The Portland Housing Market: A Field Experiment

So my field experiment is over.  My wife and I are the proud owners of a new house in SE Portland.  My experience with the market has been quite interesting.  There is still a lot of buyers out there and good (remodeled, move-in ready) properties were going for over asking after bidding wars.  But may fixers, more marginal houses and overprices houses are sitting.  We were after a fixer and we got one after we waited for an over-priced one to sit and made a fairly low (but quite fair in my opinion) offer that was accepted.   So, my interpretation of the market is that the market has changed significantly,but sellers have been slow to adjust their expectations.  Two years ago it was the more marginal properties that were going for above asking price.  

As for the mortgage market, we had no problem securing financing, but were were required to provide full documentation and they would not qualify my wife until she had a couple of months pay stubs from her new employer (a contract was insufficient).  I don't think there is much sub-prime financing out there at all, so all of those buyers are not active currently.  This is perhaps why marginal properties are not being bought to flip.

We got a rate that in historical perspective is quite good, but nothing like two years ago.  I was fine with this, I understand the credit markets and accept the outcome.  But it does kinda sting when, on the day of closing mortgage rates plummet on news of the Fannie and Freddie bailouts.  What galls me is this: it has been clear that the federal government was going to do this for weeks, so why didn't markets already price this into mortgages?  This is a picture of the rates crash that also represents that sinking feeling in my stomach.



Finally, one curious anecdote.  I was talking to a contractor that does a lot of little jobs, and whom I might employ to do a few things at my new house, and he was telling me he has never been busier than he is right now.  This is counterintuitive given the difficulty of obtaining home equity lines of credit and the like.  But it could just be that his reputation for excellent work is spreading.