Gretchen Skeaton

Path to the $8000 Federal Tax Credit:

10% of Sales Price of Your Primary Residence Up to $8000! (10% of Home Sold for $80,000 or Greater)

Why Buy Now? Appears we are the point where Interest Rates, Home Prices, and Supply = Greater Affordability

At this writing the Fixed Interest Rate is 5.12% for Conventional loans and 5.24% for FHA loans.

Average Fixed Interest Rate over the last 30 years is 8.75%

Home Prices are approaching 2005 or 2004 prices depending on the SW Washington or Portland, OR location. Plus Inventory is beginning to decline when 2009 months of inventory is compared to 2008 months of inventory.

To get more home buying information plan on attending the Home Buyer Seminar sponsored by the WSHFC on 8/18/09 and 8/19/09 from 6 PM to 8:30 PM. Call 360-608-8541 for details.

Market Trends Report for Vancouver, Washington and Portland, Oregon Areas

January Market Trends Report Using December reporting period data, the most recent data available.

Market Trend: Prices Declining, Slight Increase in Sales and Increased Affordability! December data showed a decline in inventory and sales increased; 6% of homes were sold in Portland compared to 5% in November and 5% sold in Vancouver compared to 4% in November. According to John Burns Real Estate Consulting, the area affordability barometer is now 5.7 compared to 7.0 in November. A <5 rating is considered affordable. Price declines and historically low interest rates assisted in the improvement in affordability.

Type of Market: Strong Buyers Market in all Price Ranges
(A Year or More of Home Inventory to Choose from....21,328 Homes on the Market for Sale!!)

• Less than 6 months of Inventory is considered a Sellers' Market
• More than 6 months of Inventory is considered a Buyers' Market
• The closer to 6 months of Inventory the more neutral a market it is.

*Data is from HomeQuest database and includes single residences, condos, and attached homes.

Loan Environment: Interest rates continue to be low, 5.0% as of this writing and there are 3.5% down loans available from FHA. .

Sellers, homes that present the home's best features, that are priced at market prices, and that are promoted in a way that appeals to buyers, sell!

Buyers, if you are planning to stay in your home for 3-5 years, if you have good credit, and if you have 3-5% to put down towards your loan and closing costs, it is a great time to buy.

To discuss taking advantage of this market or to get info and/or attend a Home Buyer Seminar on February 21, 2009, Call or Email me!

According to an article in Forbes.com written by Matt Woolsey on December 16, 2008, the Portland OR area which includes the Vancouver, WA area is the 9th best bet. The #1 Best Bet is Seattle, WA. Why? According to Woolsey, the top 10 best bets are such because they grew in value and avoided large swings of excess and stress, meaning these cities did not overbuild....were less volatile. Supply and demand was governed/managed. In some cities, the geography helped govern the supply, as he states of Seattle. In Portland, the areas' conservative building patterns and vacancy fluctuations make it a steady market, a kind of stability.

Job growth and construction rates are important determinants of an area's future health, he also states. For Portland/Vancouver area from Moody's Economy.com, the projected job growth for 2008-2017 will be 1%. As I read this article, it reinforced a document I read by John Burns that showed this areas' growth as steady with no large swings as is often seen in our Southern border state, California.

Woolsey states in the article that prices are likely to continue falling nationwide for at least a year as the mortgage and housing markets shake out of their hangovers. He further states that the cities on the best bet list possess the strongest fundamentals for when the market settles. If you want to read the full article go to http://www.forbes.com/2008/12/16/cities-ten-homes-forbeslife-cx_mw_1216realestate_print.html. In the article, click on In Depth: America's Best Long-Term Housing Bets to get the details on the 10 cities.

So buyers, the Vancouver/Portland area is a great area to buy and now is the time to buy before the Shake Out is complete. Look for a great home within your budget. There are numerous such homes...affordability is real. Do you have some savings, 3-5% of the sales price; have you reduced your debt,and have you been paying your bills on time, (those old fundamentals)? There are loans available. I invite you to attend the Home Buying Seminar scheduled for January 24, 2008 from 9 AM-2 PM. Call/email me for details.

And Sellers, it just might be a great time to move up, move on, or get more space or luxury. As long as those same fundamentals are in place, you can be set to make that move. If you have equity in your home and are willing to forget what the home sold for at the height of the boom...rather look at the unusal appreciation of approximately 5%. I'd be happy to work up some numbers for you.

Your thoughts?

My commentary concerning the December 2008 Real Estate Market Trends in Vancouver, WA and Portland, OR:

It certainly is an interesting time for our country and maybe the world due to poor decisions made by many people during the most recent real estate boom! And as I mentioned in my last newsletter, I have decided to give little credibility to the real estate news reporting.

What I know, here in the Pacific Northwest:

1. Financing for homes is available and offered at a historically low interest rate! Several loan consultants have been sending me emails saying they have loans available. If I was considering purchasing a home, I would definitely purchase now!! At the Home Buying Seminar of which I am one of the presenters, the loan consultant presented several programs.

2. Homes available to purchase (Inventory) is high!

Fewer homes are selling (4-8%/month). Inventory currently includes short sales and bank owned properties impacting the homes available that have yet to sell. Once the short sale and bank owed property inventory is depleted/reduced, the inventory picture will be more normal. The reduction in inventory impacts that supply and demand factor that affects sales and especially prices. As I have previewed properties, I have seen some really nice homes that are reasonably priced!!!

3. The 15%/year appreciation in the price of homes could not continue...homes would not be affordable at that rate.

I recall forecasters in 2006 saying the bubble would soon bust. It did bust in Pacific Northwest in Aug/Sept. 2007. Looking back at the data, I see the August and September 2007 decline and not before and it felt like a bubble popping.

4. The forecasters are now saying things are beginning to stabilize and with all the variables, when is hard to determine

The Pending Home Sales Index is a forward-looking indicator of homes sales and that indicator is showing an index number improvement starting in August 2008. It's interesting to look at the index numbers starting in 2005. In 2006 the index started to decrease, in 2007 it decreased more and 2008 the declining trend continued during the 1st and 2nd quarters. These index numbers are for the Western part of the USA.

Price projections are challenging to predict with so many variables. One commentator, Lawrence Yun of National Association of Realtors, stated buyer pessimism could cause prices to overshoot the downward price correction. I have seen the same commentary from others as well. The end of the bust may be as dramatic as the bubble bust. I did a market analysis of my home and seeing the price reduction was not a comfortable feeling until I used a bit of reason. Instead of looking at the impressive appreciation rate of the past couple of years, I looked at an average appreciation rate of 5%. With that in mind, my home still was valued at approximately $50,000 over what we paid for the home in 2003.

Check out my Market Trend Reports for the Vancouver and Portland Areas which can be seen on my website: (Take a Look and help increase traffic to my website) November 2008 Market Trend Reports

PS: For those in the area, our next WSHFC Home Buyer Seminar is scheduled for January 24, 2009 from 9 AM to 2 PM. Those attending the December 13, 2008 seminar said it was very informative.

Presenters besides Roger Pyles, loan consultant, Realtor, Gretchen Skeaton were Norm Shakelford, inspector with Quality First, Brad Hill, an appraiser with Cascade Appraisal, Chris Kocalis with AL Insurance and Angie Ashton, escrow officer representing Columbia Title Company.

Wishing you and yours a Christmas Holiday FULL of Joy!!

Gretchen Skeaton, MT (ASCP), MSM
GRI, CRS, AHS, e-PRO
Licensed in both Washington and Oregon
360 608-8541 or 503 750-3212
For more real estate information, check out my website, www.GSkeatonRealEstate.com

In todays Inman News, 11/24/08, Patrick Duffy writes a book review of the book Financial Shock: A 360 degree look at the subprime mortgage implosion and how to avoid the next financial crisis by author: Mark Zandi

It is much more succinct than the article I posted of the NPR interview last week on my website blog.

Duffy states: "the book is so comprehensive, it still provides an excellent framework from which to understand the root causes of the crisis, from the mistakes made by Alan Greenspan to the rapid rise of irresponsible lenders who rewrote the rules of underwriting based on their own short-term interests.

And let's not forget a compliant political system and the home buyers eager to join the ranks of owners despite any potential long-term consequences of poor financial decisions.

Beginning with a chapter that explains just how subprime mortgages evolved, Zandi writes in plain English and manages to weave a story with its share of heroes-turned-villains, including politicians pushing for an "ownership society"; a Federal Reserve chairman enamored with deregulation; an enormous amount of global money in search of a big return; financial alchemists getting drunk on their own supposed genius; home builders who ignored the lessons of the past; and bond ratings agencies who kept the entire machine humming because the profits were simply too large to pass up."

Patrick Duffy further mentions Zandi's policies to address or prevent in the future:

"So now that we're in the midst of unraveling and deleveraging the system of subprime mortgages, complex securities and credit default swaps, how do we prevent a repeat of this ugly scenario? Fortunately, Zandi provides his own 10-step program of policies to address a host of issues: from tossing out shady brokers to providing basic financial education in high schools across the country. These steps include the following:

1. Adopt a voluntary mortgage write-down plan

2. Establish clear mortgage lending rules

3. License all mortgage brokers

4. Expand data collection by the government

5. Reform the fractured foreclosure process

6. Invest in financial literacy starting in high school

7. Modify mark-to-market accounting when price discovery is unreliable

8. Raise financial transparency and accounting

9. Overhaul and simplify financial regulation

10. Pay attention to asset bubbles and act accordingly

Seems to me this book would be a good read!