As with so many industries, the COVID-19 pandemic has required the real estate industry to continue to serve our clients in different ways. Our team is following recommendations from public health officials to ensure that while serving both our home buyers and sellers, we are also helping to reduce its impact.
from Kathy MacNaughton
My intention is to provide you with data and insight regarding current residential market conditions and what they could indicate for the foreseeable future. It’s definitely challenging to do this since real estate data is multifaceted, nuanced and most available data is 30 days or more behind what is happening today and right now, today is what matters. Here is my best shot:
As of today, residential pending sales for the Portland Metropolitan Area (PMA) are about 40% off what they probably would have been in a normal market in early spring 2020. This is based on pending activity since March 1 2020 through March 30, 2020.
How much have sale prices gone down? None of us know this, but my educated guess is that market values are down 3% to 7% from where they would be today if COVID-19 didn’t happen. The only exception to this are the homes that are rare and always in very high demand with very low supply. Homes with market values of under $550,000 are experiencing the least amount of depreciation.
- Vacant homes are being shown significantly more than occupied homes are.
- Average days on market before a pending sale have not yet significantly increased over what would be typical for this time of year. This could change starting now.
- Multiple offers are happening much less than they used to, but are still occurring.
The good news is that there are people who need to or really want to sell and/or buy and transactions are taking place in the Portland Metropolitan Area (PMA) at a rate of approximately 60 sales a day. There are just over 3000 homes currently on the market in the PMA so inventory remains low with less than 2 months of available homes to purchase. Over the next 30 days, available inventory is likely to drop even more.
Buyers can still tour a particular home in person. Responsible brokers are following the strictest protocols regarding showing homes and are doing so carefully and safely. On top of these, we Brokers have the tools to expertly communicate and manage our listings and sales almost completely virtually.
If a seller needs to sell their home now, they can be successful as long as they are mindful of market conditions and list their home as close to its accurate market value as possible. Today, the market is not suited to Sellers who will only sell if they can obtain the same price they would have if not for the pandemic. For a move up seller, right now could be an opportune time to buy also since they very well may be able to procure a more expensive home at a price that is more discounted than the home they just sold. Last but not least, Buyers, as long as they are pre-approved for their financing, can very likely obtain a home for a terrific value but don’t expect the seller to agree to sell today for an unrealistic discount.
What will happen in the future? I was heartened by the news today that Oregon’s social distancing is yielding results. Right now I see market conditions staying pretty much the same as they are today for the next 30 to 60 days. I will be sending you updates until we are as close back to normal as possible. Please call or email me if you have any questions or just want to discuss something. I sincerely want to help you as much as I can in any way that I can and welcome connecting with you.
MORTGAGE RELIEF AND INTEREST RATES
from Breylan Deal-Eriksen
An important message regarding mortgage forbearance options:
Recently, information has been released regarding options to temporarily suspend mortgage payments during the current COVID-19 pandemic if needed.
We have had the opportunity to see what lenders are offering their borrowers in response to this. In some cases, the lender is allowing the borrower to postpone three months of payments but are often requiring payment in full on the 4th month. Here is an image of what that might look like:
Before forbearing your payments, we recommend clarifying when the payments would become due to prevent hardship in the future. You should also ask your lender:
- Are there any additional fees attached to the loan?
- Will skipped payments be reported to credit bureaus?
- Will skipped payments change your amortization schedule?
- Will skipped payments affect your escrow account (for property taxes/homeowner’s insurance)?
Our recommendation is to make payments as you normally would if you are able to. A temporary forbearance option may be a good thing to consider if you are planning to sell your home this year, but may not be the right decision if your intention is to stay put for the foreseeable future.
Need assistance navigating these options? Neither Kathy or I are Financial Advisors but would be willing to share their opinions with you as a friend and confidant.
What’s the deal with interest rates?
You may be hearing that the Federal Reserve has dropped interest rates to near 0%. This is true, the Federal Reserve is taking many steps to relieve stress on the economy.
The rate the Federal Reserve slashed to near 0% is the federal funds rate. The federal funds rate is the interest rate target at which banks borrow and lend excess reserves from one another on an overnight basis. A committee of the Federal Reserve sets a target federal funds rate eight times a year, based on prevailing economic conditions.
The federal funds rate does not correlate to fixed-term mortgage interest rates. Historically, fixed-term mortgage interest rates follow the 10-year Treasury note, also referred to as the 10-year bond. Fixed mortgage rates and Treasury yields tend to move together because fixed-income investors compare the returns they can get on government and mortgage-backed securities.
It’s true, mortgage rates are near historic lows, but there has been a lot of volatility in the market recently. It may be a good time to consider refinancing, but rate shoppers should know this:
Rates change multiple times daily
Fixed mortgage rates are ranging between 3-5% depending on borrower qualifications and the type of loan they are hoping for
If you need a referral to a good Loan Officer, please don’t hesitate to ask. We would be happy to help!
We are here to help you with your real estate needs. More than ever, our Concierge Real Estate Services truly set us apart and define our commitment to you and your family.
Please continue to practice physical distancing, but keep in touch with me socially! Call me and let’s talk!