Following is some statistical analysis of the market for houses on small acreage in central Clark County, Washington.  The data was selected with the following sort criteria:  Built from 1990 to 2007; lot size 3-10 acres; detached houses; 1,500 to 2,500 square feet in size.  These criteria were chosen to minimize the extremes provided by older farms with large out building compliments, and to leave out the very small, old manufactured houses.  Both of these things would have skewed the data.  The properties included in the graph below displayed great consistency in the data.           (Houses on Small Acreage in Central Clark County Washington)

The time frames looked at were in 1/2 year increments.  As you can see, there was a consistent rise in prices from the beginning of 2006 to the middle of 2007.  Days On Market (DOM) also rose during this time.  DOM rose steeply in the beginning of 2007, then decreased in the second half.  Prices dropped about 7 1/2% in the second half of 2007.  It is interesting to note that the DOM have declined some.   This suggests the possibility of the market  stabilizing.  It will take  some time (probably by April) to see if this stabilization will be prevalent.

(statistics are from the local RMLS)

Ralph Olsen, Appraiser

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La Center, Washington is a small town in Clark County Washington. It has a population of around 1,700. It is located about 16 miles north of Portland, Oregon. As of the 2000 census there were 552 households. This all suggests that even in an active market there would not be a lot of activity in any given month in La Center, Washington. In the graph below there are two months where there were no sales of houses. Also, the sales statistics were based on total sales activity of zero to nine sales in a given month for each of the months displayed. The average was 4.17 sales per month. Statistics are a wonderful thing and can give us a sense of size, dimension and activity levels of such things as residential markets. But, when the sales activity is so low, the statistics can also provide information that is nonsense. Like in the case of one man being in perfect health and one man being dead; on average, they are both just sick. That’s statistically sound NONSENSE. (La Center, Washington Residentai Market Stats. graph)

(The red line is sales price.  The black line is the days on market.)

The graph appears to depict a great deal of volatility in the market. But, knowing that the November statistics were based on four sales, one being a 1974 model manufactured house, one was a one year old house in a “short sale,” and two were modern houses of 1,400 to 1,500 square feet in size. All this suggests to me that the last three months of data is essentially useless and that, although recently quiet, the La Center market is slowly moving along at its normal value levels. I am, of course, projecting the general trend of sales averages in the $300,000 to $400,000 level. Also, the Days On Market have generally been in the 60 to 80 day range recently. (Still projecting here)

It is very important to realize that these statistics are based on very few data points. One sale of a very high value property, or one sale of a very low value property, would have a great influence in these market statistics.

Overall, I’d say the La Center market is doing well as it rides out the same storm the larger market is experiencing.

Ralph Olsen, Appraiser

Pacific West Appraisal Services, Inc.

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This posting is a look at the Camas, Washington MLS statistics for the last two years. The statistics include Average Sales Price in a given month, and its corresponding Days On Market for that month.

(The red line is Average Sales Price and the black line is Average Days On Market)

As can be seen from the graph, there is a lot of movement in the both Average Sales Price and Average Days On Market. However, if you look at the general trend and not focus on the individual data points, you can see that the Days On Market were highest last winter/spring and leveled off in the summer and fall. And, they leveled off at a rate that was about the same as the year before.

The ups and downs in price are largely affected by the sales of very expensive houses in Camas. There are multi million dollar houses in this market. If you look at the general trend in the last two years, it is really quite flat. It trended up somewhat from the winter of 2006 to the summer of 2007, then sank back a bit. But, nothing drastic.

Compared to the national statistics and even many local statistics, it appears that Camas, Washington is doing quite well.

Ralph Olsen, Appraiser

Pacific West Appraisal Services, Inc.

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The Columbian newspaper in Vancouver, Washington reported some MLS statistics yesterday.  The statistics are about the available housing inventory in Clark County.  The MLS reported that there were about 3,800 houses on the market and that about 300 per month were selling currently.  That suggests about a 12.7 month supply currently on the market.  And, that is just the supply represented by the MLS.  The houses listed ‘for sale by owner’ and those for sale by the builder are not included in these statistics.

Market activity has slowed recently.  The activity could increase in the spring and summer.  That would be typical.  Without any drastic outside influences the annual residential real estate cycle is a bell curve.  Low in January when it is cold, high in July when it is warm, and cold in December when it is cold.  The warmest months are the most active months for moves of households.  Some of the reason is to get the kids into the new location before school starts again in the fall.

The market is very spotty.  Some areas seem to have short marketing times and others longer.  Most of the areas I check the statistics in have a 90 to 120 marketing time.

Ralph Olsen, Appraiser

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I recently read about a state where the real estate appraisers are promoting legislation to prevent coercion of appraisers.  What they’d like to see is a law that makes it illegal for anyone to ask an appraiser to produce fraudulent appraisal reports.  It would be illegal to blacklist, bribe, extort, intimidate or refuse to pay an appraiser for not producing the specific appraisal results wanted.

This looks like a good idea.  If those who do these things to get their way with the appraiser’s work have no downside (fines and jail time) to discourage them, the so called “lender pressure” will never end.

Over the years I have gotten to know who the appraisers are that do “custom” work; appraisals that have a value conclusion based on the borrower’s or lender’s desires rather than a U.S.P.A.P. appropriate REPORT of the market value of the property.   I review appraisals for lenders.  Recently I reviewed an appraisal where the appraiser used four listings and one sale, ignoring all the other available sales data, in order to come up with a value conclusion that matched the developers sale price of a multi million dollar residential property.  What’s up with that???  It doesn’t meet the U.S.P.A.P.  It doesn’t meet FNMA guidelines.  It was a total piece of “custom” junk.   I don’t know what the conversation was between the lender and the appraiser, but the appraiser should be spanked good for that one.

I fall into a different category of opinion than those who are working to prevent the non coercion legislation (though it appears a good idea).  I say it is the appraiser who is at fault.  I mean to say, that if I was asked by someone to rob a bank and give them the money, I’d tell them to “buzz off!”  That’s an easy one.  But, if a lender asks me to produce a fraudulent appraisal report so they can close a deal that wouldn’t happen without the fraudulent report, and they offer to give me lots of appraisal assignments if I just “play along,” it is more tempting.  I can up my gross income working with a lender like that.  Really.  I can do great with those people.

I suggest here that most residential real estate appraisers work that way.  They roll over and give the lender any thing they want, as long as the work keeps coming.  And, they know that many state’s licensure and certification offices don’t have enough staff to pursue them if they get challenged for this kind of work.  Law with little or no teeth.

In an ideal world, every appraiser would “just say no” to coercive activities designed to get the appraiser to produce fraudulent appraisals.   If all appraisers said “NO,” the lending industry would have to live with appraisals that REPORT the market’s indication of what the property is worth.  This would leave lenders knowing what their level of risk is on loans they create.  And, it would make their real estate based securities more marketable.  And, the return they would get from the sale of those securities would be maximized due to the “known” risk rather than a great deal of “unknown” risk due to appraisal fraud.

Although an idealist, I do realize that I (and we) do not live in an ideal world.  When money is made available, integrity very often goes out the window.  It is on the news every day.

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The high end condominium market in the northwest quadrant of Portland, Oregon is the most active condominium market in the city. It also has, on average, the most expensive condominiums in Portland.

This quadrant of the downtown area consisted primarily of old, little used multi story industrial warehouse buildings that had fallen into disfavor as the industrial warehousing market moved to the suburbs. The old multi story, elevator served, close in industrial storage and distribution uses faded as the one story, suburban, high square footage, dock high, fork lift served industrial product took over.

In the wake of the warehousing exodus, the northwest downtown quadrant was very under used. Lots of the first floor space in the old warehouse buildings was occupied with the upper levels unused.

Then came the residential renaissance that began in the middle 1980’s. The first “experiment” with “artist loft” housing was in the old McKesson/Robins building between Hoyt and Irving on NW 14th Avenue. This project pioneered the new high rise condo market in NW downtown Portland. With its completion, and eventual sell out in the middle 1980’s the way was paved for other development. Today there are lots of condominium projects in this area. Some are high rise, some mid rise. Some re-used existing buildings. Many are new buildings. During 2007 it was common to see 6 - 12 cranes on the skyline, erecting new buildings.

This is now one of the best accepted areas of town with lots of single family condominium housing, served by lots of shops and restaurants. A true renaissance.

The recent real estate sales activity and price history is presented in the charts and graphs below. The segment studied was that of condominiums with a sale price over $1,500,000.

High End Condominium Sales in NW Portland

As can be seen from the chart, the sales prices have steadily risen. The Days on Market were relatively low, until 2007, when they nearly tripled. And, the current Days on Market for listings is at 281 days. And, these haven’t sold yet.

The following graph paints the picture.

(The Sales Price and Days on Market are Averages)

The graph shows the relationship between sales price and Days on Market. Sales prices had leveled off with a trend for a slow increase. Days on Market were low, then jumped in 2007. The Listing’s Days on Market have risen a lot. As that trend might continue, it would produce a downward pressure on sales prices.

It should also be noted that this High End market does not have a lot of sales activity. The sales activity for each of the time frames examined was: First Half 2006 = two sales; Second Half 2006 = 4 sales; First Half 2007 = seven sales; Second Half 2007 = nine sales. Also, there are now 28 listings in this category. If we look at the Second Half of 2007, with total sales of nine units over $1,500,000, and divide that into the current listings, we derive a suggestion that there is just over a three month supply of this category of housing. Of course, the market is changing speed, and perhaps course. The statistics at the end of the first quarter of 2008 will be very telling of where this market is headed.

Ralph K. Olsen, Appraiser

Pacific West Appraisal Services, Inc.

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Still watching the market indicators in Clark County Washington, I selected several MLS areas to look at. I looked at the summer of 2006, the summer of 2007 and current listings as of today’s date. Following is the chart of the data.  (marketing time days on market)

DAYS ON MARKET

You can see how the effect of the changes in the market have altered the numbers.  Every area of the local market that is included here has shown the same effect.  Days on Market went up 38% on average over the summer 2006 to summer 2007 time frame.  Then they jumped 83% from the summer of 2007 to now (per current listing data).  It should be noted that the Current Listing data is for houses on the market that have not yet sold.  That number (119 Average) will be higher unless they all sell today.

I’ll keep watching and reporting these statistics during the coming months.

Ralph K. Olsen, Appraiser

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Recently questions have come my way about Gross Rent Multipliers (GRM) on single family houses. Far fewer houses are renter occupied than owner occupied. And, there are relatively few sales of houses that are rented when sold. The GRM is developed by dividing the rent into the sales price. All the data presented here was on a monthly basis, so they are Monthly Gross Rent Multipliers.

All the data examined had Vancouver addresses and sales prices under $300,000. Several categories were looked at. First, houses newer than 1990 that sold in 2006 were looked at. They presented a wide range of GRM from 186.25 to 247.90. The average was 226.84. At the low end was a ranch style built in 1994 getting $1,200 rent. At the upper end was a 1994 model, two story getting $1,000 rent. There is a lot of variation in the rent levels of these houses. And, the GRM is a measure of the relationship of rent to sales price. Sales prices of the houses are fairly consistent for their size and quality. It is the rents that vary most.

Looking at a similar data set that all sold in 2007, presented a range of GRM from 193.03 to 236.08. The average was 213.14.

I also looked at a group of older houses that all sold in 2006 while rented. They showed a range of 195.38 to 246.43 GRM. They had an average of 216.62.

A group of attached houses all newer than 1990 that sold in 2007 were looked at. The presented a GRM range of 185.56 to 220.00. The average was 203.22.

Concluding, there was an average GRM of 226.84 for newer houses sold in 2006. There was an average GRM of 213.14 for newer houses sold in 2007. The newer attached houses had an average GRM of 203.22.

It appears that the average GRM has dropped a bit in the last year. The GRM’s were pushed up a lot by rapidly rising residential housing prices, while rents lagged behind. A landlord can not simply raise the rent to get higher returns on their property. They would likely end up with higher vacancy, which is self defeating. Rents have been rising, but not as fast as prices.

Ralph K. Olsen, Appraiser

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Area 41 of the MLS is from Vancouver Lake to I-5 and from 78th Street to 119th Street. Much of the housing stock in this area was built in the range of 1960 to 1985 on single family lots ranging from 3,000 to 10,000 square feet in area. I chose this range of detached single family houses because in this geographic area there is pretty good uniformity in the houses. I looked at the statistics from the MLS for half year intervals starting in January of 2006 and ending with current listings. (Felida to Lake Shore Graph)

As you can see the blue line is sales prices and the red line is days on the market. After rising in the fist half of 2007, riding the market momentum, average prices dropped significantly (almost 7%). In that same time frame the average days on market statistics rose 20% from 45 days to 54 days. Still, this exposure time is not long and considered healthy. In the second half of 2007 the average days on market rose just over 7%, not a lot. But, look at the currently listed properties. They are not yet sold and have been on the market for an average of 92 days. This is still not an awfully long time. Marketing times of 90 days or less are considered generally healthy. But, by comparison, this 92 days is an increase of over 58%. Of course, as the marketing time continues to increase there will be downward pressure on prices. Unless the days on the market shorten up we can expect prices to fall. The recent list price to sales price ratio has been about 98%. Applying that to the average list price suggests an average sales price of the listing of about $235,000. If that ends up being so, the averaged trend line for sales prices over the last two years for this product category will have been quite flat. Not bad in the face of the recent changes in the national residential real estate market.

Ralph Olsen, Appraiser

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We looked at the statistics from the Auditor’s office a few months ago. The foreclosure statistics in Clark County Washington were presented and placed in a chart to make them easy to read and track the trend. They were on an up trend then and did not give any indication of stopping their upward movement. Following, are the same statistics with the last quarter of 2007 included. Clark County Foreclosure Graph

This chart ranges from January 2006 through December 2007.

As you can see there was a slight up-trend during 2006. Then, in the beginning of 2007 it bounced around. However, the general trend was up. The statistics continued to bounce around throughout the year, but, on average continued up.

Something I was looking for in the last quarter statistics was any indication of a change in the trend. And, such a change appears to be there. The slope of the line appears to have leveled off. It is still as high as it has been in the last two years, but, maybe the market is stabilizing. We will continue to watch these statistics and see what happens. Could it be the actions of the Fed that have caused a leveling off? The lower interest rates? The infusion of capital? These things have their affect. Also, there is continued optimism apparent from the new houses still being built. Housing starts have slowed, but not stopped.

Ralph Olsen, Appraiser

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