RealtyTrac has reported the numbers of mortgage foreclosures for 2007 – by county/state. It appears the Portland area is pink to red – higher than I originally expected. The rates of change are dramatic- the number of forclosures from 05-07 increased dramatically – and this year is shaping up to be even more than last. This is a problem that will only get worse before better by most experts accounts.
Even though people are supposed to be getting reprieves from the government for a month or two, most experts (and I would agree) don’t think this will help. When the average behind mortgage owner about 5-9 months behind in payments; a month – or even 6 – probably won’t matter. They bought too much house with too little money. They simply must refinance to a reasonable rate, or they need to get out. And I hate to say this, but probably most of them need to get out of homes they can’t, and never could, afford.
As someone that is saving up money for a down payment on a house, here’s what I’m thinking (to all you experts). I’m sitting on my money. And I’m going to sit on it at least a year or two. There is still way to much danger of these mortgage problems spreading and with recession on the lips of many – prices are NOT going to go up any substantial amount. There is simply NO good reason for me to pull my money off the sideline right now. You might quote that Portland area property values are holding strong – if not seeing a small 2-3% increase even last year. Interest rates are at and even LOWER low than they were during the boom. One might point on that mortgage interest is deductible and a house is a great tax shelter. Again true, but if the house you’re buying today for $300,000 is worth $250,000 next year – no amount of tax deductions will offset that. On top of that, if it depreciates more than 5-10%, then it’ll take me 3-5 years to recoup that lost equity. Also, even if the average growth for last year was 2-3%, there is still a lot of properties that are overdue for an adjustment based on location and I am getting an FDIC backed 4.5% on my savings account -right now. Finally, interest rates aren’t likely to go up any significant amount anytime soon; so there is no rush to lock in now.
On the bright side of things, houses that are priced reasonably sell very well and quickly in Portland. I’ve been watching houses come up and get sold or sit for months around my neighborhood. If you’re overpriced, you’ll be sitting there a long time. One arrogant fool started by asking 1.3 million for a condo nearby about a year ago. It’s now a year later and she/he is down to 950k and it still isn’t even close to selling. Meanwhile, in the same complex, I’ve seen 3 units sell for 350-550k in just 1-2 months. However, one thing is for sure – I’m actually seeing for sale signs. Up until about a year ago, stuff sold so fast that they didn’t even put the sign up before a bidding war was on. I had friends tell me they had to put bids on things sight unseen just to get a chance to look at the property. I taught me again that one should never buy during a boom/high demand period – that is the definition of high. Instead, buy at times like now – when people are licking their wounds, people are losing their property, etc. That’s what buy low and sell high looks like – at least in this case – and it isn’t pretty.
Anyway, here’s where Oregon is:
|State rank in # of foreclosures:||22|
|Total # foreclosure filings:||10,746|
|% Change from 2006:||12.25%|
|% Change from 2005:||56.76%|
|Total proprties with filings:||8,461|
|% Households (foreclosure rate):||0.543%|
So, that’s the story. Feedback?