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Cash Is King — Unless it is literally Cash

I really hope this blog post is AWESOME. Because I am re-writing it due to an accidental deletion. It is amazing what accidentally hitting “Command V” instead of “Command C” will do. And believe me, the last post I wrote was pretty darn good. (Good news though is it got me to invest in a new clipboard program that saves multiple clipboards…probably going to end up being a net positive gain in time spent)Cash Is King Pic

The old saying that Cash Is King is generally very true when it comes to real estate. In the case of multiple offers on a property, a seller will frequently take a cash offer over one that requires financing. Even if the one with financing is a higher offer and will net the seller more money in the end. 

The reason is that there are fewer uncertainties when it comes to cash. You don’t have to worry about what an appraiser says, nor do you have to worry about the lender’s underwriter coming up with some final requirement of extra bank statements or pay stubs….etc….that can slow things down. 

This doesn’t mean that a seller will just accept an unreasonable offer because it is cash. Sometimes cash buyers feel that their cash is worth more than it actually is. A seller who has their house listed for $300,000 will not entertain a $200,000 offer just because it is “cash”. 

But that isn’t even the point of this post. Because in most cases Cash Is King. 

The particulars I am referring to is Literal Cash. If someone wants to buy a house and use actual cash or use cash even for the earnest money. That’s when there are going to be issues. Something about wanting to make sure the money has been legally obtained. Banks report transactions over $10,000 to the government. That seems to be a threshold they have set to keep people from money laundering or avoiding paying taxes. 

It gets a little strange now in Oregon where marijuana has been legalized, but banking with the money is hard to do. So while legal, it ends up being a cash business for a lot of people. 

Now I have never had anyone wanting to come in with a briefcase of 100’s wanting to buy a house…but I’ve heard about it. 

Where I have run into complications in the past year is clients who do not believe in the need for the banking system and pay all of their bills with cash. It seems strange and unusual to me, but it happens and seems to be a completely fair way to conduct one’s personal affairs. 

However, the lenders are required to source all of the money a buyer brings in to purchase a house. And with cash or even cashier’s checks they can’t trace the source of the money. Earlier this year I had a transaction that was held up for 2 weeks because of this sourcing issue. So when it came up again, I was prepared and had the knowledge to see the warning sign and make sure that the client used money to make their earnest money deposit that could be sourced. 

This is just one of the many tidbits of knowledge that one only gets from being in the business for a long time as a full time agent. 

State of the Ashland Market

After a number of years of downturn, it is refreshing to see a rebound in the real estate market in Ashland and Jackson County. The hard economic times that we all weathered through that started with the crash in the real estate market that was caused in large part by the lending practices and gambles made by investment firms on Wall Street seem to have run their course…this time.

We all hopefully learned from this cautionary tale, although when greed abounds I’m sure we are destined to make the same mistake again. But as individuals, we can all make decisions that are based on our personal needs and goals and stay within the bounds of safe real estate purchasing.

I anticipate based on my own research, and that of the head economists from both the Realtor and Home Building associations, that we have started a recovery that is expected to last many years. While I am personally hoping that the frenzy doesn’t lead again to another bubble and responsible purchasing and lending are the rule, we all need to be cautious and not overextend with the same misconception that real estate prices “NEVER” go down.

So where does that leave us today? The market here has definitely picked up steam and sales have been very strong. I said for years to people who asked me if we had hit the bottom of the market yet that the only way we would know would be 6 months to a year after it happened. And according to the numbers, I would say the bottom occurred back in the summer of 2012, although it could be argued easily that it was the summer of 2011.

Now that we have a full year of a strengthening market under are belts, it is a good time to look at what the numbers are.

In the summer of 2012, 49% of houses sold in Jackson County were distress sales, meaning either a foreclosure or a short sale.  In 2013 that number dropped to only 19%. While still significant, it is a huge one year improvement.

 

In the summer of 2011, the median sales price for a home in Ashland was $275,000. In 2012 the median sales price was $292,000. In 2013 that price jumped to $322,000. That is a 15% increase over 2 years. While I would be hesitant to call it appreciation, it does show the strengthening of the market due in large part to the reduction of distressed sales whose competition drag the market price down of all homes.

 

In 2011 there were 1650 houses for sale in Jackson County, and 300 houses for sale in Ashland. 2012 saw those numbers drop to 1210 and 238 respectively. Those numbers in 2013 held fairly stable over the year at 1181 and 230. This shows what looks like some stability in the supply side of the market.

 

The number of sales in May-July of 2012 in Ashland was 83, whereas the same period in 2011 was 62. That number increased to 100 sales in 2013. That is a 40% increase in the volume of sales in a 2 year period.

 

Now the final number I will throw at you is the absorption rate, which is just a fancy way to say supply vs. demand. In the 3 month period stated above, an average of 33 houses a month sold. There are 230 houses on the market. If no new houses came on the market, and houses continued to sell at the same rate…there would be no available inventory left in 6 months. Common wisdom states that a 6 month supply of housing is a stable market. Less than 6 months is a sellers market, more than 6 months is a buyers market.

 

So the conclusion is that we are looking pretty good at the current time in the housing market. There are buyers out there looking, and sellers are feeling that the market is healthy enough to sell. Those looking to move up or downsize feel the ability to do so. But if there is one thing the last 10 years has taught me is that anything can happen. All we know for sure is what is going on today, and we must all make out best decisions based on that point in time reference.

Inventory Is Low


Well, if you were looking to time the bottom of the market to buy a home, I think we found it about 6 months ago. All indications point to increasing prices. The most drastic one is the lack of inventory right now. There is a 3.5 month supply of houses to buyers right now.

 

2200 Houses for Sale 2010
1600 Houses for Sale 2011
1200 Houses for Sale 2012
What this means is if you are looking for a house right now, there is not a lot to choose from, but prices are still down considerably from 5 years ago.

And if you are looking to sell, now might be a good time to put your house on the market while competition is low.

Ashland Summer Not So Hot

This has really been another mild Summer in the Rogue Valley. For an area that has normally seen a handful of 100+ degree days by now, they are nowhere to be seen.

Image by Cle0patra via Creative Commons

This is good news to many who do not like that hot weather…plus good news to keep the forest fires down, and the rivers and lakes full.

Unfortunately, Ashland Real Estate is not as hot as it could be either. Since Summer Solstice, there have been 36 sales in Ashland. There are currently 30 pending sales to go along with that.

But there is a supply of another 195 houses still on the market. With an average of about 19 houses per month selling, that has Ashland at a 10 month supply.

So to relate that back to the weather analogy.

If the normal real estate temperature at this time of the year is pushing 100 degrees, then this year we probably are looking at temps around 85 degrees. Still fairly pleasant, but definitely not hot.

Okay, enough silly weather analogies. I’m going to go out and enjoy the pleasant 85 while we’ve got it…cause you all know that fall is right around that next corner.

Cheers.

P.S. Remember…if you want to look at what houses are currently on the market you have find Ashland Real Estate Listings Here.

Foreclosures Rising

This last week there was an interesting article in the Medford Mail Tribune about a Jacksonville man who won a court case on his foreclosure proceeding, and also a weekend  article in the Oregonian about Foreclosure filings in Oregon being up 236%

Together they make an interesting article, but I wished that it was a more NY Times in depth analysis, rather than just the few facts and slight research that was there. They brought up some questions as a combined article…and I haven’t been able to figure out what the behind the scenes real story is.

So what I want to know is did the banks file the foreclosure notices to try to race what they think might be the backlash of negative rulings by  Oregon Judges, or is this a feeling that there won’t be a many negative effects, and they are just clearing out some backlog of foreclosures that could have been filed in February, March and April?

However it goes…it does look like we still have some time left before the foreclosures clear off the market.
Interestingly, foreclosure (REO) listings in our area at the end of May only accounted for less than 5% of the active listings on the market….however they accounted for almost 44% of all sales in the previous 3 months.

So as the new foreclosures hit the market…there will be some opportunities out there for  home buyers to maybe get into a home that only 4 years ago was out of reach. But one has to be quick if one comes on the market you like, cause they don’t last long.

You can search for properties on my website www.realestate-southernoregon.com. However, the feature to search REO properties does not work at this time due to some reporting issues with Southern Oregon MLS, but I will be working on fixing that problem to give people better access to doing their own property research.

In the meantime, if you want REO listings sent to you…contact me directly and I will set something up that will alert you when new REO’s hit the market.

Southern Oregon turns Gray

I just wanted to make one quick rant about the weather we are having in Southern Oregon this year. (And had last year too I suppose.)

What is up with the extended gray days? Is this a new weather pattern that is going to continue for the next decade? I remember back in the late 70’s when I lived in Klamath Falls that we used to get a lot of snow in the winter that stuck on the ground for a long time. Then in the next couple of decades, that all seemed to change.

It seems like there are definite cycles we get into. I might attribute it in part to our geography. Ashland seems to be at a line in the weather pattern. There is a definite difference in weather patterns starting 15 miles North, and 15 miles South. So any small change in the atmosphere may be more prominent here than in other locations.

But let me say I sincerely hope that this is the last of these long winter/spring years we have in a while. It is bad for the garden, and it seems to make everyone just a little down.

Every month we put an ad for our Ashland Property Listings in the Sneak Preview newspaper with a message. Something like “Homes are Affordable, It’s a Great Time to Buy” or “April Showings bring May Closings”…..

We try to be a little clever, or a little informative. (If they let me have the full say, we would be a whole lot sillier).

This month we joked in the office that maybe the message should be “Tired of the Weather? We can sell you house so you can move somewhere warm”. But the boss didn’t think that was the message we should send out. I think it would have made a bunch of people smile…but…..guess it was a no go.

Okay, enough of the whining. It is very green and beautiful here still, and I haven’t had to turn on the sprinkler system at my house yet. So I’ll just dose up on some more Vitamin D. Besides, it gives me more time to sit and learn how to use my new computer. Video editing, podcasting, and regular updates to my blog, website and social media sites.

Cheers…..

P.S. Check out the new look of my website. Still needs some revisions, but it looks better than the last incarnation. www.AgentInAKilt.com

Ashland Real Estate Statisics-The lazy edition

Writer’s Block—-I’m going with that as the excuse for my extended absence. To push through the block…I am re-posting a previous blog post, except with all of the numbers current. If you want to see how it compares to the post in September of 2009, CLICK HERE

Ashland Oregon Real Estate Statistics as compiled from Southern Oregon MLS on March 25, 2011.

Currently there are 218 Residential listing in the city of Ashland. 41 Pending sales, and 22 places closed escrow in the last month. That actually is pretty good news as far as I am concerned.  An absorbtion rate (length of time at current sales volume for inventory to run out) of  just about 10 months is really pretty good in the current market. The breakdown goes like this:

  • 32 Listings under $250k with 17 pending sales and 13 closed transactions last month…absorption rate of 2.5 months.
  • 47 Listings between $250k-350k with 12 pending sales and 5 closed transactions last month…absorption rate of 9.4 months.
  • 50 Listings between $350k-500k with 6 pending sales and 3 closed transactions last month…absorption rate of 16.7 months.
  • 37 Listings between $500k-750k with 3 pending sales and 1 closed transactions last month…absorption rate of 15 months.
  • 24 Listings between $750k-1 million with 2 pending sales and zero closed transactions last month…absorption rate of 24 months.
  • 28 Listings over $1 million with 1 pending sale and zero closed transaction last month….absorption rate of 56 months.

(For those who want to do the math with me—I am calculating each pending sale as a half a sale for the purpose of absorption rate on the prices above $500k. Kinda need to do this to avoid having to divide by Zero…which just give me a big ‘ol E on the calculator. For those who don’t know what I am even talking about…ignore the stuff between the parenthesis)

 

An analysis of the effect of the home buyer tax credit

My last newsletter asked the question of what effect did the home buyer government stimulus money have?

My answer was I thought that the short term impact was huge. But I was really curious about what the long term impact was going to be.

And I concluded last time we’re really just in a wait and see mode to fully assess the impact.

And now we have waited…and now we can see. From the graphs, I would say that the tax credit worked, sort of. There is a definite bubble of activity that happened in April, but it was followed by a depression in July. And now, most indicators are pointing to being roughly the same as last year.

Therefore, what I thought might happen did appear to come true. People who were thinking of buying rushed their decisions, and bought early. Which did reduce inventory temporarily, but the after effect lull caused that figure to return.

I think the benefit of the credit, and a reason to do something similar again was to give 1st time buyers some cash to make repairs that are needed on many of the foreclosed homes that are dominating the market at the moment. But I could just as easily argue that the effect of that is probably not worth the cost of the entire program.

A different program that targeted foreclosed homes, and provided extra money to make them livable would be more likely to help. There are loan programs that are designed to do this, such as the FHA 203k loan, but the regulation and requirements for this particular loan can be a challenge to qualify for. I guess what I would like to see is a more streamlined method to borrow home improvement/repair money and incentives to do so. Especially for houses that will be primary residences.

Current Foreclosure and Short Sale Stats for Jackson County Oregon

According to the last few months of statistics, the success rate for short sales vs. REOs goes like this:

There are 310 properties currently listed as short sales in Jackson County….in the last 3 months there have been 41 successful closes on short sale properties for a median sales price of $164,900. (An average of 14 properties a month…with an absorption rate of 22 months)

There are 178 properties currently listed as bank owned in Jackson County…in the last 3 months there have been 153 successful closes on bank owned properties for a median sales price of $143,000. (An average of 51 properties a month…with an absorption rate of 3.5 months)

If you would like more information on Ashland Oregon Real Estate, or real estate in Jackson County, Oregon, drop me a line, or visit my website www.AgentInAKilt.com

Ashland Real Estate is on Vitamin D

The great thing about Spring is that not only does it mean love is in the air…but the people who are looking to buy houses start getting the springtime bug.

All Realtors know, and can feel the added buzz that comes with sunny days. Open houses are better attended, the phone rings more, the excitement level is higher.

I have this idea that I think one day may be able to be studied. If there was a way to measure which days houses were shown and mash that with weather data, I would really like to have proof that sunny days are actually busier than cloudy days.

The scientist part of me wants to see proof of what the feeling side of believes to be true.

Happy March everyone…and here’s to a good spring.