Foreclosures Decline in Portland, but not every part

Latest statistics from CoreLogic and RealtyTrac have shown that Portland foreclosures are on the decline in 2011, and will continue throughout 2012.  Rates of decline in Portland have dropped by 3.21%, making the percent of homes in foreclosure for the city 2.39%.   The amount of homeowners delinquent on their mortgage payments, is also lessoning.  The foreclosure percentages are fairing better than the nation, and also better than the state.  The state is at 2.8%, and that was an increase.  The overall national foreclosure rate is 3.41%, and that number is on the decline.

Things are sounding good for the Portland area.  RealtyTrac reports that the percentage of sales for the nation that are actual foreclosures is around 20%.  Whereas in the state of Oregon, only 15% of home sales are comprised of the bank owned (REO) properties. 

I thought I would take that a little bit further and show you what 2011 looked like in some local sub markets of Portland.

For the first month of the 2012, the following statistics are RMLS data of the percent of bank-owned, single family residences and condos, in proportion to the total closed sales for each area.

1. Beaverton/Aloha      35%
2. SW Portland            20%
3. Hillsboro                  36%
4. NW PDX 97229     10%
5. NE Portland             18%
6. SE Portland              29%
7. Lake Oswego/WL   18%
8. Tigard/Tualatin         26%

It appears there is more foreclosure activity going on than the Realty Trac suggests.  Or, the January 2012 numbers suggest that Nov and Dec sales were gobbling up more bank owned homes that the previous year's trend. 

Nevertheless, what occured in the last months of winter, is reflected in the first part of the year, and the result has left us with an anemic supply of inventory, both traditional, bank owned, and short sale.  We now are at the lowest level of housing supply in the last 3 years.  The metro area of Portland sits at 5.3 months.

More jobs and less houses?

2011 finishes with 2 major indexes showing the lowest levels in 3 years for the Portland Metro area.

1. Unemployment = 8.9%.  We have finally broken the 9% floor and continue to move lower.  Dropping 2 tenths of a point from November, after being seasonally adjusted.  The highest level reached was 11.6% in mid 2009 and has been generally declining ever since.
2. Unsold housing supply  = 5.3 months inventory.  This is the lowest level of inventory for the last 3 years reporting. The highest level of inventory was early 2009 and reached near 20 months.  That's almost 2 years supply of homes on the market.  It hasn't been a steady decline the last 2 years.  It's been more like a yo-yo, due to 2 significant tax incentives. These incentives increased buyers activity before those key times, and then were followed with sluggish behavior, until 2011, which appeared to be a steady decline.

We know that buyers have been helping gobble the inventory because low home prices and low interest rates, are making record low monthly payments.  Also, inventory has been held low, as 2011 has shown less foreclosures being taken back by the banks.

But let's be frank.  Without jobs, there is no consumer confidence.  Potential buyers with fear that any day they will be next in the unemployment line, won't be shopping for a house. 

Therefore, it is no coincidence that these 2 indexes are declining hand in hand.  Although, 5.3 months inventory is a great number in the real estate world, 8.9% unemployment is no figure to write home about.  And with economists still threatening that banks are withholding a large number of shadow inventory yet to hit the market, we should still stay on our heels.  But, the clouds are lined with silver now.