Q : I keep hearing that sales are falling and that prices are right behind. I thought summer was the busiest time of the year and usually the best for your business. So what is going on?
A: Since the end of the First Time Home Buyer Tax Credit program at the end of April we have seen a steady and dramatic drop in Pending sales compared to April. We were off 50% in May and another 25% off in June. The trend seems to be improving as we just finished July but we clearly “paid forward” a lot of low end business with that program. Hopefully if the July trend continues, by the end of August we should be back to a more normal market with more stable sales stats and prices again.
Prices continue to be under pressure from foreclosures and short sales caused mainly by our high local unemployment. Until the local job market improves dramatically (predicted to now be into 2011 before that happens) we will continue to see a steady stream of these distressed properties coming into the market. Portland is still one of the better markets in the US in terms of how many of these properties are in the inventory out of the total. But they do have a chilling effect on prices.
Last Friday we hit one of the all-time best mortgage interest rate level ever – 4 1/8% for a 30-Year Fixed Rate Conventional Mortgage with a credit score over 720 and about 20% down. And the 5/1 ARM programs are in the low 3% range. That is simply amazing! That one percentage point drop in rates from two months ago gives you the equivalent buying power on a $300,000 mortgage of a $35,000 price drop. What this means is you can pay $175 per month less for the loan or buy more house at the same payment.
There has never been a better time than right now to buy a home in the Portland area.