Buyer by the first of next year. I think that is a very good sign for a future uptick in business.
I advise against waiting until you are sure the market has hit bottom. I judge we have been bouncing along the bottom for the past six months. What I know for sure is you will find out we are no longer at bottom two months after it happens. The pressure on mortgage rates going up trumps any concerns about prices falling a few more percentage points.