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Cash is King
We've heard the adage "Cash Is King" when talking about real estate. However, it has historically been associated with getting a "deal" or significantly lower purchase price. In our local Portland real esate market, that "deals ship" sailed about two years ago. That said, now many buyers looking to purchase in close-in Portland and attractive surrounding neighborhoods and cities are facing multiple offer situations, with many of those offers being all cash.
Most first-time and move-up buyers need to acquire a mortgage to help finance the purchase of their new home. It's the norm to have a conventional loan of 5%-20% down. Two years ago, this truly wasn't an issue for buyer's looking to purchase, as seller's would accept these offers without thinking twice. Now, these buyers face multiple offers, sometimes 10%-20% over list, with all cash often winning out.
Why is cash better for sellers? It's one less hoop that can cause a problem for the transaction. With a financed purchase, the loan has to go through underwriting that can sometimes throw up a flag. Even more of an issue, however, is no appraisal is required with a cash purchase. With homes going so much over list price, an appraisal could definitely cause a problem.
Here's a fabulous in depth article that explains what is driving our Portland market, and how this cash is making its way to our area, Cash is King . Believe me, we who work in this market are hoping to return to some normalcy, but it doesn't appear it will be anytime soon.
Portland Market Update
Competitive Offer Market
We’ve been hearing the “buzz” over the shifting local real estate market these past couple months. Here are some significant factors and data that may help explain just what is happening:
Mortgage Rates near 45 year lows
Increasing sales figures
Steady reduction in residential housing inventory becoming an “inventory crisis” in some
select markets
Banks reluctant to sell foreclosed homes
Stabilization of declining values in most urban submarkets and some suburban submarkets.
Increasing values now being noted in some areas & submarkets.
Foreclosure Inventory & Short Sales
Shadow inventory is currently greatest in Beaverton, Gresham, Oregon City, Hillsboro and
Outer Vancouver.
Almost no shadow inventory exists in NE, Inner SE and Inner NW/SW neighborhoods,
except for a small percentage in the NW Condo Market Area.
Short Sales are commonly experiencing multiple offers although banks are sin some cases
reluctant to agree to sell for various reasons.
First Quarter foreclosure filings in the Portland area fell 28% compared to the same quarter a year
earlier, the largest decline recorded in 50 metro areas (Realty Trac).
Shadow inventory “clouds” may develop in coming months as OREGON has a 19-month supply of
bank-owned homes at their current rate of sale, while the national average is 16 months.
This condition is not expected to greatly impact inner Portland markets.
Portland Metro Trends- Comparing 1st Quarter 2012 vs. 1st Quarter 2011
Active listings down by 28%
Average Days on Market is down by 20%
Closed sales are up 12%
Average Sales Price has increased 1.43%
Median Sales Price has decreased 4.62%: No. Portland +4.38%, NW Wash. County + 4.10%,
Milwaukie/Happy Valley -9.02%, Mt. Hood area -19.38%
Let me know if you would like more specific information for your immediate neighborhood or would like a market snapshot of a neighborhood of interest.
Portland Victorious in Sustainability Survey
“We are the Champions, We are the Champions…” Queen
Portland did it again…It probably comes as no surprise that Portland, OR. was recently voted the “Greenest City” in America by readers of Travel and Leisure Magazine. In looking at 35 metropolitan areas across the country, public transportation, cleanliness, how many parks per square mile, pedestrian friendliness, air quality, were just a few of the attributes these cities were judged on.
It may be surprising to some to see such large cities as Chicago (#5) and San Diego (#8) cracking the top 10. Originally being from Southern California, I was shocked to read that San Diego County has more farms per capita than any other county in the nation.
Here is the link you can click on:
http://www.travelandleisure.com/articles/americas-greenest-cities/1
Event: Sunday April 22nd, in celebration of Earth Day, City Repair along with the Associated Students of Portland Community College are hosting an all day festival devoted to sustainable living at the PCC Cascade Campus, 705 N. Killingsworth St. There will be informational booths, organic food, music, and interactive workshops for kids and adults. Click on the following link to get more details: http://cityrepair.org/2012/03/city-repairs-earth-day-pdx-2012/
Competing in a Multiple Offer Market
Here in Portland, the market has definitely displayed a big shift over the past three months, with increased buyer activity and inventory levels lower than they have been in more than two years. It’s not uncommon for buyers to find a home, only to find out that they will be facing a multiple offer situation. Just the other day, I checked with a listing agent on a home in North Portland, and found out that they had 26 offers come in on that property! I have clients that have been looking for a home in Southeast Portland for over six months. The first day a cute home came on the market, we ran over to view it. It was “the one!” In checking with the listing agent we found out we were facing multiple offers. My clients and I sat down and carefully crafted an offer that got them the home they wanted!
If you find yourself competing against other offers for your dream home, keep in mind there are many other facets to writing an offer than just the sales price. The amount of the earnest money deposit, amount of the down payment, type of loan, personal property to be included, length of inspection period, length of escrow, home warranties, etc. are all important items that can make an offer look more or less attractive to a seller. You and your Realtor should discuss these issues in advance of finding your home, so you are confident in the offer you write. If you are selling your home, make sure your real estate agent addresses these items ahead of time.
Remember, it’s not always just about “the price.”
