Home buyers are back out in force in Portland

sold - sale pending signsAfter the usual slow down in property viewings for the last month or so, potential buyers are back out in huge numbers here in Portland. RMLS reports that home views increased almost 20% last week in the Portland metro area. This home buying frenzy is likely to continue until the Thanksgiving holidays if this year is like the last few years. Between Thanksgiving and and the end of the year holidays, the number of “I’m not in a hurry” home viewers tends to decline, while serious buyers continue to seriously search for that perfect home.

To make matters even more urgent for prospective home buyers, it is anticipated that mortgage rates will begin to rise beginning in October 2017 as the Feds begin selling off their $4.6 trillion inventory of Mortgage Backed Securities and Treasury bonds. The rates are expected to increase monthly through 2018 because the number of bonds being released by the Feds will increase monthly for at least a year. Rising interest rates will price many buyers out of the market as prices continue to rise.

Unfortunately the low inventory numbers of homes for sale continues to weigh on home prices in Portland. The median sales price for homes sold in August climbed to $385,000, up 9.1% from a year earlier but $10,000 less than the median price in July.

home prices increase againAverage home prices climbed above $420,000 in July for the first time in Portland’s recorded history, and with an ever growing population, this trend is likely to continue. Prices are rising faster in the Pacific NW than in any other area in the country. Portland ranks 2nd only behind Seattle for fastest rising prices.

 

All these statistics are a bit slanted though because the truth is that home prices have stabilized in homes valued at $500,000 and up, while homes valued below $500,000 are really rising faster than 9.1% year over year. There are so many buyers almost desperate to lock in a home purchase priced under $300,000 that unfortunately we have seen the return of the “lipstick on a pig” type home flippers. These flippers will purchase those properties that are in really poor condition; slap some paint on the interior and exterior, perhaps update the kitchen with new but inexpensive cabinets and appliances and raise the price to at or just below $300,000 to cash in on huge profits. However, a lot of essential repairs are left undone.

Since the under $300,000 price range is where most buyers are becoming more disheartened and a little bit desperate, it is critical to do your own limited home inspection to make sure that you are not risking your limited funds on a home that has too many problems to even qualify for financing. Issues such as dry rot, appliances and furnaces, water heaters etc. that are unsafe, roofs that cannot be certifiable for at least 2-3 years life, windows throughout the house that do not open or lock, and so much more can often be detected by the prospective home buyer.

While your earnest money deposit should not be at risk during the early stages of the purchase IF you purchased through a realtor with all the buyer protections written into the contract, you could lose valuable time searching for a better investment. Please read Tips to avoid buying a money pit to help you do your own quick inspection of any home you are considering making an offer on.

Finally, buyers should always be working with their own realtor, rather than the listing agent to make sure that their realtor is working for them, NOT the seller.

 

Good luck out there.

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Are you ready for mortgage rate increases beginning in October 2017?

Federal Reserve BldgWhile we have all been watching hurricanes, fires, earthquakes, North Korea threats, and so much more, the Feds rather quietly held their usual monthly meeting just about a week ago on September 20, 2017 where they unanimously decided it’s time for them to begin to unwind Quantitative Easing (QE).

Most recently we’ve grown accustomed to news that the Feds met and little changed. The benchmarks the Feds were looking for to signal economic health were not happening. But anyone watching the Feds knew that the news was bound to change soon; and it seems that soon means now.

Per the news conference held after the meeting, the FOMC (Federal Open Market Committee) chaired by Janet Yellen announced that they finally feel that the US economy is now healthy enough to begin to unravel QE  and let the market find its own way.

As a reminder, QE (quantitative easing was implemented just after the bank bailouts and housing market crash about 10 years ago in order to stabilize the economy as much as possible. The over night lending rate for banks and large financial institutions was dropped to zero while the Fed began buying up federal and mortgage bonds in astronomical numbers. They began unwinding that policy at the end of 2015 by gradually raising overnight lending rates which now stands at 1.25%.

The Fed currently holds $4.5 trillion in these security instruments. This buy and hold strategy has artificially held lending rates of all types, including mortgage rates at almost unprecedented low levels for the last 10 years.

Last Wednesday the Fed announced that the over the counter lending rate for banks will remain at 1.25% but QE has come to an end. They will begin selling off bonds beginning October 1, 2017 and will continue to sell monthly until the portfolio is gone,or until they decide that their portfolio is an appropriate size and the markets have stabilized. 

The starting rate of the sell off will begin somewhat slowly; next month they will sell $4 billion in mortgage backed securities and $6 billion in Treasury bonds. This number will increase monthly until the sell rates reach $20 billion monthly in mortgage securities and $30 billion monthly in Treasuries. It is expected that these levels will be reached in about a year. 

Once those bonds start hitting the free markets, it is forecast that all lending rates will increase incrementally, including mortgage rates, until the bonds are gone. As we have seen in the past, when banks feel they have any excuse at all to raise lending rates, they do so. Typically they test the waters with a bigger increase than the market will bear, so they pull that increase back slightly. But with billions of dollars worth of bonds hitting the free markets every month going forward for at least the next year, it’s impossible to predict just how quickly lending rates of all types will rise.

The Fed will monitor the rate of sales closely to ensure that we don’t see car loans, student loans, personal loans, credit card rates and mortgage rates rise too quickly, but rise they all will. Even the Feds expect that. 

IF you are thinking about selling or buying a home, this might be time to get going. These rate increases may seem small, but could definitely affect how much buyers are qualified to spend for a home purchase, especially those who are looking at homes priced at their current pre-approval limits.

 

 

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Portland ranked second greenest city in the US

 

downtown Portland goes green

Going green in Portland….This photo says it all!
Portland embodies “green” with a public train,public bus and a bicycle rider all traveling down a tree lined street in downtown Portland

As reported in a recent article published in Architectural Digest this year  Listshack compiled data on cities with populations of 1 million or more residents to compile a list of the greenest cities in America. Their criteria included “five factors, or “green” data points: The number of LEED certified buildings per each 1,000 residents, the percentage of the city’s land area that is parkland, the number of miles of bike lanes per 10,000 residents, the number of farmers’ markets per 10,000 residents, and the number of electric car plug-ins per 10,000 residents. Population also played a role when determining the rankings; everything was brought to scale by looking at the factors per either 1,000 residents or 10,000 residents so the largest MSAs wouldn’t win just based on their size.”

Austin Texas topped the list, followed by Portland Oregon in the number 2 spot.  Washington D.C./Arlington/Alexandria, Virginia, area ranked 3rd, the greater Boston area 4th and the San Jose/Sunnyvale/Santa Clara area of California ranked 5th. Rounding out the top 10 spots were New York/Newark/Jersey City all the way into Pennsylvania; followed by Hartford/West Hartford/East Hartford, Connecticut; then Providence/Warwick, Rhode Island; San Francisco/Oakland/Hayward; and finally Cincinnati, Ohio, and its neighboring areas in Kentucky and Indiana. Seattle; Tucson, Arizona; San Diego; all received honorable mentions. 

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Home buyers beware – tips to help avoid buying a money pit

Portland metro home

Is this your dream house? Remember to check it out before you buy it

Buying a home is more than an investment, especially for first time home buyers. It’s also a very emotional process. I can’t tell you how many times I’ve seen that look and glow in a buyers face as they find “the one.”

Hang on buyers. There’s plenty of time to fall in love with your house, but the first time you see it, before you really look it over is a little too early.

Once you find a house that you really like, it’s time to get your critical eye in gear and really look over the property as a housing inspector would; at least the portions of the house that are easily viewed. Before you spend money you could be throwing away, look for obvious signs of homeowner neglect often due to inadequate funds or concern for maintaining their home properly. 

Here’s what to look for:

  • Roof – The roof should be flat, not wavy or dipping at the edges or elsewhere.

Check for moss accumulation, usually most noticeable on the north exposure. A lot of moss doesn’t mean the roof is bad. It just means it has to be treated before it does damage to the roof.

  • Dry rot – Dry rot can be found on any wood surface, whether exposed to the elements or not 
dry rot in eaves

Dry rot in the eaves

Walk all the way around the house and look for signs of dry rot on support structures, under the eaves, on wood siding, around windows and doors, and literally anywhere you can easily see around the house. This is a fungus that eats into wood caused by excessive moisture in unsealed wood. Dry rot, if caught early enough can sometimes can be treated. But like most fungus, it spreads insidiously. Dry rot in eaves may have spread to the under support of the roof, meaning that even what appears to be a good roof, my not have proper structural support, so the entire roof will need to be replaced.

 

  • The foundation. It’s not all that unusual to have hairline cracks in the foundation. But if the cracks are bigger than hairline, you could have a foundation issue.
  • Check out the flooring in the house. Do the floors feel level and solid? Walk around as much of the floor space as you can without moving furniture of course. If the floor feels sort of spongy, that’s not a good sign. If you set a ball on the floor and it rolls to one corner, this could be minor settling OR you could have a bigger issue.
  • Exterior paint – is it chipping and falling away? Dry rot can get under a house in need of paint.
  • Gutters – do they appear to be lined up properly? Remember that gutters have to be installed on a slant, or they won’t drain, but where is the drain outlet? Hopefully not right next to the foundation. 
  • Does the ground slope away or towards the foundation? You NEVER want the ground to slope toward the foundation so water runs under the house during heavy rainfalls.

Inside the house – what to check for

  • Turn on faucets, run the shower or bath tub, flush the toilet

            You are checking for good water pressure. Does it seem adequate and normal to                you? Older houses with galvanized metal pipes rust. The rust accumulation slows              water flow, and replacement of these pipes throughout the house can be costly.

  • Windows – do they all open and lock?

            Are they single pane, double pane, wood, vinyl or aluminum framing? If you like                old windows that are wooden framed, and they work well, this isn’t a problem                    except that you are giving up energy efficiency for the look you prefer. That’s                    your choice to make. But be sure to notice.

            Is there mold growing in the window tracks if aluminum or vinyl? This is a sign of              moisture intrusion and poor house keeping. It could also signal that these home                owners have other deferred maintenance – so take a look around.

  • Doors and drawers – do they all open and close properly?

            Go ahead and open cabinets and closets. I know this sometimes feels like                    you’re intruding on someone’s privacy. But you’re also about to make a very                      expensive purchase. 

It’s important to remember that just about any home you look at, even brand new or just remodeled homes can have issues. Once you’ve completed your own comprehensive inspection, it’s time to hire a professional who will climb into the attic and under the house, and presumably knows a whole lot more than the average home buyer about structural integrity. Please don’t skimp here. Most realtors are not nearly as knowledgeable as property inspectors. We won’t climb up on roofs nor under the house. You’d be amazed at what can be seen in those spaces, such as signs of rodent infestation, roofs propped up with 2×2 boards, buckets filled with concrete holding up the foundation, termites, carpenter ants, MOLD, standing water, rotted support structures and so much more. Your inspector will look for anything that could cause problems and COST MONEY.

WAIT – there’s more Appraisers and Insurance Companies

And here’s the other side you perhaps haven’t thought of. If a house has too many obvious issues, your property appraiser will very likely notice as well, and could call out any issues that must be repaired or replaced before your lender will close your loan.

Beyond that, your property insurance agent will very likely send out someone to look over your purchase as well. Most insurers are doing that now, and many will refuse to issue insurance if the roof looks bad for instance, or there are other obvious structural issues.

This article is not meant to scare you. Believe it or not, most homes, unless you’re looking at fixers, will be just fine. This doesn’t mean that there’s nothing wrong. But in most cases, after an inspection your agent and the listing agent will get to work and try to negotiate what repairs you want the seller to repair, and what you are willing to take on yourself. If you’ve fallen in love with the house too early, you could get caught up in the “I can fix it later” syndrome. But when a house is advertised as “move in ready” or just remodeled and really isn’t, it just might be time to walk away. We’ve all heard of money pits.

Your realtor should help you inspect a house. Hopefully you’re working with someone who has some experience. Believe it or not, your realtor is supposed to be on your side, so pay attention please. We’d rather see you walk away than end up in a house you end up hating.

Now, if all the inspections pass, and you still want this house knowing all that could affect the integrity and value of this house – go ahead and close the deal, and now get ready to fall in love with your new house.

Congratulations!

 

 

 

 

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Did you know that 1 of every 3 home buyers nationwide purchase their properties sight unseen?

I have to admit that this was a surprise to me. It goes without saying that these  buyers are doing their research online and depending on photos and information that is readily available for anyone to see.

For those who are purchasing for investment or flippers who are ready and eager to find properties in specific neighborhoods with the cash and skills to rehab homes, this could be a great way to go.

But for people looking to buy a home to live in, it’s not a way to buy that I would recommend at all. Here’s why:

  1. Photos can lie
  2. Unfortunately sellers and their realtors are not always telling you the whole story about any given house. The truth is that neither the seller nor the Realtor may know the whole truth when the house is listed. But sellers may also deliberately try to hide flaws that they are aware of. For example, how easy is it to paint over a wall covered in mold to disguise the problem? How easy is it to disguise a wall way out of plumb with a refrigerator in that corner?
  3. Not all remodels are done up to the same standards. A home may photograph beautifully, but has it really been finished beautifully? Do the doors all close? Do drawers all open?

In my very humble, or not so humble opinion, there is no substitute for actually seeing a house and getting a real feel for how the house flows, and more importantly how a house feels to you. Sure a home inspection is supposed to disclose what the seller may or may not have known in terms of flaws; but remember that a home inspector is a person too and can make mistakes, or might not call out something that just might drive you crazy when you actually live in the house.

The home inspector is not there to advise you about a neighborhood or your potential new neighbors. He/she might find the foundation appears sound, which doesn’t mean that it hasn’t settled. Those walls that aren’t plumb can be a real inconvenience when you go to place furniture, or even just hang wall decor.

That being said, my best advice to almost all home buyers is if you’re not able to go see a house yourself prior to purchase, at least have someone you trust go see it for you. Please don’t base your decision on photos, videos and the description. What feels like “move in ready” to one person may not feel like move in ready to you.

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