QUERIN LAW: April 2013 Portland-Metro Real Estate Stats YTD

We continue to see promising signs in the Portland-Metro real estate market. The recently released RMLS™ Market Action report for April, speaks for itself:

Year to Date Summary. The Portland metro real estate market continues to have a strong year. There have been 9,314 accepted offers and 7,039 closed sales in 2013, up 16.4% from 8,000 pendings and 12.9% from 6,236 closed sales in the same period last year. The 11,678 new listings this year represent a 4.4% increase from the 11,182 entered by this time last year.

Average and Median Sale Prices. The average sales price so far this year was $293,600, up 15.3% from the same period in 2012, when the average was $254,600. In the same comparison, the median increased 15.6% from $216,200 last year to $250,000 in the first four months of 2013.

Depending upon whether you’re a seller or buyer, the inventory numbers are either good or bad: April’s inventory is at 3.1 months; down from 3.2 in March. For first-timers to this report, RMLS™ explains that months of inventory is determined as follows:

“Inventory in Months is calculated by dividing the Active Listings at the end of the month in question by the number of closed sales for that month. This includes proposed and under construction homes.”

A “healthy market” i.e. one in which sellers and buyers have roughly equal negotiating power, is 6 to 8 months. With the current low inventory, it means that sellers have the greater bargaining power in the establishing final selling price. The result has been less time homes spend on the market. In other words, homes are being snapped faster and faster. In many instances, offering prices have exceeded list prices and back-up offers are becoming commonplace. April time on the market was 91 days; March was 112. This feeding frenzy will likely continue into the summer months, and only slow down when more sellers list their property and new housing construction becomes available. ~PCQ

Introduction. Now that the market is s-l-o-w-l-y returning to a semblance of normalcy, perhaps it’s time to go back and revisit some real estate basics. For the last several years, with the market dominated by short sales and bank-owned REO sales, many practices that were considered ‘SOP’, fell by the wayside. For example, even though the statewide OREF Sale Agreement form was chock full of seller representations, when an offer was made to a bank in an REO sale, the bank would ‘counter’ with an addendum that effectively scrubbed all the seller reps out of the document. Buyers were on their own when it came to protection. Similarly, although most contingencies retained some semblance of meaning in short sales, the condition of the property was presented on almost a take-it-or-leave-it basis in short sales, since most banks declined to spring for most repairs unless they were of such a magnitude as to require the concession.[1] Continue reading “Representations and Contingencies in Oregon’s Statewide Sale Agreement Form”

Introduction. Unless you’ve been in the real estate industry for ten or more years, it’s quite possible you’ve never heard of listback agreements. Due to today’s lack of housing inventory, the slow re-emergence of residential development, signs of new construction, and innovative newer agents, developers and builders, who’ve not given listbacks much thought, we are seeing some evidence that these arrangements are beginning to reappear. Continue reading “Back to the Future: Revisiting Listback Agreements”

As I was reading Kelly Harpster’s excellent article on The Housekeeping Report, summarizing the January 9, 2013 oral arguments on the Niday case[1] before the Oregon Supreme Court, I felt I was ringside with Howard Cosell covering an old Ali-Frazier title bout:

“Frazier hits Ali with a short left jab, followed by a quick right – Ali feints, dances, bobs, weaves – he laughs, drops his hands and mugs at Frazier, taunting him, then fires back with a flurry of punches to Frazier’s midsection. Oh, there’s the bell! That was the round 15[2]! The ref jumps in to separate the two gladiators, who are exchanging angry words and gestures. Their corner-men separate the pugilists, each side claiming victory. Ladies and gentlemen, this is why they call it the “Sweet Science.” Have you ever seen such a magnificent exhibition of the sport? It truly was a “Thrilla in Manila!” Now let’s go to the judges’ scorecards….” Continue reading “MERS, Niday, and Occam’s Razor”

If the politicians in Washington today were instead the CEOs of private industry, they’d all have been fired by now.” Anonymous [sort of]

Introduction. At the end of 2012 we all went over the Fiscal Cliff like Wile E. Coyote. But unlike Wile E., we were able to grab a hold of a small scraggly branch on the way down, and eventually climb back onto terra firma…for the time being. The next looming crisis – the Debt Ceiling negotiations – is the second feature in this macabre satire called “Your Government at Work,” so don’t go away just yet![1]

Leaving a discussion of who’s to blame for another day [there’s enough blame to go around], how did the real estate industry fare in the Fiscal Cliff legislation [technically known as H.R. 8, American Taxpayer Relief Act of 2012], that was moved, seconded and passed on January 2, 2013? Well, considering what was at risk, it appears we dodged a few bullets, albeit temporarily. So here’s what the scorecard looks like right now: Continue reading “2013 Fiscal Cliff Legislation And Its Impact On The Real Estate Industry”

In the late 1990s, without a single piece of enabling legislation, the Big Banks, infused with money, ego, hubris and a TBTF attitude, created MERS in order to electronically track securitized loans and avoid public recording fees. But like Dr. Frankenstein, the Big Banks never fully realized the monster they were about to create. The foreclosure crisis of the last five years has underscored the flawed logic of the MERS model.

In January 2013, the Oregon Supreme Court will, for the first time, hear oral argument on four certified questions dealing with MERS. It can only be hoped that after five years of litigation and millions of dollars in attorney fees, MERS will be quietly laid to rest in the Dustbin of Bad Ideas.

Herewith, in anticipation of the upcoming ceremony, I reprise an Ode to the star-crossed lovers most affected by the Mess MERS Made:

The Note and the Trust Deed had been married for years

The union was good, with very few tears.

They were always together, going hither and yon

But early one morning, the Trust Deed was gone.

Note searched for her lover, nearly out of her mind.

Soon her fears were confirmed – Trust Deed was assigned.

Unwilling to stop, she asked clerks far and wide

“Have you seen my dear Deed? He must be inside!”

But recorders responded, “Have you not heard of MERS?

We no longer record – we haven’t for years.”

“The best you can hope for,” friends told the Note

“Is to check with the Registry – it’s your last and best hope.”

Then she remembered, with rising alarm

Those 18 small numbers, tattooed on Deed’s arm.

So she rushed to the Registry, and entered the MIN

With hope against hope, she’d see Trust Deed again.

When MERS finally replied, a cold day in December,

She learned Deed was assigned – but not to a member!

“Oh, what shall I do,” the Note softly cried,

“MERS took my dear Deed, but left me outside.”

The months turned to years, then one day through fate,

She saw him by chance – her wayward soul mate.

Her Trust Deed looked terrible; he’d developed a paunch,

Seems he’d wasted away, in some low level traunche.

“Oh Trust Deed, my Trust Deed, return home to me.

Wherever I go, is where you must be.”

But Trust Deed responded, holding Note very tight,

“Dear, the law says once split, we can never unite.”

Now lawyers will argue, with logic askew,

That MERS didn’t cause the split of these two:

“They were just being strawmen – why can’t you all see?

MERS isn’t to blame – they’re just ‘Nominees.’”

But truth is the truth, it cannot be denied,

MERS is the reason, they’re not side-by-side.

[Note: This is the second in a two-part series in managing brokerage risk. In the first article [here] I discussed managing risk “from the top down,” i.e. identification of what aspects of real estate brokerage practice need the greatest attention, and proper evaluation and treatment of customer complaints before a potential claim becomes a real claim. – PCQ]

Where Do Claims Originate? Real estate brokerage claims come from three different sources: (1) The customer, (2) the customer’s lawyer, and (3) the Oregon Real Estate Agency.

Claims From Clients Themselves. If the client is presenting the claim on their own behalf, the real estate company is in the best position to have direct control over managing that risk. In fact, this may be the one and only time a managing principal broker has actual control over the outcome of the claim.¹ Here are some tips:
Continue reading “Real Estate Brokerage Claims Evaluation – Part Two”

This is the second installment of my article looking back over the past five years at Portland housing statistics. Part One examined the real reason for the housing crisis which officially commenced in 3Q 2007, and looked at the historic numbers for average and median (i.e. “mean”) sale prices according to the RMLS™. The link to Part One is here.

The Rest of the Story. Besides pricing over the past five years, what about time on the market? Available inventory? Number of listings? Closed sales? Let’s look at each one:

1. Time on the Market. Until 3Q 2007, an overheated real estate market was still burning through inventory. In August 2007, the average time on the market was 56 days – less than two months from listing to “pending sale.”[1] The following month, September, 2007, banks began realizing that the drumbeat of subprime defaults was not going away. They tightened their underwriting requirements almost immediately. Over time, they began to even restrict borrowers from tapping their HELOCs based upon ZIP code. As short sales and REOs began to fill the real estate marketplace, buyers and appraisers began viewing the sales figures as legitimate comps by which to gauge present value. All the while, many potential buyers remained on the sidelines, waiting for prices to hit bottom.[2] Many sellers who were fortunate enough to have equity during the following five years had to decide whether to wait until the market turned, or sell their home and recover far less equity than they had earlier.[3] Continue reading “Portland Metro Housing Prices – The Last Five Years [Part Two]”

Background – 3Q 2007. Looking back, August 2007 was a memorable month, filled with good news and bad. Based upon RMLS™ numbers, it was a statistically impressive month for closed residential transactions in the Portland Metro area. The bad news was that it was the last such month we were to see. From that point forward, in almost every meaningful category, the local housing stats just kept getting worse.

The Credit Crisis – 3Q 2007.[1] Quietly, and with little public fanfare, in the third quarter of 2007, worrisome cracks began to appear in the country’s financial system. They were first noticed by those who monitor these things, such as the Federal Reserve. They were also noticed by some who actually had a hand in causing the cracks to occur.[2]

In short, the credit markets began seizing up; access to short term borrowing engaged in by companies was drying up. Normally, large businesses financed their daily operations through the sale of commercial paper, i.e. secured and unsecured short term loans. The Federal Reserve recognized the crunch, and in September 2007, cut interest rates by 50-basis points, or one-half of one percent. The purpose in so doing was to provide liquidity for financial institutions and investment houses so they could continue to survive. Bloomberg explained it well in its September 27, 2007 article titled “U.S. Commercial Paper Drop Slows After Fed Cuts Rates (Update5)”: Continue reading “Portland Metro Housing Prices – The Last Five Years [Part One]”

OK, I admit it! I am suffering from chronic MERS fatigue. Every few days, in some part of the country, MERS gets sued by someone. Sometimes it involves a pending foreclosure; other times it involves some state or county suing to recover lost recording fees. And the beat goes on. MERS apologists, aka the Big Banks and their toadies attorneys, appear before one judge or another with arguments so specious as to make intellectually honest lawyers grimace and intellectually dishonest lawyers grin. – PCQ

On Thursday evening, November 15, we learned through the Oregonian, that the Multnomah County Commissioners unanimously authorized the filing of a lawsuit against Mortgage Electronic Registry System, also known as “MERS,” which describes itself as follows: Continue reading “MERS Fatigue”