I have thought for some years that the cost of living “in the country” would eventually rise.  The reason is that if gas were $5.00 per gallon the cost of commuting from distant suburbia to the employment centers would have  a large affect on the property owners ability to make their mortgage payments and have enough disposable income to maintain “the good life.”

Gas is now approaching $4.00 per gallon.  I am seeing some indicators that the stampede to the inner city neighborhoods is picking up speed.  I have looked at some distant suburban areas lately with 300 to 600 day marketing times.  This has been caused by various circumstances.  However, gas prices appear to be part of the cause.  Last week I looked at a 100 year old, 1,100 square foot, inner city house on a 5,000 square foot lot.  The house was in average condition and nothing special at all.  The three sales comparables used in the report sold in 11 days, 15 days and 35 days.  That ain’t bad in such a market as we have seen in the last year.

I’m calling this a big “buy” indicator for the inner city areas with good public transportation availability.

We’ll see.

Ralph Olsen, Appraiser

Pacific West Appraisal Services, Inc.

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The Hillhurst subdivision in Ridgefield, Washington was placed in the county records in November 2003. There are 117 platted lots, including some with older houses on them. Roughly 24 of the lots, or 21% of the development appears to have been existing housing (according to on line county records). I was not able to tell from the county records how many of the lots have been built on. However, the MLS reports that since 01/01/2004 there have been 32 sales of new houses.

I went into the development yesterday to look at a house in foreclosure. I saw lots of for sale signs along the street. The MLS shows 19 active listings in the subdivision with an additional three pending sales.

Of the 19 listings there were nine noted in the listings or county records as being foreclosures or bank owned. There were five notations of “price reductions.”

Hillhurst has a lot of product on the market with little demand at this time.

Ralph Olsen, Appraiser

Pacific West Appraisal Services, Inc.

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This is a brief note about the  REO activity in Clark County Washington.

I have seen some neighborhoods with a large percentage of REO activity.  If your are not aware, REO stands for Real Estate Owned.  Lenders like to hold a mortgage that is receiving regular payments.  They do not like to own the property they have made loans on.  But, if the borrower does not make the payments in full and on time, a likely outcome is that the lender will end up owning the property, thus: REO.

The local market conditions are mixed.  There seems to be a strata of REO activity (foreclosure sales), a strata of people who are not in default, but have to move fast, so have offered big discounts to sell the house quickly, and the rest of the market, which appears fairly normal.  (This, by the way is empirical data and not based on statistical studies.)

At this time the market is so mixed that it is still difficult to tell just what way the market will go.  That is; will it get back to that “normal” posture I mentioned above?  Or, will REO grow and cause further softening?  We have to wait to see.

I went to Grand Ridge in Camas the other day.  I looked at an REO property.  In the MLS there were no sales in Grand Ridge in the last six months and 19 houses currently for sale.  It is looking like recovery will be slow in that development.

There are others like that example.  And, there are others where the activity seems quite normal with the only apparent difference from a year ago being that longer marketing times are required.

Ralph Olsen, Appraiser

Pacific West Appraisal Services, Inc.

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Vancouver, WA and Clark County foreclosure activity is up.

As you can see from the graph, the foreclosure activity in Clark County has risen.  I have been tracking this since the first of 2006.  At the beginning of 2006 the number of foreclosures was about 60 per month.  Then it began to creep up.  In 2007 it rose dramatically and was up nearly three fold by the end of December 2007.  Now it is at about 240 foreclosures filed per month.  That is four times what it was two years ago.

As I’ve mentioned in previous postings, the beginning of the second quarter of 2008 would reveal the state or the real state of the market.  The hope was that things would level out and perhaps get better.

On the ‘get better’ side of things, with interest rates fairly low, sales of houses are doing fairly well although available inventory is very large.  This inventory is still growing due to continuing new construction.  (What do the builders know that we don’t know??)  Looking at the graph above, foreclosure activity has leveled off since the first of the year.

On the other side of the news, although the foreclosure statistics have leveled off in the first quarter, they have leveled off at a very high rate.  At the average quarterly rate of about 242 per month there would be nearly a thousand foreclosures a year.  That is quite a lot.  There were 246 sales reported by the MLS for the month of January, and there were 238 foreclosures filed.  Ouch.  With that many houses in the “distressed sale” category, being sold by trustees through foreclosure, there is certain downward pressure on prices.  This is supported by the statistics that tell us that average marketing time has, roughly, doubled in the last two years.  The longer they sit in the market the softer the prices are likely to become.

Ralph Olsen, Appraiser

Pacific West Appraisal Services, Inc.

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This post is a case study of a new subdivision in Washougal, Washington.  It is of the Forest View Phase 2 development.

The Forest View development came on line at the end of 2005, at the height and nearly the end, of the most recent inflationary period in residential real estate.  All was looking pretty good at that time.  The development consists of 33 lots.  Thirty two have been built on.  The houses on the lots range in size from about 2,400 square feet to to about 3,400 square feet in above grade living area.  They ranged in price from around $400,000 to around $650,000.

To date there have been 19 sales of houses in the development with two additional re-sales.  That leaves one undeveloped lot still available and 13 houses that have never sold.  It is very difficult to tell how many are in foreclosure.  The county does not track foreclosures by address.  I drove through the subdivision yesterday and there were eight for sale signs.

The overall sales activity in this development was four sales in 2005, 13 sales in 2006, one sale in 2007 and one sale in 2008.  Perhaps the good news is that 2008 is off to a good start with a sale in the first quarter.  Statistically, that might suggest a year with four sales.  If so, that would indicate a 3.25 year supply of houses in Forest View Phase 2.

It will be interesting to see what happens.

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