Managing Director & Subdivision Team Leader
PGP Valuation, Inc.
112 W. 11th Street, Suite 250
Vancouver, WA 98660
Phone

Relative Inventory
Existing home sales were down consisently across all 4 counties in 2008 by 32 to 34%
New Detached sales followed a smilar trend, with Clark, Washington & Multnomah down 29-33%, and Washington down 18%
Attached housing market faired the worse, down from 40 to 54% across all four counties.
Overall, the volume of home sales was down an average of 35% for the Portland Metro Area
Pending sales dropped 30%, and New Listings Dropped 8.7% for the year, and 20% compared to the same quarter last year
Foreclosure sales now approaching 10% of existing sales, with Clark County higher at 17%
Per the local RMLS service there is a 14.1 months of inventory based on current monthly sales rate, up from 8.5% in December 2007
Total Marketing Time for Homes Per MLS is up 13% to an average of 138 days

Median Existing Home Price down from 2 to 6%, averaging 5%
Mediand New Home Price more static in Washingotn and Multnomah Counties, but down 13% in Clackamas and 19% in Clark Coujnty
Attached housing down average of 5%
Median Sale Prices Are Likely Skewed by Concessions and by the number and location of the sales

Residential Market Trends
Annual Trends 2007 & 2008
Excludes Mobile Homes & Plexes

Construction activity and starts are at all time low
Generally selling close to 1/4 of the new units as compared to the peak of the market
New home and lot inventories are declining, but slowing sales are still keeping the overall months of inventory high
Most plat in Clark County with new detached product have absorption from 0 to 2.50 sales per momth, with average at about 1 per month
Attached townhome absorption similar to slightly lower at 0 to 2 closed sales per month
2009 Volume of New Home Sales Could Go Down Further 20% if Economy Does Not Improve
More builders will file bankruptcy in 2009 & we will see builders work together or consolidate to survive
Some production builders trying to get detached housing down to $180,000 for starter home
Affordability is improving with home prices continuing to decline & very low mortgage rates, but recession & tighter lending standards offset
Long term trend for production builders: goal to match of starter home pricing to median incomes, and conform to underwriting standards.
During the peak of the market, starter home prices far exceeded the affordability based on median incomes and traditional underwriting
Median Income are likely to drop given unemployment on the rise, and near term deflation is likely
Lot and land prices have to adjust further
Interest Rate Buydowns More Common as Incentive From Builders
Trend to continued increase in number of attached townhomes entering rental pools by builders.
Some discussion between building community and jurisdications to put a temporary freeze on increased impact fees

Restructuring of the financial system & underwriting requirements likely in near future
Continued Bank Closures Likely in next two years
Bank closures typically result in frozen lines of credit and loans being called- ripple effect for the community
Opportunity for brokers to represent buyers & to inform them of inventory becoming available
Also recommend learning the process and establishing relationship with FDIC on selling side
Fed is injecting money (liquidity into banking system), but banks are stockpiling the liquidity and not passing it on.
Commercial Real Estate Problems will hurt already troubled banks in the coming year.

25-40% value declines in many markets
Most transactions are individual retail sales or takedown sales tied to home absorption to builders
Larger custom lots and acreage lots showing big declines, with the exception of very unique parcels in limited supply
Spec financing for smaller custom builders is extremely limited, so only buyers of larger lots are production builders or individuals
Most bulk discounts analyzed using Discounted Cash Flows range at 25-35% from retail, with some up to 50%
Increase in short sales for lots, will result in builders offering new below market product with competitive advantage
Some Recent Potential Buyer Comments on Liquidation Values for Land and Lots
Developer/Builder 50 cents on dollar because they can immediately react as a producer
Inventor buyer at 20-30 cents on the dollar for wait and hold scenario