Recent rise in foreclosures creates more lower priced inventory

Foreclosed home yard sign

Foreclosed home yard signIf you’ve been waiting for more lower-priced homes to hit the market, this just might be the opportunity you’ve been waiting for. Portland metro foreclosures were up in November, about 87% over the same time period in 2013! This surge in foreclosures reflects a “pent-up” demand by lenders to close their books on delinquent home owners and clear that inventory off their books.

Since 2012, we had seen a slow-down in bank repossessions. Prior to 2012, in the state of Oregon, banks were allowed to file notices of default if a buyer was as little as 30-90 days late on payments, and then they could proceed to foreclose as quickly as they deemed prudent. This led to the glut of bank owned properties that hit the market due to the recession of 2007. And of course, the result was a further depreciation in home valuations.

In order to slow the repossession process and to ensure that all foreclosures were in fact legal, our Oregon legislature got to work to protect home owners. All lenders were required to use the “judicial” foreclosure process, which gave home owners 180 days after a notice of default was filed to try work with their lenders to try to save their homes. This created a reprieve for home owners, but a logjam in the foreclosure process for lenders.

A few months ago, our legislature ruled that lenders had to at least offer a delinquent borrower the opportunity for a face to face meeting prior to taking a property back. Without that 180 day wait, lenders are now able to speed up the process and are clearing out the distressed property inventory that has been growing since 2012.

Washington County saw the highest number of properties in the foreclosure process in the metro area during November (142 homes), while Clark, Multnomah and Clackamas counties all saw those numbers drop. Throughout Oregon, there was a 90% increase in the number of homes in some stage of the foreclosure process during November, as compared to November 2013, with the Astoria and the Pendleton-Hermiston areas leading the way.

Realty-Trac predicts that increasing numbers of bank repossessions during late 2014 could be a forerunner of what is to come as we head into 2015.

According to FHFA (Fannie Mae) records, there are currently 1,336 properties in the state of Oregon that are bank owned. BUT, there are 5,330 home owners who are 90 days or more delinquent on their mortgages. This represents a disturbing 1.9% of all loans in the state that could be facing foreclosure in the coming months.

Bank owned properties typically are priced at or just below fair market value. Because our housing market is pretty healthy now, the only real bargain basement priced homes are those in need of serious repairs or those that have been on the market for an extended period of time. Still, if you are one of those people willing to take on even a moderate fixer, there are still opportunities out there. In most cases, even relatively minor upgrades will increase the value of the home more than the actual cost to make those improvements. 

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Low cost bathroom updates

Towel rack warmerYou’ve heard it again and again. Kitchens and bathrooms sell homes. Most of us think kitchen and bath upgrades are expensive, but there are a few updates that are lower cost and will definitely make a difference. Besides, we all visit the bathroom at least a few times a day. It should be pleasant both for ourselves and for future owners, if you’re thinking of selling your property some day.

  1. Double flush toilets – yes we’re talking commodes here. Water costs are on the rise, so double flush toilets are a good investment.
  2. A towel warming rack is an inexpensive luxury that’s easy to install if it’s a plug-in model.
  3. Floating shelves are attractive and offer increased storage.bathroom skylight
  4. Replacing or re-framing your mirror is an inexpensive way to update the look and feel of the bathroom.
  5. Change out old fixtures.
  6. Lighted vanities.
  7. Skylights can make even a small bathroom feel larger and airy making this one of the best investments especially in a bathroom with no windows.

Some of the above will require professional installation, but others will take no more than a couple hours, even for those of us who are mechanically challenged.

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When Janet Yellen speaks everyone listens and markets react accordingly

Janet Yellen

Janet YellenThe Federal Reserve Board (Feds) met yesterday and of course, everyone was listening for news about the Federal Funds rate. The big announcement was that for now, they are leaving the Fed Funds rate unchanged at 0.00% – 0.25%. But what was even more important was Janet Yellen’s press conference following the announcement. Following are some of the highlights:

  1. The Feds are very focused on monitoring inflation (rates will be increased when there are signs that inflation is on the rise).
  2. While the economy continues to improve, housing continues to be a drag on the economy. In fact, Fed chairwoman Janet Yellen commented that she is surprised that housing has not been recovering more quickly than it has been. The Feds believe this continues to be due to very tight lending requirements.
  3. The Feds are stressing patience as they watch closely for signs that signal it is time for changes in the current Fed policy.
  4. As worldwide economies are slowing, this continues to be a factor in our own economic outlook.
  5. Rate increases are very likely at some time in 2015 though there is no pre-determined time as to when the appropriate conditions will fall in place. Some of the factors that will signal time to raise rates:
    1. Lower unemployment
    2. Better utilization of the employable population
      1. Too many people still unemployed
      2. Too many people still working either part time or temporary positions.

It is anticipated that by 2016, Fed funds rate will be inching towards normal and could be as high as 2.5%.

As was seen just after Janet Yellen spoke, Wall Street LOVED her comments and rallied up approximately 300 points.

That rally continued today with the DOW ending up 419 points. Surprisingly, the yield on the 10 year bond dropped and dropped more today again, which will keep mortgage rates down as well.

That rally continued today with the DOW ending up 419 points. But there was also a nice surprise with today’s rally; the yield on the 10 year bond stayed low closing at just under 2.1%. (Remember that mortgage rates are tied to the 10 year bond yield, so this is very good news and important to watch, regardless of which direction the DOW is moving on any given day.)

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Redfin study concludes winter is a great season to sell your property

???????????????????????????????Contrary to much popular opinion, the housing market is alive and well, even during the winter months (December 21 – March 20). In fact, Redfin has just updated a study conducted by the Portland Metropolitan Association of Realtors (PMAR) in 2013 and concluded that the winter months are the best months to list and sell your home.

Redfin researchers studied nationwide home listings, sales prices, and time-on-market data from 2010 through October 2014.”  The findings suggest that during the winter months, buyers are more focused and serious about purchasing a home than during the busier spring and summer months (when many “buyers” are often just window shopping.)

Redfin’s conclusion was that winter months favor sellers because there is less competition (lower inventory). But read on….

Winter months also tend to favor home buyers

So, if you’re a buyer, should you wait until later in the year? Sure there is more inventory to choose from, but there is also a lot more competition for the same properties which can also favor sellers, especially when they receive multiple offers.

Many realtors® polled disagree that winter is best for sellers and instead have found that sellers are more ready to negotiate with buyers during winter months because every seller wants a quick sale regardless of the season.

Potential buyers often think that homes that sit on the market for extended periods of time must have something wrong with them. Is the property over-priced? Are there structural issues? Is the seller unreasonable? Some potential buyers won’t even view properties that have been on the market for a long time, unless there have been significant price reductions during that time span.

The real estate market never sleeps

Whether you’re a buyer or a seller, you need to be out there when it is most appropriate for you. There are advantages and disadvantages at any time of year for both buyers and sellers. If you have a great property that offers location, price and amenities that buyers are looking for, your home will sell if it is priced right.

However, as a buyer, you need to actually get out and look at some homes in order to better understand what features are most important to you and even more importantly, what your budget can buy. Please don’t rely solely on online photos. First of all, photos can lie, but even if they are totally honest, a beautiful kitchen is not the whole story and will not necessarily be the feature that sells the house to you. When you find the home that speaks to you, and at least one home will – for many assorted reasons, then make an offer. It could be months before you find another house that you like as well.

Believe it or not, approximately 25% of all home owners fell in love with the very first house they saw but wanted to keep looking. That’s all well and good, but that home you love just might not be there in a week when you decide it was “the one.”

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2014 Portland Oregon holiday events

If you love the winter holidays and decorations, entertainment, food and spirits as much as I do, here are some ideas to help you and yours celebrate this year…

24th Annual Tuba Christmas Concert presented by SmartPark

Tuba concert

 If you’re downtown holiday shopping on Saturday December 13th, why not take a break and stop in at Pioneer Courthouse Square to listen to 250 tuba players in concert. The group will perform from 1:30 – 3pm, so why not go out and support our local talent.

Christmas ship parades on the Columbia and Willamette Rivers
Christmas ships

 If you’ve never seen the Christmas ship parade on the Columbia and Willamette Rivers, you’ve missed something magical. For 60 years now, local boat owners decorate their vessels (from small fishing boats to yachts) all for your viewing pleasure. There are actually 2 fleets of ships; the Willamette fleet and the Columbia fleet, so there will lots of opportunities to get in on the festivities.

The parades are held almost every night beginning Friday, December 5th and run through Sunday December 21st. Be sure to check the schedules on the above links to see where the boats will be launching and traveling every night. You can even follow their progress on the rivers on Twitter. Ships generally depart at 6-7pm nightly.

If you want to get up close and personal with the Christmas Ship Skippers & Crew, on Saturday Dec. 20th, 3:00-4:30pm, they will be at the public dock in front of the Riverplace Hotel.  Santa will be there too! Bring your cameras and take pictures to create memories of a lifetime.  Since safety is always their primary concern, life jackets for those 12 and under will be available before entering the breakwater dock.

Oregon Zoo Zoolights

Oregon zoo lights

Bundle up and head out to the zoo for an amazing light show with more than one million LED lights illuminating all the paths and trails throughout the Portland zoo. The lights transform the Oregon Zoo into a winter wonderland filled with moving sculptures, forests of lighted trees and animal silhouettes. Prefer to ride? The ZooLights train returns this year, taking visitors on a ride through the light experience.

Zoolights opened Thursday December 4th and runs through January 4th. Be sure to check the website for hours, rates, and even special discounts some evenings.

The Great Figgy Pudding Caroling Competition is being resurrected this year (last held in 1995) by hosts Pioneer Courthouse Square and Portland Mall Management, Inc. on Friday, December 12th from 5:30-7:30pm.

If you love Christmas caroling, head out to selected corners of SW Yamhill and Morrison Streets to hear the caroling groups competing throughout the downtown area. All competition will run from 6pm – 7pm before the finalists groups head to Pioneer Courthouse Square for their final performances. The winning group will take home a $1,000 prize, so join the holiday fun and root for your favorite carolers.

Is it raining or freezing cold outside?
You can still take in some light displays at places like the Drive through Winter Wonderland at the Portland International RacewayOR – looking for a cultural experience? Why not go to the Scandinavian Fair and Get ready to celebrate the sights, sounds, tastes and traditions of a Nordic Christmas! Lots of live entertainment and great food, and it’s all indoors Saturday December 6: 10am-5pm and Sunday December 7: 10am-4pm at the Portland Veterans Memorial Coliseum – Exhibit Hall.

For lots more holiday events in and around the PDX metro area, check out the full calendar of holiday events open to the public. You’re sure to find crafts fairs, parades, dining experiences, and a whole lot more to round out your holidays this year.

It’s that most wonderful time of the year, so please take some time to get out with family and friends and enjoy some of the unique holiday events we’re privileged to have available to us here in the Portland metro area.

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Mortgage rates closing in on recession levels

rates drop (2)If you’ve been waiting for mortgage rates to hit 3.5% again (last seen more than a year ago), you may not have long to wait. It appears that rates are headed in that direction again with best 30 year fixed rates loans now hovering around 3.75% for the best qualified buyers.

While this is great news for buyers, the flip side is that this is causing a housing buyer rally that was not foreseen just a few months ago.

As always we need to watch Wall Street to understand why mortgage rates continue to drop in spite of good jobs numbers and increased GDP in the US. While the US economy is in recovery mode, the rest of the world is still in turmoil economically.

Economic activity has hit a 16 year low in France, Japan is officially again in a recession, and Germany is also struggling with manufacturing. To top that off, oil prices continue to fall. This is great for us as consumers, but OPEC just voted to continue to their oil production at its current pace. This affects 10 countries whose economies depend on oil production, so their economies continue to slide as well.

For home buyers in the PDX area, this is almost all good news. Home prices still remain well below 2006 levels. But of course, as mentioned in prior news, housing inventories remain low but as homes become more affordable, more buyers are out shopping. The end result is that Portland home prices will again resume their march towards 2006 high prices.

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Do you qualify for the best mortgage rates?

home application paperwork

home application paperworkWhether buying a house, an investment property, or refinancing a current mortgage, there is a long list of variables that determines the rate you will pay.

Type of financing

Conforming/Conventional: Loans that follow Fannie Mae/Freddie Mac lending guidelines; approximately 87% of all mortgages with balances under $417,000 are still sold to Fannie or Freddie.

Jumbo: Loan amounts above $417,000.

Government: Loans that are insured by government entities, such as HUD, VA, and USDA.

ARM: (adjustable rate mortgages) Loans that start at lower rates than conforming, with rate locked for a specified period of time before it can adjust higher or lower (depending on the index the loan is tied to). Initial rates are usually considerably lower than 30 year fixed rate loans, but can adjust much higher once the initial locked in period ends.

Criteria that will affect the actual loan rate includes:

Credit score: Mortgage lenders pull “tri-merge” credit reports – scores and details from all 3 major credit bureaus. Most lenders will use the middle score as the basis for determining your rate. When multiple borrowers, lenders will use the lower credit scores.

Currently most conforming lenders require scores of 720 – 740 or better to qualify for the best advertised rates. Government insured loans are not nearly as rate sensitive as Fannie/Freddie loans.

Credit history: Lenders are looking for a number of factors on your credit history that can affect the rate you will pay. Obviously most derogatory information, such as bankruptcies, judgments, foreclosures, etc will affect your score, but this information will also affect whether or not you even qualify for a mortgage at any given time.

Amount of down payment: Conventional lenders usually charge higher rates for those with less than 20% down payments. This is known as “risk based” pricing adjustments.

Debt ratio: There are 2 debt ratios used in mortgage lending.

1. Total loan obligations (PITI – principal, interest, taxes, insurance) divided by gross income = lower debt ratio. (also include HOAs and mortgage insurance where applicable)

2. PITI plus all other monthly debts (car loans, credit card montly payments, etc) divided by gross income is the higher debt ratio considered to qualify for a mortgage.

Type of property: a house, condo, condotel, manufactured house, land, etc. Lenders often charge higher rates for some types of property based on risk and life expectancy of property.

Occupancy: Will this property be owner occupied? a second home? a rental? Do you own other rentals? Length of history as a landlord?

Type of Loan: 30 year fixed, ARM (adjustable rate loan), 15 year loan.

Location: Rates can differ from state to state and from lender to lender, so it pays to shop around a bit. Yes, all banks will pull your credit which will result in about a 6 point drop in your score, but you are permitted to shop several lenders within a 90 day period with only one 6 point adjustment to your rate.

And if all the above information isn’t enough, if you are shopping for a mortgage, it is also important to work with someone with offices close to the property you want to finance. A lender in Arkansas, for example, may not have Oregon rates available, and may not know about any special loan programs or financing specials running in your area of interest.

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