Grand Ridge in Camas, Washington is an interesting study.  Construction of houses in Grand Ridge began in 1999.  The market was good and construction progress was brisk for six years or so.  It is a well received and well placed development with good views to the south and west.

Today, there are about 20 existing properties listed and not a sale since September 2007.  There are two pending sales at this time.

Although some houses are higher priced and some lower, the bulk of the development is in the $500,000 to $1,000,000 range.  Looking at all the MLS data for Camas, WA in the last six months in the $500,000 to $1,000,000 range, there were 19 sales.  The average sales price was $681,200 with a 95.77% sales to list price ratio and an average of 134 days on the market.  In the previous six months (the 6 to 12 month range back from today) there were 40 sales with an average of $681,794 with a 95.46% list to sales price ratio and an average 104 days on the market.

The average sales price hasn’t changed, the statistics say.  The list to sales price ratio hasn’t changed, the statistics say.  Yet, Grand Ridge hasn’t had a sale since last September.  This is not an in depth study of that market.  It is just a glace at MLS statistics.  Maybe the continued competition of new construction  is part of the cause of the slowness of activity in Grand Ridge.  Perhaps the enthusiasm of current property owners to hold prices high in the face of increased competition and softening market is a contributing factor.

In Grand Ridge the current average list price is $798,359.  The current average days on market for these, as yet unsold houses, is 159 days.

In all of Camas, there are 130 active listings in this half million to million dollar range.  The average list price is $680,461.  The average days on market for these yet unsold houses is 116 days.

So, some of the statistics portray stability.  Some portray a faltering market.  One must be careful how one looks at these figures.  However one might analyze the Camas market in general, it can be said that Grand Ridge is stuck in the Horse Latitudes.

Ralph Olsen, Appraiser

Pacific West Appraisal Services, Inc

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   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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An open letter to Landsafe Real Estate Closing Services
To the leadership and staff of Landsafe I am offering “congratulations for a job well done.”
The leadership of Landsafe has assembled a great, well trained, courteous and effective staff that gets the job done well.  I have worked for several years for Landsafe, and the experience has been great.
Landsafe has an excellent appraisal assignment system.  It is fair, objective and very easy to interact with.  It is the best in the United States.  Every part of it offers the appraiser an easy opportunity to communicate and follow up on assignments.
The on line review system works excellently.  The basics of the appraisal process are covered very well by this review process.  As an appraiser I always know what is needed of me.  The system lets me know if I have missed anything.  Upon further review, if necessary, the well trained and objective reviewers at Landsafe will give me a call.  I can say that I look forward to their calls.  Those calls are few, but when they come they arrive with courtesy, understanding and  knowledge of the business.  The reviewers are bright, straight forward and understand the nature of real estate appraisal, what’s possible and what is not.
Landsafe, as an organization, has never “twisted my arm.”  Everyone at Landsafe “asks” what questions they have and never tells me what it is that I must do.  I feel very respected by them.  I dare to say that all the appraisals provided by Landsafe to its customers are done without coercion or bias from Landsafe.
I have worked for Landsafe for several years.  It has been a very good working relationship.  I have worked for six other organizations that are competitors of Landsafe.  I will not name them, but I will say that none of them have the objectivity or respect that Landsafe maintains in relationship with appraisers.  (At least, not from my point of view.)
So, my hats off to Landsafe.  You always do what you say you’ll do; don’t do what you say you won’t do, and pay on time.  What more could an appraiser ask for??

P.S.
Due to the objectivity of the Landsafe system I will get no reward for saying these things.  And, that is as it should be.

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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I was recently asked what’s up with small acreage home-sites in the Washougal, WA area.  The sales presented in the MLS were reviewed.  This is a macro overview of the recent market activity in MLS area 33.

Home-sites in the range of 2.5 acres to 6 acres were reviewed.  This size range included the most activity and represented the most common site sizes for residential housing.

What I found was that in all of 2006 there were 10 sales that fit the criteria.  They had a sale price range of $149,000 to $315,000.  The average was $200,090.  The average days on market was 88.

In 2007 there were 15 sales reported.  They had a sale price range of $110,000 to $269,000.  The average was $185,043.  The average days on market was 134.

In the last six months the stats were:  Price range from $140,000 t0 $210,000 with an average of $175,375.  The average days on market was 175.

So, as you can see, the average price went from $200,000 to $185,000 to $175,000.   And, the average days on market went from 88 to 134 to 178.

Looks like the market for small acreage in Washougal is experiencing the same kind of market the rest of the Metropolis is experiencing.

Ralph Olsen, Appraiser

Pacific West Appraisal Services, Inc.

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I got a phone message from a loan officer at ‘Great Big National Lender’ yesterday, a very familiar company you’d all know the name of.  The loan officer wanted me to “check the value” on a property and if it did not reach a certain level they would not initiate a loan.

For those of you that don’t know it, it is illegal to do such a thing.  In the first place, I don’t know any more about the property than the loan officer does at this point.  In the second place, to do what the loan officer asked IS AN APPRAISAL.  To do such an appraisal legally there must be an auditable file to support the verbal report to the loan officer.  And, thirdly, Fannie Mae frowns on that kind of activity quite harshly.

I called the lender to see what their policy was.  They not only forbid such behavior, they have a team set up nationally to monitor and discourage such activity.

There was a time when such illegal activity was ignored by most lenders.  Some have always supported appraiser independence.  Without appraiser independence from the influence of loan officers the appraisals often become biased to the result the loan officer is looking for regardless of what the actual market value of the property might be.

Ralph K. Olsen,  Appraiser

Pacific  West Appraisal Services, Inc.

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FHA appraisal requests are up significantly this year.

I was a specialist for FHA appraisals before they went to lender selection of appraisers in the early 1990’s.  The FHA had chosen several appraisers locally to watch for indications of fraud in the market; flips and contract fraud, etc.  After lender selection of the appraiser went into affect seems the lenders did not want those appraisers that followed the FHA rules to do their appraisals.  They wanted those appraisers that would respond to the whims of the lender and not adhere to FHA insurance needs.  Then, the FHA got into trouble and the appraisers got blamed.  Probably rightly so.  At least, to blame the appraisers that ignored the FHA concerns about property condition would be justified.  But, those appraisers were chosen by the lenders for the appraiser’s pliability, not their integrity.  Oh, those rascally lenders.   Seems the stories about the lenders mistakes keep coming up, then someone else gets blamed and the lenders get bailed out.  They are all about FREE MARKETS until they stumble and fall.  Then it is “Where’s my government bail out?”    But, I’m whining, aren’t I?

Fannie Mae is now looking at the possibility of black listing lenders who manipulate the appraiser into producing fraudulent appraisals.  The pendulum has swung.  I have been complaining to FNMA since the 1980’s about the lenders black listing appraisers for not committing fraud on the lender’s behalf.  I guess a lonely voice was inadequate to affect the change.  A few hundred billion dollars in losses and loss of market confidence seems to have gotten their attention.

Ralph K. Olsen,  Appraiser

Pacific West Appraisal Services, Inc.

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