Real Estate In Perspective

9755 SW Barnes Rd. #560

Portland, OR 97225503-546-9955

Bob Broad 503-222-7623

Greg Long503-413-0027

www.PortlandRealEstateCafe.com

[email protected]

Real Estate in Perspective

Review of trends as we exit 2009

PortlandRealEstateCafe.com [email protected] 503-222-7623

Become Informed. Act with Confidence.

The Numbers that Drive Real Estate

1. Home Sales

2. Home Prices

3. Inventory

4. Mortgage Rates

5. Affordability



Sales increased 5% in 2009, the first annual sales gain since 2005 and the tenth highest annual activity level on record.

5.2

7.1

5.0 4.9

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

2009 Was A “Top Ten” Year

Source: National Association of Realtors Millions of Homes Sold Each Year since 1989



$198K$222K

$165K

0

50

100

150

200

250

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

$174K

$203K

Returning to 4% Appreciation Rate

Historical appreciation rate is 4%



If home prices actually grew by 4% every year from 1989 the median home price would be 17% above where we are today

Annual Appreciation Rate

Historical appreciation rate is 4%



Stronger sales activity in the second half of the year helped draw down inventory of existing homes to 8.8 months in 2009

4.3

10.5

8.8

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Housing Inventory Peaked in 2008

Source: National Association of Realtors Measure is the number of months it would take to sell existing inventory at current sales rate

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rs M

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et

Se

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• Mortgage rates averaged 5.04% in 2009 which is an all-time low since Freddie Mac started tracking in 1971.

• Mortgage rate ranged from 4.81% to 5.59% in 2009.

• At the end of December, rates stood at 4.93%.

5%

10%

6%

4%

8%

12%

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Mortgage Rates at Historical Low

Source: Freddie Mac



18.5%

15%

40 Year 40 Year AverageAverage

Source: National Association of Realtors Percent of a median family’s income required to make mortgage payment on a median-priced home

All-Time Affordability Record



1. Foreclosures and short sales continued to skew home prices downward

2. Banks continued to tighten their lending standards

3. Stimulus aid continued to gain traction

4. The available sides per agent ticked back up

Events that Shape the Market



• Four million foreclosure filings in 2009– One filing for every 45 housing unit (2.2%)

• So far, foreclosure prevention programs have had limited impact on slowing foreclosure rates.

Downward Pricing Pressure from Foreclosures and Short Sales



49%

22%

26%

17%

64%

46%

30%

29%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Q4

Q3

Q2

Q1Non-Traditional

Prime

Tightening of Credit Standards

Source: Federal Reserve. Percent of Banks Tightening their lending standards in each of the last four quarters. Many banks tightened more than once; virtually every bank tightened at least once. Non-Traditional includes adjustable rate mortgages with multiple payment options, interest only, Alt-A (limited income verification and mortgages secured by non-owner occupied properties)

• Jumbo Mortgage Originations Down 70 %• 6% of loans v 15% historical norm

• High-End homes (>$750K) only 2.3% of home sales• Down from 4.4%



• Historically low interest rates and unprecedented home prices continually contributed to positive affordability conditions.

• The market share of first-time home buyers rose to 47% in 2009.

42% 40% 40% 40% 36% 39% 41% 47%

2001 2003 2004 2005 2006 2007 2008 2009

Percent of First-time Home Buyers

Source: National Association of Realtors

Stimulus Package Helping First-Time Homebuyers