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.

Percentage of Distressed Sales in the Portland Market

Below is a graph made by the local multiple listing service showing the percentage of homes that are bank owned vs short sale, and compared to traditional transactions.  It's about 20-30%.  Remember a short sale, will likely become a bank owned, if it doesn't move into the SOLD category. 

Look at the size of the short sale listings that become a sale, vs the size of the bank owned that actually become a sale.  Most of the traditional listings that don't make it into the SOLDs, likely are home owners that decide now is not the time to sell, and they stay there.  However, most of the short sale sellers, that are unsuccessful at selling, still move.  When they move on, the house goes back to the bank.  And it will reappear again on the market. 

The inventory of bank owned will likely increase in 2011.  However, they have made their mark already in our marketplace.  Banks are interested in selling for fair market value these days.  It's the short sale sellers that are the motivated ones, that drop their price below fair market value, just to avoid foreclosure.  In these instances, these short sales are likely to fail and become bank owned.  It isn't truly new inventory added to the market.  It's actually the same house, now with a new owner, and typically, the price is fair market value.  The only grumblings are that we don't like what we see considered fair market value any more...

New Construction, Bank Owned and Financed at low down

Total Down at closing = $2,000
$175,000 Price. Appraised $195,000.
Originally priced well above $200,000
Builder could not sell in time before the bank took them back. Now the bank wants to finance for you, Owner or Investor, for $2000 down.

Located on a quiet street in Atlanta Metro, Georgia.
These are big 2000+ square feet, 5 bedroom, 3 bath houses.
Complete move in ready, blinds, fridge, landscaping.
If you want to rent it out, or rent it, the market rent is $1200.
2 Homes just like this are rented for $1200 in the neighborhood.
The Mortgage payment will be $948 for the next 3 years.

If you live in Atlanta, you know about the wonderful reasons to live there.
Which is why over 1 million people have moved there in the last 7 years.
The most growth for any city in the US during the same time.