September 2012 Residential Highlights: Best September for Closed Sales in 6 Years

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1 Portland Metro Area Home Market Report For September Voice Portland Home Market September 2012 Residential Highlights: Best September for Closed in 6 Years With one exception, all reported measures of real estate activity show improvement when comparing September 2012 with September 2011, while dropping somewhat from August heights. At 1,894, closed sales were 19.4% higher than September 2011 sales of 1,586, while declining 18.0% from the August 2,311 total. This was the best September since 2006 for closed sales. Pending sales also continued to be strong, with 2,058 accepted offers in September, 10.6% more than the 1,861 reported in September 2011, and 13.8% under the 2,387 pendings in August. New listings were just 2.0% under comparing this year to last -- 2,451 to 2,501, but 20.9% lower than the 3,099 new listings entered in August. The unsold inventory returned to its July setting of 4.6 months. Year-to-Date Totals With three-quarters of the year gone, the market recovery is solidifying. Accepted offers are 16.8% above the level they were for the same period last year (19,015 v. 16,275.) Closed sales are 18.0% higher, with 17,468 closed so far this year, compared to 14,803 last year. At 26,771, new listings lag by 3.5% compared to 2011, when there were 27,746. s continue to creep up. The average sales price year-to-date of $272,200 is 2.9% higher than the average price in the same period last year, while the 2012 year-to-date median of $230,400 is 3.8% higher than the median last year. Total market time has dropped 20.7% from 145 days last year to 115 days for the first three quarters of Percent Changes for Portland Metro Area The Average Sale Percent Change is based on a comparison of the rolling average sale price

2 Page 2 Portland Metro Area Home s for September 2012 for the last 12 months (10/01/2011-9/30/2012) with 12 months before (10/01/2010-8/30/2011). Average Sale Percent Change: 1.0% ($269,500 v. $266,700) Median Sale Percent Change: 2.9% ($229,500 v. $223,000) Average Drops 23% From Peak in 2007 Here are the sales price percent changes in August 2012 from their peak prices in 2007: Average Sale Percent Change from Peak in August 2007: -23% ($281,400 v. $366,900). Median Sale Percent Change from Peak in July 2007: -21% ($238,300 v. $302,000). Home Sale s Starting Slow Recovery Below is the Average and Median Sale chart for the periods showing the home sales by 6-month intervals. The chart is for the five county Portland metro areas. It does not include homes in southwestern Washington (Vancouver to include Clark County). The State of The Portland Metro Area Home Market These next two charts explain the home market situation in the Portland metro area. You will note that the average market time (red line) in the below chart is slowly decreasing. Homes are selling faster which is good for buyers. It also means that buyers have a shorter time frame to make decisions. Many homes that are priced right are receiving multiple offers.

3 Page 3 Portland Metro Area Home s for September 2012 The low inventory affects the time a home is on the market before it is sold. The below chart shows that the total homes available for sale in the metro area has not changed much in all of 2012 (red line). The number of listings has varied by approximately 800 during the year. Different communities within the Portland metro area and different price ranges see very different results. For example, Southeast Portland has 3.4 months of inventory along with an average days on the market of only 62 days for September Here are others for September 2012: Lake Oswego and West Linn: Total market time is 137 days and the inventory is 7.0 months. Canby, Beavercreek, Molalla, Mulino, Oregon City: Total market time is 109 days and the inventory is 6.1 months Northeast Portland: Total market time is 95 days and the inventory is 2.8 months. Northwest Portland: Total market time is 119 days and the inventory is 4.2 months. Case-Shiller Home Index for July 2012: Portland Index 1.3 Data through July 2012, released by S&P Dow Jones Indices for its S&P/Case-Shiller Home Indices showed average home prices increased by 1.5% for the 10-City Composite and by 1.6% for the 20-City Composite in July versus June For the third consecutive month, all 20 cities and both Composites recorded positive monthly changes. It would have been a fourth had prices not fallen by 0.6% in Detroit back in April. The 10- and 20-City Composites posted annual returns of +0.6% and +1.2% in July 2012, up from their unchanged and +0.6% annual rates posted for June Fifteen of the 20 MSAs and both Composites posted better annual returns in July as compared to June Dallas and Washington D.C. saw no change in their annual rates; and Cleveland, Detroit and New York saw their rates worsen in July, with respective returns of +0.4%, +6.2% and -2.6%. After nine consecutive months of double digit annual declines, Atlanta finally improved to a -9.9% annual rate in July 2012, but still the worst among the 20 cities followed by S&P Dow Jones Indices. Among the cities, Miami and Phoenix are both well off their bottoms with positive monthly gains since the end of Many of the markets we follow have seen some decent recovery from their respective lows San Francisco up 20.4%, Detroit up 19.7%, Phoenix up 17.0% and Minneapolis up 16.5%, to name the top few. These were some of the markets that were hit the hardest when the housing bubble burst in Portland is at a current level of , up from last month and up from one year ago. This is a change of 0.28% from last month and 3.15% from one year ago. The S&P/Case-Shiller monthly index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average.

4 Page 4 Portland Metro Area Home s for September 2012 Cost of Residential 1 Homes by Area/Community for September 2012 Area Sept Closed Sept Average Year-to-Date For Period Ending September 31, 2012 Average Median Sale Average Percent Change 2 Portland Metro Area Includes these counties in Oregon: Clackamas, Columbia, Multnomah, Washington, & Yamhill 1,894 $281,400 $272,200 $230, % Portland North 66 $234,100 $228,900 $220, % Northeast , , , % Southeast , , , % West (Includes SW and NW Portland and parts of eastern Washington County) , , , % Portland Metro Suburban Areas Corbett, Gresham, Sandy, Troutdale 100 $216,300 $194,400 $177, % Clackamas, Milwaukie, Gladstone, Sunnyside , , , % Canby, Beavercreek, Molalla, Mulino, Oregon City , , , % Lake Oswego and West Linn , , , % Northwest Washington County & Sauvie Island , , , % Beaverton and Aloha , , , % Tigard, Tualatin, Sherwood, Wilsonville , , , % Hillsboro and Forest Grove , , , % Mt. Hood: Brightwood, Government Camp, Rhododendron, Welches, Wemme, ZigZag 9 230, , , % Counties Columbia County 47 $150,600 $164,600 $157, % Yamhill County , , , % Southwest Washington State Clark County (Battleground, Camas, Ridgefield, Vancouver, Woodland, etc.) 431 $221,500 $218,700 $190, % 1 Residential includes detached single-family homes, condos, townhomes, manufactured homes, and multi-family (e.g., duplexes, triplexes, etc.) homes when one of the units is sold. 2 The average sales price percent change are based on a comparison of the rolling average price for the last 12 months (10/1/2011-9/30/2012) with 12 months before (10/1/2010-9/30/2011).

5 Page 5 Portland Metro Area Home s for September 2012 Mortgages Primary Mortgage Market Survey: 30-Year Fixed Rate Averaging 3.37% Freddie Mac released its Primary Mortgage Market Survey (PMMS) results of its Primary Mortgage Market Survey (PMMS ) on October 18 showing mixed mortgage rates edging slightly lower with the 30-year fixed averaging 3.37 percent, just above its all-time record low of 3.36 percent, and the average 15-year fixed dipping to a new all-time record low at 2.66 percent. To view the Regional Breakdown in the below chart, click here. News Facts 30- year fixed- rate mortgage (FRM) averaged 3.37 percent with an average 0.7 point for the week ending October 18, 2012, down from last week when it averaged 3.39 percent. Last year at this time, the 30- year FRM averaged 4.11 percent. 15- year FRM this week averaged 2.66 percent with an average 0.6 point, down from last week when it averaged 2.70 percent. A year ago at this time, the 15- year FRM averaged 3.38 percent. 5- year Treasury- indexed hybrid adjustable- rate mortgage (ARM) averaged 2.75 percent this week with an average 0.6 point, up from last week when it averaged 2.73 percent. A year ago, the 5- year ARM averaged 3.01 percent. 1- year Treasury- indexed ARM averaged 2.60 percent this week with an average 0.4 point, up from last week when it averaged 2.59 percent. last week. At this time last year, the 1- year ARM averaged 2.94 percent. Portland Area Mortgage Rates To check on Portland metro area mortgage rates visit Professor Guttenberg s Web site at mtgprofessor.com click on Fixed-Markup Lender. Jack M. Guttentag is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania. Taking the average home price in the Portland area (Multnomah County) of $281,400 for September 2012 and with 20 percent down payment ($56,280) and a mortgage of $225,120, the payment for a 30-year fixed loan is $ per month (excluding property taxes and insurance) in Portland, Oregon. The interest rate is 2.875%, and the APR is 3.208%. Total closing costs are $10, Guaranteed lender fees are $9, the lender fees are guaranteed not to change from the time they lock your rate (60 days) to closing. Closing attorney/agent, appraiser, title insurance, and credit reporting costs are $2, The markup fees are $6, Local government taxes and fees of $207. Escrow fees are not waived. FICO credit score 750. According to the professor: In using an on-line lender monitored by the mortgage professor, a borrower enjoys competitive wholesale prices, which are disclosed and passed through by the online lender and a standardized and reasonable markup over the wholesale price, which is guaranteed by the professor. This eliminates all potential sources of abuse."

6 Page 6 Portland Metro Area Home s for September 2012 Other Topics Portland city leaders are in the process of coming up with a plan to guide development in the central city through Planners and a committee of citizens and stakeholders will present guiding principles to the Portland City Council on October 24, Anna Griffin, a writer for The Oregonian has written a 3-part series about the history as well as what the future may hold for downtown Portland. The first and second parts have been published and the final piece will be published next week. You don t have to live in Portland very long to realize how lively the downtown area is whether it is high noon or well into the night. Most cities roll up the asphalt after the offices close. Not Portland. Part 1: The 1972 Downtown Plan provided a blueprint for the vital urban core Oregonians enjoy today. Part 2: Keeping downtown Portland vibrant requires rethinking what it means to live and work in the "central city." Part 3: Forty years ago, the Willamette River was an obstacle to overcome downtown. By 2035, it will be something to immerse yourself in literally. I think you will enjoy the history as well as what the next few years will hold. If you re interested in reading part three, just go to The Oregonian Web site and you should be able to locate it. Below you will find a few paragraphs of the first two articles and links to the complete articles on The Oregonian s Web site. Part 1: 1972 Downtown Plan Dean Gisvold and his friends didn't know what they were doing. Back in 1971, when an acquaintance showed up at his office to ask him to lead a committee on the future of downtown Portland, Gisvold was a 31-year-old real-estate lawyer and a Grade-A dogooder, not an expert on cities. He and his family lived in a big house in the Irvington neighborhood, then a gritty place where he spent many a cocktail party trying to convince other young professionals that Northeast Portland wasn't as scary as they'd heard. He rode a bicycle to work, though friends thought he was crazy, and officials at his large downtown office building responded to his request for bike racks with a single, lonely stall. He'd done some neighborhood activism and found the work fulfilling, so when an architect in town asked for help with downtown, Gisvold agreed without much thought. "It seemed like fun," he said, "and not that much work." It turned out to be a great deal of work, more than a year of practically full-time effort. But the document Gisvold and his committee helped planners produce became the 1972 Downtown Plan, the blueprint for the vital urban core Oregonians enjoy today and a nationally renowned bit of advanced thinking about what the modern U.S. city can be: Walkable. Livable. Alive. "I know there were people back then who said, 'What the hell are these people thinking?'" said Chet Orloff, a historian and Portland State University professor. "Everywhere you looked, in every city, people were fleeing and cities were talking about how to make driving easier. But in Portland,

7 Page 7 Portland Metro Area Home s for September 2012 they were focusing on getting people back to downtown and out of their cars." "We were a little naive about what we were doing," Gisvold said. "Maybe that's why it turned out so well." Read the entire story at The Oregonian Web site Part 2: Keeping Downtown Portland Vibrant Requires Rethinking Here's something to consider the next time you're stuck in traffic in downtown Portland: If city planners succeed, that congestion won't improve. In fact, it might even get worse. As they work on a wide-ranging plan for the future of the central city, a blueprint to ensure that downtown Portland's next 20 years are as successful as its past 40, planners and citizen volunteers have come up with a strange, fascinating, seemingly counterintuitive equation. For Portland to remain the healthy cultural and financial heart of the region, they say, the number of trips made downtown each day must double. The amount of greenhouse gas emitted must remain the same. And the number of vehicle miles traveled n the central city -- the average number of miles each of us put on our odometer on any given day -- must drop by close to 40 percent. More trips. The same pollution. Fewer miles. "It's a head-scratcher when you first think about," said Andre Baugh, chairman of the Portland Planning and Sustainability Commission, the volunteer group that helps craft city development policy. But the projections tie into what the experts say central Portland must become to remain the region's economic heart: A city that feels more like... a city. Read the entire story at The Oregonian Web site Susan Marthens Principal Real Estate Broker, CRS, GRI Windermere/Cronin & Caplan Realty Group, Inc SW Beaverton- Hillsdale Hwy, Suite 100 Portland, Oregon Telephone: smarthens@movingtoportland.net