390 homes were sold in Portland in January, down from 593 in December. I had predicted 400 with the normal sales slow down of the holiday season. This January is just slightly better than 2009’s.

Wild cards: Tax credit has been extended to April 30th 2010 and new move up buyer tax credit added. Foreclosures are still going up in Oregon.
I’m predicting around 425 closed sales in Portland (RMLS areas 141, 142, 143 & 148) in February. Watch for a large increase in new homes on the market in March and rising activity through the Spring.

Sales volume is a leading indicator for price. To help predict where the market is going I publish this sales volume trend report. The wisdom is that price follows volume so when you see a market trending higher in sales, prices will soon follow up and when sales volume is low, prices will stay flat or fall.

PORTLAND sales volume 021510

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Without further ado, click here for the PSU Real Estate Quarterly Report.

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I recently helped a client buy this duplex in SW Portland. If you’ve been thinking about buying or you need to sell your home give me a call at 503.901.8100. I’m here to help you with any of your real estate needs and I always appreciate your referrals.

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Are land and vacant lots the new hot buy in Real Estate?

Despite the fact that most western states have 2-3 years of lot inventory many investors are betting that the recovery will leave builders with nothing to build on.
Who is buying the lots? Right now it’s more of a long term hold so private equity firms and national home builders with the ability to wait are buying.

Who is selling? Banks and local/regional builders.

It will take a few years for prices to recover and the new home shortage to become a reality but it could be a great investment to buy lots at 25-50 cents on the dollar if you can wait. Keep in mind that in the Portland market that close-in “in-fill” lots are still selling at a premium and I don’t expect this to change. Look a little further out of the core of the city and there are deals a plenty.

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I get asked all the time if you should wait or buy now?

I think now is a great time!
Interest rates under 5%
Tax credit is good till April 30th – Close by June 30th
FHA loans still only 3.5% down

Many people also want to know what I think will happen to the housing market in 2010?

I think prices could soften but not more than 10% – especially in the affordable under $300k range or close-in.
I also think interest rates which are currently at 5% will be around 6% by end of 2010.
Rates going up 1% off set any gains a buyer gets even if prices drop 10% = same monthly payment.
I also do not think they will extend the tax credit past April 30th and for most buyers that’s an $8,000 benefit that will likely be gone if you wait too long.

So what does that mean in simple numbers?

If you bought a 250k house now at 5% interest and qualified for the tax credit your net purchase would be 242k and your payment would be roughly $1,275 if you put 20% down

If rates go to 6% and you want the same payment of $1,275 you have to pay 10% less or $225,000 and there’s no credit either so $8,000 of incentive is gone.

I can’t predict the future but the government is planning on no longer buying mortgage backed securities and when they do it will likely drive rates up.

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