Melina Tomson, M.S. Principal Broker/Owner

I know the end of September is approaching and my market reports are out a bit late this month, but we had some good news, temporarily anyway, about the Salem and Keizer real estate markets.

With the MERS foreclosures heading towards judicial foreclosure and off the real estate market currently (which is about 50% of foreclosures in our area), we've had a dip in inventory that is temporarily helping our sellers. Facing fewer foreclosures to compete with and insanely low interest rates means that more buyers may elect to pick a house not in distress.

This is not a sellers market by any means, but make no mistake...we are in a temporary sweet spot for sellers where they actually have a shot at selling their house.

You can read the Salem Real Estate Report and Keizer Real Estate Reports for more details.

Oregon has long been a state that uses Trust Deeds for real estate transactions. With the ease and low cost of foreclosure for banks, it was the instrument of choice for many years here in Oregon...well as long as you follow the state laws. You've heard the terms, judicial foreclosure, non-judicial foreclosure, deficiency state, non-deficiency state. Like all things to do with law, nothing is black and white. There are some huge changes with serious implications headed the way of homeowners facing foreclosure.

I chatted about the MERS problem Oregon was having and the backlog of foreclosures this was going to cause. Not a good thing for anyone, in my opinion. In the Oregonian a couple of weeks ago, Brent Hunsberger wrote an article about the shift that banks were making, taking foreclosures to the courtroom. Left with little choice , due to legal issues, the lenders that can actually produce the original note are headed to chat with a judge about getting the property in a judicial foreclosure. I was curious to see if we would have any of these converted foreclosures head our way in Salem. Sure enough, I looked through the notices this week and there it was...a nice list of attorney names, including the firm mentioned in the Oregonian article, Kelly Sutherland. Salem homeowners that have been in limbo due to the MERS debacle are going to find their way into a courtroom and standing in front of a judge.

What this means is that the building shadow inventory will once again start working its way down the foreclosure pipeline as banks start to push their way through the system. There are so many implications with judicial foreclosures. A HUGE one for homeowners facing foreclosure is ORS 86.705(3). This statute can convert a residential trust deed to a non-residential one which allows for a deficiency judgment. This could be financially disastrous for many people out there who are facing foreclosure and end up in a judicial proceeding. I am personally appalled that banks could break Oregon laws by failing to record note transfers properly, then have an "out" for a judicial proceeding which may open up some families to deficiency judgments that they would have been protected from before. That just isn't right.

If all banks decide to follow Wells Fargo's plan for MERS held loans and go the judicial route, homeowners facing foreclosure MUST talk to an attorney before they move out of their home. It is imperative because the game just changed.

This was originally posted on Get Real Estate.

Back in the boom, MERS was a cornerstone of the real estate market offering a way to offload mortgages to investors allowing banks to continue to originate loans and make bundles o' money. Apparently, my strategy of waiting at the end of the rainbow for my pot of gold wasn't a good one: should have been a lender. Lots of green, just not in the form of little people with funny hats. Now, lenders wouldn't have been able to meet the demand of the American consumer for housing loans without sending loans off into the netherworld to be split up and chopped up into bite sized fare for investors. This MERS legacy is the gift that is contributing to the ongoing hell that is real estate these days.

Getting real on Salem Oregon Foreclosures

I almost didn't write my quarterly foreclosure post because the data, or lack thereof, isn't an accurate reflection of things to come. So, I pulled a NAR this quarter and extrapolated my data a bit for you. I wrote last quarter about the impact of MERS in Oregon, and in particular Salem. I doubt most of you care what is happening in real estate in Topanga so we'll just chat about Salem. What you need to know but don't really care about is that in the second quarter of this year, not one MERS held foreclosure notice was filed in Salem. This is significant because last year 48% of foreclosure notices were MERS held.

Why aren't they filing? Well that has to do with the 5 lawsuits that have occurred in Oregon this year, with the latest one the judge rescinded the foreclosure as the title transfer wasn't properly recorded per Oregon laws. As these loans were fractured and sold, Oregon law requires the transfer be recorded at the county level. Due to the massive costs associated with doing this, the banks decided "eh...what the heck with Oregon laws. Those people are up hugging trees anyway. They won't notice." This cavalier attitude works as long as the seller doesn't default and transfers the title directly. It isn't so pretty when foreclosures happen oh say such as circa real estate 2007 and beyond.

I might need a cocktail

What does it matter? Well, if you are a home seller right now, what you are seeing is a reduction in inventory. Huge price drops on homes happened in the first quarters this year so buyers are out. The reduction in inventory is a sign of stabilization, for now. This is the gift of MERS present. Incompetence on the part of the big 8 in following those pesky state laws has caused a temporary stop in those properties hitting the foreclosure market. So potentially 48% of homes that should be hitting the foreclosure market aren't. That is causing a nice drop in inventory.

But you know that old adage, all good things must end up in annihilation...or something like that. Anyway, what is building is of concern for our local market. See my pretty picture? I worked really hard on it so say it is pretty or my feelings might be crushed and I'll have to go drown my sorrows in one of @RobDrinkenstien's amazing cocktails at La Capitale.

Notice of Defaults in Salem

We had a dip at the end of last year and it looks like there is a dip this year, but this is where I pulled a NAR. MERS notices aren't getting filed, while those cases work their way through the Oregon legal system. What this means is that we really should have 48% more foreclosures each quarter than we really do (assuming that the percentage stayed the same as last year). So I created a special bar for the ghost of MERS. These are the potential notices that should be out there but aren't. Why is this a concern? Because they are building up, and at some point in the future when the MERS situation gets resolved there will be a tsunami that hits Salem as the notices hit the county. Right now we have a regular flow of foreclosures hitting the market so we can, in theory, have some sort of stabilization. If this buildup continues and those homes get dumped on the market in a short period of time...do I need to tell you that would be bad?

What we are looking at is the ghost of MERS future, and it sure doesn't look like Casper.

Peruse our Salem Oregon Foreclosures

This post was originally posted on the Get Real Estate Blog.

A client emailed me a link to a recent news article about the 5 worst real estate markets in the country for Q1 of 2011. Salem, Oregon was listed as number 3. They based this article on the NAR data that was released. Any of you that have read my blog know I am by no means a Pollyanna on this market and I expect good data when talking about anything. I also expect it to be put into context for the average consumer who doesn't live and die by real estate data.

How the NAR collects data has been controversial and CoreLogic called them out on the inaccuracy of their data before. Unfortunately this is no exception. NAR takes samples of MLS data and then has a "drift" calculation they use to "correct" for their sample error. The problem this creates is that most consumers don't understand the way statistics work, but tend to believe what they read. So here is the real deal about that data released by the NAR.

1. The data is for the Salem metro area, not Salem proper. This is defined by the census bureau as Marion and Polk counties.
2. The NAR uses samples. So if they pull an uneven sample and say pulled more homes from Woodburn, Dallas, Stayton, Jefferson, or Mill city area which have been harder hit, the data will skew the wrong way.
3. I have no idea what raw data the NAR used but it doesn't jive with my data set which is a complete set of WVMLS data.

So, the article reported that Salem (which you now know means the Metropolitan Statistical Area, not Salem proper), had a median home price drop of 20.6%, first quarter of 2011 from first quarter of 2010. Here is what you really need to know. Using the full data set and not the samples/drift combination of the NAR, the first quarter dropped 14.9% year over year. Salem proper, which is how many consumers are reading that article, dropped 11.3% year over year, first quarter. These price drops are not at all unexpected because as many of you many remember the first and part of the second quarter of 2010 had the federal tax credit associated with them. We had a disproportionate amount of sales early in the year last year as the housing market was temporarily propped up. Prices had to come down and this is the market reaction to that event. A completely expected event, in my opinion.

Anyone that has been around me will hear me consistently say that we are still in a declining market here in Salem Oregon. There is nothing wrong with accepting the reality of our economy, but I do expect the NAR and the news media to propagate data that is true and accurate for our cities. That is their function, is it not? If I wanted inaccurate information, I can always pick up the National Inquirer to find out which celebrity had the latest alien baby or I can encourage Sarah Palin to start her own history channel for television. The news media has a responsibility to help to interpret that data for readers if they are going to propagate it. Seriously, news media and NAR, you blew it.

This was originally posted on The Get Real Estate Blog

The first quarter ended in the world of real estate. I can tell you that personally I saw an increase in buyer activity on my listings and other agents reported the same thing. The proof is always in the data though.

Salem had the best first quarter in three years in terms of home sales. Supply met demand as home prices dropped this quarter and buyers responded.

You can read the March Salem market report

The first quarter foreclosure report for Salem and Keizer Oregon's market report for more details about what the local market is doing right now.