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. 

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!

 

 

 

 

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.

How to win the battle of bugs and weeds around your home and garden with all natural products

It’s the battle of people versus the bugs and weeds as both try to take over our homes and gardens. Take heart, for the most part we can co-exist with most bugs without damaging the environment or killing off the good bugs. Personally I have no love for the weeds, so weeds be gone is my motto as long as I can do it without chemicals and too much work on hot summer days. 

Bugs
Did you know that most bugs have a sense of smell and there are some common household items that bugs do not like the smell of?
1. Vinegar – very few bugs will tolerate and spend time around an area sprayed with vinegar, so feel free to use it liberally to deter pests. This is especially helpful to drive ants out of your house. Personally I wipe down kitchen counters almost daily with vinegar. It works.
2. Essential oils such as peppermint, lavender, tea tree, citrus or neem oils have spiders literally taking their spider webwebs elsewhere. They smell through their feet, so you don’t have to actually spray the spiders, just their webs, and they won’t even walk on them. You can make up a spray bottle with any of a combination of several of these oils, add a few drop of dish detergent, find your target and spray. Keep this on hand because the effects are not forever, so you will have to repeat as needed to keep walkways etc free of spider webs. This works equally well indoors and outside too. By the way, to keep spiders outside, trim plants about a foot away from your foundation.


3. Coffee grounds are great to keep slugs out of your garden beds. If you’re a coffee drinker you probably have plenty around to surround your veggies or favorite young plants with the used coffee grounds. Slugs don’t like that coffee grounds stick to their bellies so they move on. If you don’t drink coffee, try going to the nearest Starbucks or other cafes. They are usually thrilled to have you take coffee grounds away for them, and the plus is that coffee grounds actually nourish the soil. This is so much better than dumping slimy trays of dead slugs that have gone after your good beer in a bowl. Yes slugs love beer, but it’s a nasty mess to clean up.

Weeds
weeds

Is this how big weeds look in your garden?

Weeds are a never ending battle but one that is easily won if you keep on top of it. While some people swear by Round up,  it’s highly toxic and pollutes the ground, gets into ground water, and really does not kill weeds any better than a simple mix of:
1 gallon regular 5% household vinegar
1 cup table salt
1 teaspoon dish detergent
Mix the above in a sprayer and wait for a sunny day to tackle the weeds. It’s best if you can catch the weeds before they flower and set seeds, but if not, just go at it, and repeat as necessary. You should see most weeds die off within hours and certainly within a few days. 
IMPORTANT note here though is that this mix is so effective that you need to be careful to not spray on any plants you care about directly. It will kill your plants as quickly as the weeds you were after. 
If you have weeds growing around the roots of favorite plants, sorry but your best best is to just dig them up.

If weeds have already set seed they’re ready to sprout up somewhere else, so keep vigilant and keep your garden not only looking better but healthier too. Remember those weeds compete with your plants for nutrients in the soil. 

2017 Oregon Legislative session ends saving important benefits for home owner

The 2017 Oregon legislation session ended last week. Here’s a recap of some of the laws that affect home owners.

HB 2004 – Tenants Rights – failed

Just this week, the long disputed tenants rights bill failed to pass in the Oregon legislature. This is very sad news for tenants, but a huge relief for landlords. It was a poorly written bill that would have enhanced protection for tenants, but was unfairly anti landlords. Tenants will certainly be working to protect their rights again next year, and hopefully a better bill will be written and passed.

In the meantime, renters will retain the rights they already have, which differ from city to city. Before moving, renters should check with the tenants rights groups for the city they are considering moving to so they understand what laws apply to them already, and which laws do not. 

HB 2006 – Mortgage Interest Deduction – failed

This bill would have eliminated the MID (mortgage interest deduction) for individuals making $100,000 or more ($200,000 for joint filers). HB 2006 would have also capped the amount of interest that could be deducted for those individuals making under $100,000 ($200,000 for joint filers) at $15,000 on their primary residence. In addition, the bill would have eliminated the MID for second homes. This bill didn’t get the attention from the public that it probably should have, but the OAR (Oregon Association of Realtors) fought it on home owners behalf. 

With ever increasing housing prices and mortgages, this bill would have hurt just about every home buyer who paid anything close to current average prices for property, especially in the early years of a mortgage when just about all of the principal and interest portion of the payment goes to interest. The interest rate deduction helps middle class families and should not be eliminated. 

HB 2771 – Eliminating the Deductibility of Property Taxes – failed

House Bill 2771 would have phased out the itemized deduction for real property taxes for incomes between $50,000 and $125,000 for single taxpayers and between $100,000 and $250,000 for joint taxpayers. In addition, the bill would have eliminated the ability to deduct property taxes for single tax payers making $125,000 or joint tax payers making $250,000 or more in a year.

Again OAR fought this bill on behalf of all home owners. Home owners should not be the only ones who contribute to state budget shortfalls. And tenants should be equally concerned about these laws since bills eliminating tax write offs for landlords would only serve to increase rents to help those property owners shoulder the additional costs.

 

Average Portland home prices soar to $423,700 while mortgage rates dip slightly

houses make you moneyNationwide, housing inventories have reached crisis proportions. There is a severe lack of available homes for sale everywhere. Home values are increasing an average of 5+% throughout the country. But here in the Pacific NW, home prices are surging faster than anywhere else in the country. Average prices in Seattle are up about 12% per year, while Portland in the #2 position is seeing average value increases of 10.7%.

Remember, these are average price and value increases. There are some neighborhoods with lower inflation rates, but there are also many with much higher rates. Currently zip code 97233 (Centennial, Rockwood and Mill Park) is leading the metro area seeing prices and values up 19.7% for 2016 and early 2017! This means that if you are currently a home owner in 97233, you’ve watched your home value increase about $2500 – $5000 every month for the last year and a half – depending on size and condition of your home and immediate neighborhood. Still closer in areas such as Tualatin, Tigard, West Hills, Hawthorne, Rose City, Alberta and more are also seeing inflation between 10-15% annually so you’re not being left behind. 

Spring and early summer months are the busiest months of the year for home purchases. 

Buyers are out in droves, so homes are selling as quickly as they hit the market; often with multiple offers and often selling for considerably more than list price.

According to RMLS, new listings for May hit their highest level in May 2017 since May 2008 but demand was so strong that inventory levels actually dropped .2 months (down from 1.7 months to 1.5 months once again.)

What does this mean for buyers?

If you are a prospective home buyer, once you make up your mind that you’re ready to get out and start looking at homes, there are a few things that you should get in order before you proceed. First and foremost, whether you’re paying cash or financing the purchase, get your finances in order.

  1. If you are going to be financing the purchase, get your pre-approval. This means you will need to get your paperwork together for that lender. 
  2. If you’re a cash buyer, be sure your funds are free to use (if you need to sell stocks or move funds from a retirement account, that shouldn’t be left until the last minute.
  3. If you need to sell a home, get it on the market. I know this could put you in a difficult position of needing to move in with friends or stay in a hotel if your house sells too quickly, but sellers need to know that you’re serious and you will need to present proof of your ability to go through with the purchase if your offer is accepted.

Many sellers won’t even allow you to view a home or consider an offer from you without the above business details being in order.

This doesn’t mean that you shouldn’t go out and take a look at a few homes just to see what’s available in your price range. But, it really doesn’t make a lot of sense to just go out looking at lots of homes until you’re a serious buyer because prices and values are moving so quickly. The home you’re viewing today at $300,000 will cost and be worth considerably more in 6 months. Still some looking around in advance will help you understand better what your dollars will buy in different neighborhoods, and that’s a good thing to know as you begin this process. 

Strike while the iron’s hot

Boom markets never last forever. The markets ebb and wane all the time. But the old adage to “strike while the iron’s hot” has never made more sense.

strike while the iron's hotMost buyers are not looking for their forever house. They just want a home of their own and the stability of knowing that their monthly payments are locked in (other than tax and insurance increases). Of course obvious. Your purchase starts making you money in the form of equity often before the transaction even closes, and of course the tax advantages can’t be overlooked either. Mortgage interest, property taxes and even mortgage insurance are all tax deductible, so your monthly income rises once you become a property owner.  

 

You might like to read 15 fastest selling neighborhoods in Portland as of June 13, 2017

 

Pacific NW cities dominate fastest rising home prices in the US

Portland skyline with Mt Hood

Seattle skyline

Portland skyline with Mt Hood

 

 

 

 

 

 

 

The 20 largest cities comprise the list of metro areas that most economists watch as they compile statistics about how most of the economy is functioning. Of course, the same 20 cities are those that are most watched for housing market statistics and trends. In the Pacific Northwest, the most watched cities are Seattle and Portland. AND, Seattle and Portland are #1 and #2 cities in the country with the greatest price and valuation increases for 2016 and into 2017. 

For several years since the housing recovery began Portland topped the list of 20 with the fastest rising housing prices in the country, but we’ve dropped to the #2 position as Seattle has surged ahead of us. Currently Seattle is seeing average 12% annual home price increases, while here in Portland we’re close behind at 10.7%.

Average home prices in Seattle reached $700,000 last month while Portland home average prices increased to $425,000

Like Seattle, in Portland new home construction homes are the priciest; renovated old turn of the century homes are almost as costly, while mid century homes are where the “bargains” can be found.

Developers are snapping up run down mid century homes where they can split the lot and build 3 skinny houses at a huge profit. But developers also love the high end neighborhoods and have no qualms about tearing down those beautiful old estates to cash in on the higher prices of new construction homes.

 

 

Did you know that money really does grow on trees?

Most people who live in the northwest visit parks often and appreciate the trees for their appearance, the shade they provide and the ambiance they create. We love our parks. But did you know that trees on your property really do add value to your home? Actually, most buyers are aware of the value of trees, perhaps somewhat intuitively, since homes with trees and attractive landscaping appear more inviting. Realtors know how much buyers appreciate beautiful landscaping which is why you will often see information about the landscaping, trees, etc in a property description. Now there is real scientific data to support what we all knew.

According to a study conducted by the the Pacific Northwest Research Center of the United States Forest Service planting a tree in front of your house will increase the sales value by approximately $7,130 in the Pacific Northwest. 

“Two recent studies by Geoffrey Donovan, an economist and research forester at the Pacific Northwest (PNW) Research Station, and David Butry, an economist with the National Institute of Standards and Technology, yielded specific dollar values for street and neighborhood trees in Portland, Oregon, and for yard trees that provide summer shade in Sacramento, California. This research is important to city governments, communities, and environmental organizations because it helps them make a case for publicly funded “green infrastructure,” that supports many environmental and social amenities.”

These studies have enabled scientists to develop a “benefit-calculation model” to come up with realistic valuations for absence or presence of trees and mature landscaping on a homes value. The algorithm used is similar to the methodology used by appraisers in determining the value of a 3 bedroom house vs a 2 bedroom house in the same neighborhood. 

 

street trees in a neighborhoodFor home owners, trees are a valuable asset, and trees in your own yard, or better yet, street trees throughout a neighborhood make the whole neighborhood appear lush and inviting and raise the values for all home owners nearby. According to a University of Washington research survey:

  • Mature trees in a yard add 2%
    • Mature trees on the street add at least 3% for all home owners on the street
    • Trees in the front yard add 3-5%
    • Mature trees in high-income neighborhoods add 10-15%. Incidentally, it has been found that higher valued neighborhoods have far more tall mature trees than more suburban neighborhoods. 

benefits of treesBut beyond the value of mature trees on the sales price of your home, trees help in many other ways that put real cash in your bank account. You’ve probably heard all this before but here goes the list:

  1. Trees add shade, which keeps your house cooler during the hot summer months. In fact, according to the Forest Service, a tree planted on the west side of your house can reduce air conditioning use by 30% in a single year. 
  2. Trees clean the air of contaminants and if you remember your science classes breathe in carbon dioxide and breathe out clean oxygen which decreases your carbon footprint while cleaning the air around you. This in turn cuts down global warming. 
  3. Mature trees are a great wind break and again can help reduce your heating costs up to 30% a year by effectively reducing a 35 mph wind to 10% during the coldest windiest months of the year. 

The city of Portland has been paying attention to how trees add value, not only to a home owner, or a neighborhood, but also to the city. As home values continue to rise, cities benefit by higher property taxes. Portland has been paying attention so as early as 2013 Portland decided to plant 33,000 trees throughout the metro area within 5 years, especially in the 55% of the city where more trees were needed. We are still in the process of competing that plan. This not only adds to the city coffers, but also is part if the city plan to keep Portland green.

Are you ready to start growing your own money trees?

You don’t have to buy fully grown trees which are expensive and much more difficult to plant. You can start with smaller plants, perhaps as small as in 1 gallon pots and watch those trees grow along with the equity in your home.

You might also want to read more about Factors that can increase the value of your home

Watch prices rise in the 10 most in demand Portland metro real estate markets

Housing prices UPIt’s human nature to want to know which neighborhood or zip code is leading the market at any given time. And the truth is those zip codes change all the time. But can you guess which zip code topped the list for the last year with almost 19% price appreciation from April 2016 through March 2017?

I can hear a lot of you now. Of course it’s Alberta or Mississippi, Multnomah Village, Orenco Station, or the Pearl? Those neighborhoods have all led the pack in prior reports, but hang onto your hats. None of them are on the list this time. Are you surprised? The truth is that most people want to be home owners whether it’s for the tax credits or just the stability of knowing approximately what your monthly payments will be. But, all of the usual areas have become too expensive for the average buyer so buyers are being forced to look elsewhere to fulfill their dreams of having a home without a landlord.

Suspense it killing you?

OK – zip code 97233 topped the list with the most homes sold. It’s true, it has been one of the most affordable areas in Portland metro forever, but little by little buyers are moving out from close in to downtown, primarily because of rising housing costs. But with 18.6% value increases in just the last year, this area is no longer quite so affordable anymore, and it’s not at the bottom of the list for average home values either. For those who own homes there in 97233, your equity positions just increased dramatically. To put those numbers into more perspective, if you purchased a house in 97233 for $200,000 just one year ago, your house is worth approximately $37,000 more than you paid for it already.

Other cities in the top ten included:

4.6% increase in value – East Mill Plain, Vancouver (98664)

10.7% increase in value – Vancouver Lake, Vancouver (98660)

16% increase in value – South Beaverton/Highland, Beaverton (97008)

9.9% increase in value – Central Gresham (97030)

8.9% increase in value – Tigard/Garden Home (97223)

13.5% increase in value – Five Corners/Vancouver Mall, Vancouver (98662)

7.4% increase in value – Milwaukie (97222)

8.2% increase in value – Central Beaverton (97005)

14% increase in value – North Hillsboro/Helvetia (97124)

Congratulations to all who live in these 10 zip codes. It is probable that more walkable neighborhoods will spring up further out from downtown Portland and Vancouver.

 

Whats happening in Portland Oregon last weekend of April 2017?

Rain or shine, there is always a lot happening in our great state. The forecast as of today is that this weekend will be cloudy with little to possibly no rain and will be in the upper 50s to 60s throughout the weekend. So here are a few activities that you might consider.

Portland Japanese Gardens – 611 SW Kingston Ave, Portland, OR 97205

Portland Japanese gardensIf you haven’t visited the gardens recently you’ll find that there are a lot of changes. According to an article in OregonLive “The gardens have expanded by 3.4 acres and this weekend, the cherry trees should still be blooming. But there’s more…

Thousands of trees and shrubs have been planted along zigzagging paths, and garden curator Sadafumi Uchiyama has designed three distinct, new landscapes: A moss hillside garden, bonsai terrace and chabana (tea flower) garden.

Even more dramatic is the new, hilltop Cultural Crossing Village, three steel-and-glass pavilions linked by a large courtyard near the shuttle stop to the main garden. A 185-foot-long “castle” wall made with 1,000 tons of Baker blue granite from an Eastern Oregon quarry and built using Shogun-period techniques defines the west side of the village. Anchoring another side is a tea cafe, the first food and beverage service available at the 54-year-old garden.”

If you want to add some Japanese flavor to your garden or home, the gift shop has quadrupled in size, so don’t forget to take a look at what is being offered.

Wooden shoe tulip festival – 33814 S Meridian Rd, Woodburn OR
Take in all the tulips still in bloom, learn more about wooden shoes and watch a craftsman create a pair just for you using ancient tools and skills.

tulip festival/muddy paws runAnd Saturday, April 29th, why not join the 2nd Annual Muddy Paws Fun Run/Walk in the same location as the tulip festival from 9:30am – 7pm.  Rain or shine, that should be a fun event to participate in or at least watch from the sidelines.

People’s Climate Movement: Portland Mobilization and March | Dawson Park, Speakers (more info) – just east of Legacy Emmanual Medical Center at N Stanton St and Williams Ave – Saturday April 29, from 12pm – 5pm
Looking for political action this weekend? This is an event for anyone who stands with people of color and low income people to join the movements for racial, social, and economic justice as pathways to climate action.

Gorge Artists Open Studios2017 Gorge Artists Open Studios Tour
April 28-30, 2017   10 a.m. – 5 p.m. | Free

Forty juried artists have been selected to participate in 2017. You’ll see some of the highest quality work available from the region utilizing multiple mediums and styles. According to their website, the tour is free and self-guided, with artists’ studios located throughout the Mid-Columbia from Cascade Locks to The Dalles and from Parkdale, Oregon to Trout Lake, Washington.

Astoria Seafood and Wine FestApril 28-30: Astoria-Warrenton Crab, Seafood & Wine Festival | 175 Vendors, Food, Live Music & More! (Win Tickets, $20)

If you’re looking for great food, entertainment and a great time, why not drive over to Astoria and enjoy the best seafood and wine around while you browse the 175 vendor booths. Take your wallets. There is sure to be something there that you have to take home. Remember Mothers Day, Fathers Day and graduations are just around the corner.

Mortgage Rates dip again

Mortgage rates have backed off the highs we saw right after the start of the year when the stock market went into overdrive. There were lenders quoting rates at or near 4.5% at that time. The good news is that rates appear to be below 4% again, so if you’re thinking of buying, this is still a good time. Who knows how long this will last? Just a reminder that you need to shop lenders. Rates can vary as much as 1/4% – 1/2% from lender to lender. 
 
The average home price in the Portland metro area has again topped $400,000. This also means tthat homes priced below $300,000 are becoming harder to find, even when they are fixers, and they sell quickly. Single family detached homes priced below $200,000 have all but disappeared now though there are still condos and town homes available from time to time. With the higher prices, we’re seeing much more home sales activity in outlying areas in NE and SE Portland. According to RMLS statistics neighborhoods east of I-205 are seeing a surge in popularity and in fact a few neighborhoods are reporting more sales in 2017 than some of the very popular close in areas like Multnomah Village, Concordia or Hawthorne. 

For those who are waiting for the inevitable slowdown in housing prices, it is forecast that we are unlikely to see that until 2020 because economists at city planning say that the Portland metro area is currently about 24,000 housing units short of demand and it will take that long for developers to catch up. 
If you are “forced” to buy a home further out from downtown, I wouldn’t fret about it. I doubt it will be long before the bellweathers that forecast that a neighborhood is great, like the opening of a New Seasons or Trader Joes always seem to follow where the population is moving, so watch for news that a new store is opening in outer NE or SE Portland.

By the way, for those of you on the west side, Forest HIlls, Bethany, Beaverton, Tigard, and HIllsboro are still right up there for number of sales as people continue to buy on the west side of town too. In fact, Forest Hills/Bethany had the most sales during the fist quarter of 2017.

FHA and VA raise loan limits in Oregon

We thought it was never going to happen, but rising home prices and values have finally caught the attention of the powers that be and both the FHA (Federal Housing Administration) and VA (Veterans Administration) have finally increased loan limits to $408,250 in the Portland metro area and in Yamhill County. That’s a pretty decent increase from $368,000. Conventional financing, (Fannie Mae and Freddie Mac) have also increased loan limits to $424,100.

If you live in other counties in Oregon, please check to find out what your current FHA loan limits are. It appears from a brief check that VA loan limits are the same as the new FHA limits in all Oregon counties.
 
This is no way keeps pace with the ever higher prices in our area, but it will make purchasing a home easier for many buyers, especially those who are using FHA and VA financing.

How long do hot water heaters last? Is it time to replace yours?

tags on hot water heatersDo you have any idea how old your hot water heater is? There should be a tag on the front of your water heater that looks similar to the photo. At the very least it should have the model number and serial number so you can google those numbers to find out the age. But many more labels are similar to the photo with the actual age the unit was purchased and installed in your house.

The BAD news is that most home water heaters are too old to be considered safe anymore. The average life span of a water heater that has been well maintained is only 8-10 years. After that many will develop leaks that could lead to flooding and expensive damage to your property.  The good news is that water heaters are relatively inexpensive to replace. Read more about saving money if you replace your hot water heater this year…

If you’re even thinking you might move one day, rather than purchasing another water heater that stores water, you might look into an instant on hot water source. Yes, they cost more, but:

  1. If you purchase a qualifying instant on hot water system, you will qualify for an Oregon tax credit (which can offset part of the cost of the unit).
  2. Your investment will increase the value of your house – and the more energy efficient items you have in your home, the higher the value (up to 4% more than a comparable home in the same neighborhood with a lower energy score.)

Most states offer tax credits and other forms of rebates to property owners who install energy efficient appliances. In Oregon, energy saving appliances and home improvements could qualify for both an Oregon state tax credit AND an Energy Trust of Oregon rebate for the 2017 tax year. Unfortunately, all federal tax credits for energy improvements expired in 2016, and to date there has been no discussion about extending those credits for 2017.  

 

Housing market takes off like a rocket in Oregon and Washington in 2017

 

lockbox activity end of Jan

RMLS reports showed massive increases in buyers looking at homes during the week ending January 22, 2017. Washington viewings were up 54.3% while Oregon viewings increased by 47.8%.

It is not unusual to see almost frenzied buyer activity during the month of January. We’ve seen it every year since the housing market recovery began in 2012. This year buyers are citing the added pressure to find a home as quickly as possible because we are seeing significant increases in mortgage interest rates which has many buyers scrambling to lock in a their home before rates go any higher. Buyers are very aware that banks will have free reign to start raising rates as quickly as possible this year, especially since President Trump has been saying that he will be rolling back many banking regulations via Executive order very quickly. The only thing that has kept a slight damper on massive rate hikes since Trump’s election is competition. Banks do want your business, so they can’t charge ahead and start increasing rates willy-nilly so to speak.

But in talking with mulitple mortgage lenders, I’m finding that rates are anywhere from 1/2% – 1% higher than they were just a couple months ago. Last week, lenders quoted best 30 year mortgage rates ranging from 3.8% – 4.5%!  That’s a huge range, so it definitely pays to shop around. The average rate quoted was 4.25% for all the lenders surveyed.

One of the factors that is hindering buyers in the Portland metro area is the extreme shortage of inventory. As of the end of December 2016, inventory had again dropped to almost record lows at 1.3 months (the amount of time it would take to sell all inventory if no new listings are added.)

Buyers do need to be aware that the shortage in inventory with high demand WILL push prices higher. If you couple the higher prices with higher rates, unfortunately many potential buyers could find themselves priced out of the market.

You might like to read How inflation affects your ability to buy a house ~ perhaps more than you think. 

 

How inflation affects your ability to buy a house ~ very likely more than you think

If you’ve been watching the news, you know that housing inflation has far outpaced the rate of inflation in the rest of the economy.

In the Portland metro area, home prices have been rising 10% – 20% annually since 2012. In 2016 the average house increased in value 11.4% and average home prices have increased from just under $350,000 at the end of 2015 to just under $400,000 as of the end of 2016. Have you managed to save for that type of inflation? If you add to that the increase in mortgage rates in just the last year, from around 3.625% at the beginning of 2016 to 4.25% as we start 2017.
how inflation affects monthly paymentsTo put this into more perspective for you, let’s assume that you first started thinking about buying a house in January 2016 with a maximum purchase price of 300,000. With inflation that house will very likely cost you 11.4% more (average value increase for 2016) so you should now expect to pay approximately $334,200 for the same or an equivalent house.

So your required minimum 5% down payment has risen from $15,000 to $16,710. That’s not too bad and certainly doable for most people. BUT… mortgage rates have risen about .625% at the same time. So check out the chart above to see what has happened to your monthly payment based on increased value and mortgage rates. It has increased from about $1300 just a year ago, to $1560.93, You are looking at an increase of $261.18 increase in your monthly payment! Do you still qualify at this new monthly payment?

Unfortunately, all too often buyers focus on how much more money they need for the down payment without taking into account how the increased purchase price will increase the mortgage amount AND if rates rise at the same time, can have a MAJOR affect on the monthly payment. This combination will cause many buyers to be priced out of the market.

The solution is one that you might not like, but IF you are already priced out of your market or the increased monthly payment feels uncomfortable for you, perhaps you might seriously rethink your “must have” list. Clearly in this type of market it is very difficult for the average home buyer to keep pace with this double whammy inflationary environment.

But, prior to this most recent environment, most first time home buyers particularly, were not thinking of forever. They just wanted to get into a house. Perhaps it’s time to return to that type of thinking and just get into a house. You’ll not only save money on your monthly payment, but also on your annual taxes. That gives you more opportunity to save at a much faster rate for that “must have” list you want in your forever house.

In Portland Oregon, we have the ideal environment for home values to continue to rise, regardless of mortgage rates.

  1. Employment is strong
  2. We are and have been one of the strongest housing markets nationwide
  3. Housing inventory is dismally low (at only 1.3 months as of December 2016)
  4. Migration into Portland is so high that our population is growing by approximately 150 people or more every single day.
  5. Our rental market is so bad that it is actually cheaper to own a house than rent.

Perhaps most importantly, competition is fierce in our market.

You might also like to read How inflation affects your ability to buy a house ~ very likely more than you think

President Trump signs executive order eliminating the 1/4% FHA mortgage rate cut just announced

A new President, a new day! But not a good day for first time home buyers nor President Trump supporters.

With one quick stroke of his pen, on day one, President Trump took back the FHA mortgage insurance rate cut that had just gone into effect on January 9, 2017. For the average home buyer using FHA financing, this will cost each of you an average of $500 per year. Here in the Portland area, this will cost you between $700 – $900 per year. Not necessarily a deal breaker for many of you, but why in the world did he do that?

FHA has the reserves now to support this rate drop. Perhaps you should ask him.

Please read the article just published yesterday about this rate cut for more information

FHA lowers mortgage insurance premium for most home buyers – maybe?

In an effort to attract more home buyers to the FHA financing option, on January 9th, FHA announced a reduction in the monthly mortgage insurance premium that most home buyers will pay by 25 basis points for new mortgages closing on or after January 27, 2017.**

FHA says that they have finally reached a stable point in their finances after the enormous losses they endured during the housing collapse. The last four years of housing growth and stability has allowed the FHA to recoup their losses and they want to pass some of these savings on to home buyers to make housing more affordable.

To put this into perspective, for a mortgage of $368,000 (the maximum allowable mortgage for the Portland metro area at this time), this would equate to a monthly savings on your payment of approximately $76.00 (an annual savings of $912).

However, it’s important to remember that mortgage rates have risen over the last several months. We are no longer seeing the low rates we had grown accustomed to over the last 4-5 years at below 4%. Average 30 year fixed rate loans as of today are around 4.25%, even for those with the best credit. So this .25% rate reduction for FHA mortgages only partly offsets the rate increases. Still, every little bit helps, and FHA is the best financing option for prospective home buyers with less than 5% down payment.

In contrast, a conventional home loan will cost the home buyer more to purchase. While there are conventional loans requiring as little as 3% down payment, these are available to only those with the best credit scores; AND the mortgage rate rises for buyers with less than 20% down. FHA rates are the same for those with low down payments  and less than perfect credit, though there is a minimum credit score requirement of at least 620-640 at this time.

**NOTE: I apologize for this footnote, but just as I hit publish on this article, the following news came across: As of yesterday, National Mortgage News reported that Trump is recommending that this reduction in mortgage insurance premiums be delayed until it can be further reviewed by his new Secretary of Housing and Urban Development Ben Carson. This is purportedly just one of the Executive orders that he intends to sign as soon as he is inaugurated.

2016 Portland housing market wrap

Final housing stats for 2016 are out. There weren’t many surprises, but there were a few.

Overall, the market was not quite as hot as 2015. Total sales were down a bit for the year, but not by much. According to RMLS, “Activity was cooler in 2016 than in 2015. Comparing all of 2016 to 2015, new listings (41,121) increased 0.7. Closed sales (32,798) decreased 1.5% and pending sales (33,234) decreased 3.9%.”

2016 housing market value increases

Housing values increased by an average of approximately 11.4% for the year for all homeowners throughout the Portland metro area. (Of course, some neighborhoods saw bigger increases while others saw a bit less. But there were no neighborhoods that saw values decrease during the year.) So, for those of you still on the fence about buying, owning a house is not only a good way to stabilize the percentage of your monthly income that goes towards putting a roof over your head; it also makes home ownership a very good investment for your future.

shopping for a houseAs of the end of 2015, the average home price was $347,000 but by the end of 2016, that number had risen to $395,000! Clearly Portland is no longer a low priced city to retire in. There has been a lot of speculation about whether or not we are soon going to be the next Seattle or San Francisco in terms of home values. That remains to be seen, but Portland is still a lot more affordable than either of those cities which in part is what is driving so many migrants to our area.

Extreme weather caused slowdown for housing market in December 2016

December 2016 experienced quite a slowdown in home purchases and listings with the extreme weather we experienced for much of the month, but that should come as little surprise to anyone. January 2017 is also off to a bit of a slow start with the recent snow storms, but is expected to pick up as the snow melts away and warmer, or at least drier weather returns.

Get your buying hats and shoes on. Housing inventory closed out 2016 at only 1.3 months (the number of months all houses would be sold if no there were no new listings.) But, we are seeing quite a lot of new listings hitting the market already this month, so we expect buyers to hit the streets as we have seen in January for the last few years. 

In case you missed it, you might want to read Seattle – Portland fastest rising home prices nationwide

 

 

Feds raise rates today – how will that affect you?

Today the Feds announced just the second rate increase since 2008. The justification for the rate increase was that the economy continues to get stronger and move closer to the 2% inflation rate that the Federal Reserve considers a solid rate of inflation for a healthy economy.

Fed speak indicated that it is anticipated there will be 3 more rate increases in 2017. 

Federal funds rates do not directly affect mortgage rates but…

Federal funds rates are the rates that banks charge each other for short term loans they need to keep their reserves at a set level to ostensibly prevent another bank melt down.

The federal funds rate can directly affect the cost of housing, rates paid on credit cards, auto and other installment loans and student loan rates.

Mortgage rates are not directly tied to federal funds rates, but banks do find ways to pass on current and anticipated future costs to consumers. With the forecast that bank short term borrowing rates are likely to increase at least three times in the next year, banks are already looking at the losses they will be incurring on the hundreds of millions of 30 year fixed rate loans with rates at and below 4% that have been funded over the last 8 years; as well as losses they will sustain on new mortgages funded now before more rate increases kick in during the coming years. 

However, to put all this in perspective, the banks have been paying basically zero per cent over the last 8 years, while the lowest mortgage rates funded during that same time period was 3.5%. Not to mention that banks have been charging fifteen to twenty percent on credit card debt. This is why most banks are not hurting at all, and in fact have been more profitable than ever over the last several years since the recession ended. 

As regard mortgages, as of today, the average rate for a 30 year fixed rate loan has risen to 4.3%, up from 3.5% available from many lenders to the most qualified buyers just a few weeks ago. 

Still on the fence about buying a house? The forecast is that rates will continue to rise which will reduce buying power for most applicants. It is possible mortgage rates could rise as much as one per cent in 2017. If you’re currently home shopping, be sure to keep in touch with your lender AND keep your pre-approval up to date so you’re aware of how much you can afford at all times. 

Seattle – Portland fastest rising home prices nationwide

sold - sale pending signsAccording to the S&P CoreLogic Case-Schiller home price index, Seattle and Portland are leading the country with the fastest rising home prices in the twenty major metropolitan areas they follow. Seattle has had year over year price increases of 11% annually through September 2016, while Portland follows right on Seattle’s heels at 10.9%. Remember, these are average prices and some neighborhoods within these metro areas have seen prices rise much more dramatically year over year. 

According to Professor Gerard Mildner at Portland State University’s Center for Real Estate, the issue is that developers are just not building enough housing to meet the demand. He added that here in the Portland metro area, “We’re building about 20 percent fewer housing units in the last three years as compared to the years between 1990 to 2007.” At the same time, our rate of growth as been explosive with as many as 150 new residents moving into Portland every single day! That number varies from report to report, but numbers I’ve seen range from as low as 112 daily to as high as 165 people migrating into Portland daily. 

Housing inventory has sat at or below 2 months (the time it would take to sell all listed homes based on current demand if there were no new listings) for the last few years, and demand is on the rise with recent rate increases. 

How much has demand risen?

Lockbox activity 12-4-2016

Just to give you some perspective on demand, check out the chart issued by RMLS that shows the amazing increase in number of home viewings the week ending December 4, 2016!

Since the election, rates have been rising at the fastest pace we’ve seen in years, so buyers are jumping off the fence and getting to work finding that new house. On average rates are up at least 1/2% in the couple weeks! 

 

 

 

Is Portland experiencing a housing bubble?

The general consensus is NO. 

First of all, the population and business influx that we are seeing in this decade did not exist prior to the housing collapse on 2007-2008. Sure we saw people moving to Portland from all over the country, but the jobs increases due to the movement of big industry creating satellite offices here is a relatively new phenomenon. 

We have not seen the wage increases that would support price increases continuing at the rate we’ve seen over the last 3-5 years (up 32.5% in the last 5 years), but the lending guidelines (assuming that they are not over-turned with the new administration) are so much more stringent that current home owners and buyers are not nearly as likely to default as they were during the recession. High risk banking and lending practices and loan products have all but disappeared. 

Home ownership remains an American dream

Most  people interviewed want to be home owners. There is stability in knowing what your housing payment will be from year to year (versus rapidly rising rents); and where else can you see as great a return on your investment as current home owners are seeing?

As mentioned above, until supply catches up to demand, housing prices in Portland will continue to rise. At least that is the forecast until at least 2020. To be sure, the rate of inflation in housing values will slow as supply catches up to demand. There could even be a 10% price reduction in the next 10 years, but if your home value has increased by 30% and more, that’s not devastating, especially if you know your housing payment will not increase. 

Please read more in the article published by Ettro Capital in November 2016.

 

 

 

Housing market forecast for 2017 – Portland Oregon

Housing prices UPHousing prices and mortgage rates have very different factors driving the direction of both. If rates rise, will housing prices drop? I’m asked this question all the time. Many people assume that rising rates should cause housing prices to drop.

The truth is that no one can say for sure what’s going to happen with the housing market in the future. We know for a fact that both prices and rates are cyclical; but that’s because of all the many outside factors that influence the two markets. And to be sure, it’s important to remember that these are two very different markets.

Mortgage rates are tied to the Mortgage bond market

When demand for mortgage bonds drop, the yield on the bonds tends to rise and mortgage rates will follow suit. The demand for bonds tend to rise when Wall Street is in a slump. This causes the price for bonds to rise, so the yield drops and rates drop too. Conversely, when the bulls take over Wall Street, as we are seeing since the recent presidential election, institutions sell bonds and buy stocks. As bond prices fall, rates rise.

It would be an over simplification to say this is always true – there are always other factors that are part of this equation, but in general, WATCH WALL STREET! There is no doubt that when the Feds stop buying mortgage bonds to keep that market stable, mortgage rates WILL rise. The 10 year Treasury bond yield, which historically mortgage rates tended to mirror has risen more than 1% since the elections, and mortgage rates have followed though not quite as quickly. Mortgage rates bottomed at around 3.5% and that rate was available as recently as a few weeks ago. As of today, average 30 year fixed rate loans are available at 4.3%.

Housing prices are tied to supply and demand

Unlike mortgage rates, the price of housing is dependent primarily on supply and demand. When inventory is very low, as we have seen in Portland since about 2012, housing prices rise until inventory catches up, or demand drops.

Here in Portland the forecast is that housing prices WILL CONTINUE TO RISE for at least the next couple years. It will take that long for there to be enough inventory to meet the demand. Though, if mortgage rates rise dramatically, many potential home buyers will be priced out of the market.

Why is housing inventory so low in the Portland metro area?

  1. Migration – there are far more people moving into Portland than out. As of 2015 migration numbered approximately 112 people moving into Portland every day! Portland’s population is now at approximately 2.5 million residents and still growing. More recently we are hearing migration numbers have increased to closer to 150 new residents every day.
  2. Jobs and the economy – Industries are moving into Portland bringing some of their own employees with them, and boosting the economy by adding jobs for local residents. Recently, Amazon announced that they will be opening a giant warehouse in Washington county that will employ approximately 1000 people! Add this to Uber, Google, Airbnb, Ebay, plus all the smaller tech start ups, and you can see that there are jobs in this area, and people migrate to areas where employment is available.
  3. Climate – Unlike California and much of the southwest, Oregon has a fabulous moderate climate. Yes, it does rain approximately 141 days of the year, but most of those days we see some sunshine too. And the temperatures are moderate. We have few days below freezing or above 90 degrees. The rain keeps Oregon green and water prices low as compared to much of the country. 141 days of rain means we rarely have water rationing. There’s plenty of water to go around, even for those who like long showers. 
  4. Competition from institutional buyers – with prices relatively low and on the rise, institutional buyers such as hedge funds find Portland a great place to invest so they buy up much of the lower priced housing; competing directly with home buyers who actually live here. Unfortunately they hold these properties as investments and drive up the rental costs along with the housing prices. 
  5. Green economy  – Travel and Leisure magazine ranked Portland the greenest city in America in 2015. 
  6. Millenials are moving to Portland in huge numbers due to all the above factors and have been choosing Portland since around 2010.

All these trends are likely to continue which will continue to contribute to ever higher housing prices.

 

Election is over – watch mortgage rates rise

The election is over, and whether you supported Trump or Clinton, we all have to face that we are now looking at President-elect Donald Trump. As you know, he promised when elected, during his first hundred days he would push to roll back much of what President Obama accomplished. Unfortunately for consumers, this means much of the consumer protection legislation that was passed could disappear or be seriously revised. 

Since the recession, the Feds have kept interest rates low and continued government subsidies for mortgage bonds to keep mortgage rates low. However, Fed Chairman Yellin has already signaled that an interest rate hike in December is likely and that mortgage bond subsidies will end at that time.

Mortgage rates up approximately 1/2% in last few weeks

In the meantime, mortgage rates started rising even before the elections, and have picked up speed since the results were announced. Lenders tell me that average mortgage rates are already up about 1/2% in the last few weeks. Corporate America and of course this includes banks, are thrilled about the plan to lower taxes on the corporations and the wealthy. If you couple those tax cuts with regulation roll backs, who really knows where mortgage rates could go? 

One of the potential Fed Chairmen that Trump has been talking with has said that it’s time for rates to return to a more normal level. This means we could be looking at as much as a 2% increase over the next 2 years. That would normalize our mortgage rate environment which many of you may have forgotten typically runs around 6%.

Stay tuned. This could be a very different year than the last eight years since the recession. 

 

 

 

Fall and early winter are best seasons for both home buyers and sellers

Fall colors

Fall colorsLate October through the end of December  are always the best months for home buyers and sellers to either get their properties listed or hit the streets in search of the perfect house. This may sound counter-intuitive, but the reason is low inventory and serious buyers.

Relatively speaking few people list their homes during the latter part of the year, especially as we move closer to the holidays. Home owners get involved in home decorating, holiday shopping and of course, all those special holiday activities. They’re busy and don’t want to be bothered with keeping their homes as clean and orderly as possible for potential buyers.

Buyers also get busy, but serious buyers are looking to take advantage of less competition, hoping to avoid bidding wars and perhaps more negotiating power with sellers. Besides, even if they cant close a sale prior to year end, moving into a new home is a great way to start a new year. 

Feds meet again in December

The Feds are scheduled to meet again in December. The elections will finally be behind us, but there has been a lot of talk about raising interest rates one last time this year. Wall Street has seen corporations reporting strong earnings for the 3rd quarter of this year which makes it even more likely that the dreaded rate hikes could be upon us sooner rather than later. 

There are even rumors that the Feds will back off on their massive purchases of mortgage bonds low which have been keeping mortgage rates so low since the recovery began in 2012. Remember, even a small increase in mortgage rates will affect your buying power.

So, whether looking to buy or sell, don’t write off the later months in the year. 

Portland ranks #1 best city to live by Bankrate

Recently Bankrate rated all the metro areas in the U.S. and determined which are the best and worst cities to live in based on multiple criteria.

Best places to live in the US

Metro differences that matter

According to Bankrate, “Based on Wachter’s advice and some of our own research, we selected factors that influence the overall cost and benefits of home ownership and set about finding the best data available to measure them. They include:

  • Property taxes.
  • Affordability.
  • Property insurance costs.
  • Foreclosure rates.
  • Maintenance costs.
  • Average monthly home energy costs.
  • Appreciation rate.
  • Rent hedging.”

Out of a possible score of 80, Portland ranked the highest with at total score of 60.58.

Unlike many similar rankings, Portland was the only west coast city among the top ten, with other west coast cities such as Seattle, San Francisco, San Jose, Los Angeles and San Diego considerably lower in the rankings.

Portland had among the lowest foreclosure rate in the country, and THE lowest costs for property insurance!

Read more: http://www.bankrate.com/finance/real-estate/best-worst-places-for-homeowners.aspx#ixzz4L12M3KY2

It’s a sellers housing market ~ where are my multiple offers?

As home buyers and sellers know, this is a sellers housing market. In fact, Portland has been consistently one of the hottest markets in the country almost every month for the last several years, and no one is anticipating any slow down in rising home prices. As a result, home sellers have come to expect multiple offers when they list their houses. Unfortunately, many sellers are not finding that to be the case. Why not?

Location, location, location AND price

Buyers know that when it comes to buying a house, their top two requirements are location and price. In some locations, just about any house that is listed, regardless of the condition, will sell with multiple offers IF it is priced properly for the neighborhood. Even fixers sell quickly in these neighborhoods.

So, why do some sellers receive so many offers regardless of location?

Homes that seem to be in the highest demand are often either priced under that buyer sweet spot of $300,000 or less, or are priced below market value.

Unlike the house buying frenzy we experienced in 2012 – 2015, home buyers this year are far more cautious, picky, and savvy. This is likely to continue, in spite of low inventory and high demand. The bottom line is when buyers are spending so much money on a house, they want what they want, and seem willing to wait for that “right house” to come along. This is likely to continue as long as home prices continue to rise. Paying $300,000 for a house, while still relatively low priced in Portland’s current housing market, is still a lot of money.

Houses must be priced right to sell quickly

Almost every home owner thinks their house is worth more than it really is. Part of this is the emotional attachment to the house, but more often, sellers expect to recoup every cent they have spent in upgrading and maintaining their home. This is not the way it works. There are almost no upgrades that will repay you fully for the actual cost. You should reasonably expect about 75% of the actual cost, while some renovations will net you slightly more, and some could actually result in lower offers because they are so personal in nature that buyers will deduct from the price in order to have that upgrade removed or replaced. You may love your renovations and upgrades, but not every buyer shares your taste. You may think it was worth it to pay $5000 for a Bosch cooktop, but your buyer may not even notice or care if cooking isn’t a really big deal. You may have spent a ton of cash on custom cabinetry in your kitchen and bath. Would you believe most buyers won’t even notice that it’s custom?

Items on buyers must have lists that may keep them away from your house

  • Gas ranges – while this is generally not a major factor in price, approximately 90% of all buyers want gas ranges, and some won’t even look at a house without one.
  • Dual sinks in master baths are must haves in master baths, and often in main bathrooms as well, depending on family size and number of baths.
  • Air conditioning is increasingly becoming a must have for many buyers, especially as we see more people moving into Portland from much hotter and/or more humid climates.
  • Attached garages.
  • Hardwood floors.
  • Curb appeal is critical. If buyers won’t even walk into your house, you may have lost a sale. Be sure you’re not advertising a yard full of weeds and at least have some attractive landscaping out front. Paint the front door and even install a new light fixture. Remember, buyers form their first impression of your house in the first 10-15 seconds. Make sure their first impression is a good one. Great curb appeal can net you up to 10% higher offers and sales prices.

What if you price your house too high?

Prior to the housing boom of the early 2000s and this sellers market, it was okay to price a house a little too high. Houses typically were on the market 30-60 days, and most buyers typically offered less than list price anyway. Those days are gone. These days, if a house isn’t under contract within 5-10 days, buyers assume there is something wrong with the house. The old adage that if a house doesn’t sell, we can always lower the price is a bad practice in this market. The longer your house is on the market, the more likely it is that offers you receive will be less than list price. You can forget about multiple offers – they are very unlikely.

While it may seem counter-intuitive, sellers who price their houses a bit below market value are far more likely to sell for more money, AND receive those coveted multiple offers. Buyers are always shopping for deals, and sometimes can’t resist making an offer on a “steal of a deal.”

Price per square foot – this is the most over-used and inaccurate statistic out there

We see this number on multiple websites, or we can compute it ourselves really easily. If you divide the sale price of a house by the square footage of the house, you arrive at what is customarily called price per square foot. While this number makes sense in a homogenous neighborhood, where all lots were purchased by the developer for the same price, it is much less accurate in more custom or older neighborhoods where even lot size and condition of homes can differ widely. This is when price per square foot becomes such a misleading number that few people really understand. The truth is that a proper sales price is determined by multiple variables including:

  • number of bedrooms (each bedroom is given a value, but a master bedroom with a walk in closet is valued higher than one with a small closet, while a master suite is the most desirable).
  • number of baths (this is further refined by whether a bath is a half bath (sink and toilet), 3 piece bath (sink, toilet, shower or tub), 4 piece bath (sink, toilet, tub and separate bath), 5 piece bath (sink, sink, toilet, shower, bathtub). The more plumbing outlets, the higher the value of the bathroom.
  • square footage of house (this should be actual living space but in fact includes unfinished basements and even storage areas) .
  • garage (single car, two car, oversized, oversized with storage, finished (sheet-rocked), attached or detached, etc.)
  • basement (finished, unfinished, partially finished, high ceilings, outside entry, walk out basement or underground basement, etc. While all basements are computed into living space, they shouldn’t be. A basement with only 5 foot ceilings is basically worthless as living space for most families, but is often cited as living space and is calculated into price per square foot. An appraiser won’t give this basement full value though, and he/she shouldn’t).
  • finished attic space versus unfinished (variables include formal stairway to attic, ceiling height, insulation, walls, number of rooms, bath in attic, fully wired, etc)
  • lot size (if your lot is dividable or just over-sized or under-sized for the neighborhood, this will definitely affect the price per square foot)
  • condition of house – don’t overlook the details because buyers won’t.
  • landscaping – and yes this definitely does matter. Buyers are more likely to pay more for a house with both hardscaping and attractive front and back yards. Landscaping, and especially hardscaping is expensive. Do you have an outdoor kitchen? Water feature? Pool? Hot tub? While some of these features add values, others can cost you. What should not be overlooked is making the landscaping attractive, because a yard full of weeds will lessen the value of the house, and some buyers won’t even walk into the front door if the “curb appeal” is missing.
  • energy efficiency of appliances, fixtures, etc. Homes with high energy scores will appraise higher and will sell for more – up to 4-5% more than homes that are not scored and don’t include that 95% efficient furnace, etc.
  • Decks are more attractive to most buyers than patios – for reasons I don’t totally understand. They are much higher maintenance, and if not up high enough off the ground to be easily accessible, can attract all manner of varmints. Stray cats, mice, rats, etc will find that low lying deck a great place to nest and shelter from bad weather.
  • Hardwood floors versus carpeting. Some buyers won’t even look at houses with carpet.

So, if you see the house down the street from you is listed for $300 per square foot, you may decide that your house should be priced the same. But what if that house is priced under $300,000, while you want to price your house at $400,000? Suddenly you’re looking at a whole new batch of prospective buyers. Yes, your house may be bigger and have more upgrades than your neighbor’s house, but there are far more people who can and will pay up to $300,000 than up to $400,000, so you’re not competing with the same buying pool. It’s very likely that your neighbor’s house is smaller than yours, and/or may be on a much bigger lot. In any event, more potential buyers will find themselves in a more competitive market for lower priced homes regardless of size or condition.

Statistics show staging your house almost always reaps more offers at higher prices

Believe it or not, only 10-30% of all home buyers can actually visualize how their furnishings will look in your house. This is why most high end homes and almost all big developers stage their homes before they go on the market.

  1. Empty homes look smaller than furnished homes, and this is especially important for bedrooms.
  2. Buyers are better able to visualize themselves in your space.
  3. Rooms with undefined uses (such as dens or bonus rooms) can now be defined.
  4. The entire house looks more finished and higher end. This is really important when prospective buyers are looking at photos online, and of course when they walk into the house.

Yes, staging is expensive, but statistics show that homes that are staged do receive higher offers.

Why do home prices continue to rise in Portland?

  1. Industries continue to move into the Portland area – many of these are industry giants like Google, Airbnb, Amazon, Uber, and more. At the same time, tech start ups find Portland attractive, and of course, it seems that just about everyone wants to at least visit Portland, and once they do, they’re hooked and ready to pack up and move here.
  2. It has been reported that as many as 160 people move into Portland every single day!
  3. Portland has been rated the #1 best city to live in by the National Association of Realtors as of September 2, 2016!
  4. Portland offers much that so many people are seeking:
    • moderate climate,
    • big city atmosphere,
    • it’s a foodie haven,
    • everything you could ask for in terms of outdoors activities all within an hours drive, and often bike riding distance
    • employment
  5. Moderate housing prices relative to most other big cities in the U.S., and especially relative to other urban areas on the west coast
  6. Housing inventory remains below 2 months (the number of months it would take to sell all the houses currently listed at the current pace of sales.
  7. We still have a huge number of institutional investors (think pension funds, banks, unions, insurance companies or real estate investment trusts)buying in Portland to capitalize on the rising housing prices and rising rents.

We could go on and on singing the praises of Portland, but unlike 20 years ago when Portland was known primarily for rain, we are now one of the most popular tourist destinations, and as mentioned above, one of the fastest growing cities in the country. (If only our transportation and housing needs could keep up with our growth.)

Should Portland home sellers be required to get a home energy score before selling?

energy star logo as seen on most appliancesThe city of Portland is proposing that all Portland city residents be required to have an energy audit and obtain a home energy score prior to listing their homes. There are approximately 160,000 single family homes in the city of Portland, but fewer than 2% of owners have an energy score. Why does this matter?

As shoppers, and we’re all shoppers, we want as much information about what we’re buying as we can get. We look for labels on food, automobiles, energy labels on appliances, etc. But home buyers want more information, and without an energy audit and score, that information is not readily available.

The framework for energy audits for houses in Portland was first established in 2009. By 2013, the training program for certifying energy scoring professionals was underway, and yet, here we are close to the end of 2016, and fewer than 600 Portland houses have had an audit done.

Portland has a Climate Action Plan that proposes that by 2050 Portland will reduce carbon emissions by 80%. But how can we achieve that goal without knowing how much carbon is emitted into the atmosphere by each house without audits? We already know that residential buildings account for approximately 50% of the total carbon being released into the atmosphere from buildings. (According to the proposal, “By April 2017, 80 percent of Portland’s commercial building square footage will be reporting energy performance.”)

More about energy audits

Before everyone panics, you should know that an energy audit takes only 45 minutes to an hour to complete, and costs only approximately $150-$250 per house. On the upside, a house with a high energy score will generally sell for up to 4% more than one with a low score, or no score at all. (With average home prices in Portland now around $400,000, you just might net a lot more money when you sell your house.) So, in spite of a lot of opposition, this is really a no brainer for both buyers and sellers alike IF the proposal is drafted property (see below for reasons to opposition). Most home owners are upgrading their homes all the time. So why not pay a little extra for more energy efficient appliances, better insulation, and regular home maintenance to improve your energy score? It makes your home more comfortable to live in and reduces your energy bills to boot.

The other upside to going energy efficient is that there are both state and federal tax credits for many of these purchases, as well as rebates issued by Energy Trust of Oregon, and sometimes even the approved contractors who install these purchases. I’ve even been told by one prior client that installing an electric heat pump instant hot water system was almost a net zero purchase with all the credits he received for the purchase. AND, of course, if you’ve ever looked at your Portland water/sewer bill, you will have noticed that the sewer portion of the bill is usually higher than the water usage portion of the bill. With instant on hot water, you’re not paying for all that water that runs down the drain while you wait for the hot water to get to your kitchen, bathrooms, and laundry room.

And one last benefit is that with a good energy score, when you sell your house, you qualify for appraisers who are certified to value your home with your energy upgrades. That is no small bonus these days when all too often homes are appraising lower than actual sales price.

How will this information be passed on to prospective buyers? Home owners can obtain a score at any time and report their scores to the city of Portland via mail, fax or online. The city will make this information available on Portlandmaps.com, and of course, listing agents will enter this information into the RMLS when the house is listed.

Why so much opposition to requiring energy audits?

According to PMAR (Portland Metro Association of Realtors), this proposal is poorly drafted.

  1. There aren’t enough certified auditors yet, and most who are certified are also selling some of the “green” products you might purchase anyway.
  2. There are multiple scoring systems. In any given metro area, the scoring model must be consistent so consumers will understand the reports and scores.
  3. We are already experiencing an appraisal crisis here in the Portland metro area. It’s not unusual for it to take 4-6 weeks and even longer in more outlying areas to get an appraisal done. Are there enough appraisers out there who are certified to value energy efficient homes?
  4. The audit must be completed prior to listing a house. For someone who is ready to list now, this could delay that transaction, perhaps for months. This could potentially be a disaster for someone who has just lost a job or is experiencing some other type of life crisis.
  5. Why are banks exempt from this disclosure?
  6. Why are rental properties exempt from this disclosure?
  7. Finally, why does this proposal apply only to homes within the Portland city limits? Does this mean that home buyers in Washington, Clackamas and Clarke counties don’t care about energy efficiency?

What other cities have passed similar policies?

Several U.S. cities have passed similar disclosure policies for their market, including Austin, Texas; Berkeley, California; Santa Fe, New Mexico; and Boulder, Colorado. Internationally, residential disclosure policies are in effect in the United Kingdom, Denmark and Australia. The reduction in carbon emissions is apparently already noticeable where audits are required.

Please read the full scope of the proposal for more information.

 

Is Amazon planning to open an office in Portland?

Amazon logo

Amazon logo

 In 2015, Amazon bought out Portland’s Elemental Technologies. At that point, the Portland Business Journal began speculations that the purchase could signal a much bigger Amazon presence in Portland in the coming years. They were talking potential Intel sized expansion with multiple campuses since Intel began with just one campus all those many years ago. There are few businesses with the financial capability to support multiple campuses, but Amazon is definitely one of those businesses.

There is no confirmation from Amazon yet, but apparently the word around town; according to Portland Business Journal reporter Malia Spencer is that Amazon is recruiting developers for a Portland office. Rumor has it that interviews will begin in July and positions could be filled as early as August this year.

What does a big Amazon presence in Portland mean for our housing market?

More jobs for those in the higher income levels means more competition for a housing market that can’t keep up with demand already. This generally signals that our housing prices will continue to rise. We’ll just have to watch to see how this all pans out this summer and beyond. 

 

Friends of Trees of Portland

snoozing in you hammock

I know, this sounds like a “tree hugger” article waiting to happen. Well, it is, and it’s not.

If you’re not familiar with Friends of Trees, please allow me to introduce this great non-profit organization whose only mission is to bring people together to plant and care for city trees and green spaces in Pacific Northwest communities; including trees for your own property.

Through their Neighborhood Trees program, homeowners buy trees at a great discount to plant with their neighbors at weekend plantings. For $35-$75, you’ll receive a healthy 8-12′ tree, delivery, hole digging, planting assistance, mulch, stakes, and follow-up maintenance checks: a $200 value! They also offer scholarships to people who can’t afford a tree, and if you need a permit to plant trees in your mowing strip, they’ll even help you with the permitting process (which is free).

 

Through the Green Space Program, trained crew leaders guide volunteers at weekend events to restore green spaces.

Since Friends of Trees was founded by Richard Seidman in 1989, they have planted nearly half a million trees and native plants in the Portland – Vancouver and Eugene-Springfield metro areas. This year they have also expanded into the Salem metro area as well.

Street trees add value to every house in your neighborhood

IF you’ve been thinking about planting a fruit tree in your yard, or a towering Douglas Fir (Oregon’s state tree), Friends of Trees is currently giving away several fruit tree varieties and lots of evergreen trees too. They can even tell you which trees would be best for your mowing strip, if you’d like to get your neighborhood involved in planting great street trees that will not only look great, but will also increase the value of every home in your neighborhood by as much as 8-10%. Sure property values are soaring around here anyway, but who wouldn’t like to see their property value increase another 8-10% as these trees grow and create that inviting ambiance so many of us are drawn to when we drive down tree lined streets.

snoozing in you hammock

OR – you might share your hammock with a bear?

More benefits of planting trees in your front and back yards

  1. Trees help clean the air of pollutants.
  2. Trees provide shade during the hottest weather which will lower your utility bills.
  3. Trees make a great hammock support. Why not plant 2 trees at hammock distance apart in your yard? Can you picture yourself sitting back on a hot day, under the shade of your trees, reading a book, drinking an Oregon craft beer or one of our local wines, and just relaxing? Does it get any better than this?
  4. And in case you missed it, trees add value to your home.

 

If you’re looking for an opportunity to give back to the community, Friends of Trees is always looking for volunteers. You can find more information about volunteer opportunities and needs by visiting their website. Personally I’ve just signed up to pour beer on July 2nd at the  Portland Craft Beer Festival in the Friends of Trees booth. Sounds like fun, a great way to meet new people, and give back while enjoying the day. (And you thought you might have to plant a tree? They could use help with workers who plant trees too and if you’re working with some great people, that can be a lot of fun too). 

Convinced yet? Check out the trees that are currently available in your neighborhood and sign up to get started today.  The selection will vary so you don’t have to actually choose your tree today. In fact, volunteer planting season runs from October – May, so their assistance in getting a tree into your yard is over for the season, but you can always choose a tree to plant yourself.

You might also want to read:

Factors that can increase the value of your home

 

Leading economist says Portland home buyers ARE at risk of being priced out of the market

Housing prices UP

Housing prices UPHome buying has become an exasperating experience for buyers across the nation. With high demand and ever increasing prices, the fear is that before buyers can find a house that suits their needs and budgets they will be priced out of the market.

Leading economist and Nobel prize winner Robert Shiller of the S & P Case-Shiller housing price index recently wrote a column for the NY times about this very subject.

According to Shiller, unless you are trying to purchase a home in Portland or San Francisco, your fears are perhaps a little overblown. “There is reason to believe that double-digit increases won’t continue for long in individual cities,” Shiller writes. “Short-term variations abound, but for the most part, the differences in long-term home price increases in individual cities are about plus or minus one percentage point annually.”

Shiller went on to add that San Francisco and Portland are notable exceptions to the above where home prices have grown almost two percentage points above average annually since 1987. According to Shiller, the primary reason for Portland’s explosive increases in home values is the incredible population growth which demographers project will continue at least until 2050!

Migrants are NOT the only ones buying homes in Portland

Wall StreetCompounding the problem of too few homes for the growing population in Portland is the fact that huge investment companies are not only buying the big multi-family properties, they are also investing in single family homes too, and have found that east Portland is especially attractive because of the lower prices relative to those in the rest of the metro area.

Unlike years ago, where big investors, such as Hedge funds, insurance companies, pension funds, and the Berkshire Hathaway scale of investors were interested only in commercial properties and multi-family buildings of 100 units or more.

Big institutional investors are buying up Portland because our property values are relatively low and there are no other safe havens for the type of money they have to invest. The stock market is too rocky while bonds offer little to no returns. These investors are parking their funds where they see growth above average growth potential, and Portland is one of those markets.

“A series of reports by the nonprofit Investigate West found that Wall Street was scooping up single-family rentals in Portland by the hundreds. And where did one of the investors – Blackstone, a multinational private equity firm – raise some of its capital? Oregon’s own Public Employees Retirement System, or PERS. (Investigate West found that Blackstone had invested in more than 45,000 single-family rentals in 14 areas around the country, but not in Oregon. Another company, American Homes 4 Rent, pursued a similar strategy in Portland.)” When investors buy single family homes, they usually buy in bulk and pay cash, and so are directly competing with the average Portland home buyer.

The recent rent hikes in both housing and commercial buildings may be only the beginning of the hikes to come as these investors see current leases expiring.

 

 

 

 

Portland housing value increases top the nation again – How high can we go?

Housing prices UP

Housing prices UPAccording to Standard & Poor’s Case-Shiller home price index, Portland again had the fastest increasing home values in the country for the 6th straight month. Of the 20 metro areas that Case-Shiller watches most closely, there were only three cities that have shown double digit increases in home values over the last year. Seattle and Denver rounded out the top three.

According to Case-Shiller spokesperson, the Pacific Northwest has been the hottest region in the country, with no slow down in sight. It’s the law of supply and demand, and with 500 migrants moving to the Portland metro area weekly, there is a real shortage of housing that cannot be overcome over the short term.

Portland average home values inch above $400,000 for the first time ever

The average price of a house sold as of the end of May was $402,500 while the median price hit $354,500! Listing prices have increased as well, with the average price of properties currently on the market now at $383,000; up 11.8% from this time last year.

Portland inventory held steady from April at 1.4 months (the number of months all homes would be sold if no new homes are listed), but that’s a long ways from 6 months which signals a balanced market where inflation in values drops back to a normal pace of approximately 3% annually.

Across the country, housing prices have increased a more normal 5.8% average. The big builders should be dancing in the street if they weren’t being forced to pay so much for land, and jump through so many hoops to get approvals for new developments.

How high can prices go?

At some point, this rapid increase in prices and values will have to slow. Wages are simply not keeping pace with this pricing inflation causing more
buyers to be priced out of the market everyday. But for now, forget the lotto – owning a home is raising the net worth of home owners throughout the Pacific Northwest. And Portland is still the lowest priced big city on the West Coast. 

 

Portland home values soar 17% in last year ~ average home prices hit $385,000!

sold - sale pending signs

sold pendingAs of the end of the first quarter of 2016, houses within the Portland city limits have soared an almost astonishing 17% over the last year (according to Zillow). Throughout the rest of the metro area home values are up approximately 13% – not quite 17%, but still a very good return on any investment these days. In many areas of Portland, housing values have hit record new highs, and just keep rising.

To make matters even worse, inventory dropped again to almost new record lows of only1.3 months (the time it takes to sell all the houses currently listed if there are no new listings). Many buyers I work with say that trying to buy a house is almost like having a second job. It is not for the faint of heart or those who are easily discouraged. Buyers need to be ready to get out and look at new listings the day it goes active because any house could be sold in just one day, often with multiple offers. And buyers need to be ready for “rejection.” It’s not unusual for buyers to make offers on many houses before they get one accepted. This is not personal folks. Money talks.

Buyers – don’t even think about a low ball offer; not in this market (unless the house has been listed longer than a week or two.)  Sellers know this is their market and most are prepared to wait for the right offer to come along. 

Average home values in Portland metro area hit $385,000

It’s true that the averages include the prices of homes in the highest priced areas of Portland;  but this is the highest average price we have ever seen, and it’s just going higher. With big industries moving into Portland and employment on the rise, there are more buyers out there with bigger budgets helping to push prices up. 

Home buyers with lower budgets should consider the suburbs

The typical Portland suburb does NOT look like this. This is a photo of a suburb in Las Vegas.

The typical Portland suburb does NOT look like this. This is a photo of a suburb in Las Vegas.

The “dreaded suburbs” has many would be buyers thinking gloom and doom. Millennials and those with larger budgets have their eyes on being close in to down town Portland and are willing and able to pay the higher prices. Just last week in the very popular Hawthorne/Belmont district there were only 3 listings.

But the suburbs aren’t the end of the world. There are some really beautiful neighborhoods outside of the I-5 corridor. With home values up at least 13% over the last year those who move to the suburbs are still making a very respectable return on their investments! Of course, it’s always possible that many of these suburban neighborhoods will sprout little boutique shopping areas too, and in time, you might find that you actually like where you were able to buy at a lower price. You get a lot more house for the money in the suburbs. Remember that the Division shopping area didn’t appear until PokPok restaurant opened and that was only 10 years ago.

Businesses are also moving to the suburbs

It’s not new that businesses are moving out from downtown Portland. Property costs are  lower in the suburbs, so many big companies choose to build their campuses further out. Look at Intel, Nike, Columbia Sportswear, and all the high tech companies out in Beaverton and Hillsboro; or Xerox, Sysco Food Systems, Mentor Graphics and Flir Systems down in Wilsonville and you’ll find those suburbs are where the employees are moving to be closer to their jobs; and their housing markets are thriving too. As a lot of start ups are moving into Portland, we’re finding that many of them are also locating out in the suburbs. 

At some point, housing inventory will catch up to demand, and the market will slow. That 13% return on your investment will definitely help you purchase another house, perhaps in a more desirable location if you choose to. You’re certainly not going to see that kind of return paying rent (which is also increasing at unprecedented rates of 14% per year). Buyers need to remember that a house is more than just a place to live; it’s also an investment for the future. It’s not even unforeseeable that housing prices could dip again one day. It has happened many times historically, so it could happen again.

When will the housing market craziness end? Is this just another housing bubble?

We’re hearing “bubble” everywhere, but few analysts or economists think this is a bubble. Portland property values have been lagging behind all the major metro areas on the west coast forever. It is in part why 500 people are moving to Portland every week. And of course, that high rate of migration into Portland is fueling our high demand and low housing inventory. Plus approximately 25% of all home sales are cash buyers! With all these factors in place, this housing boom was predicted. Even Forbes magazine named Portland one of the housing markets most likely to outperform this year. That prediction is certainly coming true now. 

However, virtually everyone believes that the market will cool, but very likely not before 2018. It will take that long for inventory to catch up to demand. Note, that cool is the word here, not bubble bursting. Eventually the housing market will stabilize and we will retreat to more normal 3% annual home value increases. But inventory has to rise to more like 3-6 months before that will happen. For better or worse, this is our housing market now, and anyone who wants to buy a house has to play in this market. It’s quite an experience. 

What about buyers with budgets of less than $300,000?

Buyers with budgets of less than $300,000 absolutely should be looking outside the inner corridor to find a home, especially if they need a house with 3 bedrooms and 2 baths. Inside the inner corridor, few homes are priced below $300,000 and most are major fixers or tear downs and often require cash buyers. But even close in to I-205, home prices are rising almost as quickly as just across the interstate. Neighborhoods like Park Rose, Maywood and Mill Park took off last year. Others further out such as Milwaukie, Gladstone and even Gresham were among the hottest selling neighborhoods in the metro area. And on the west side, Beaverton and Hillsboro are definitely hot too. 

You may even find that you like living in the suburbs where there is less traffic and your money allowed you to buy a larger home than would have been possible closer in. And with the exception of the new housing developments, most Portland suburbs do not feature “every house looks the same” type of atmosphere. Most of our suburbs are a great mix of older homes, lots of mid-century style homes (which, by the way are definitely coming back into vogue), as well as newer infill homes. There are lots of quaint tree lined streets and evidence of pride of ownership further out. Stranger things have happened, and it could happen to you.

Alert: Hackers take aim at home buyers

hackers target home buyers

Hacker at workIf you’re a home buyer, you should be aware that you are a very popular and relatively easy target for hackers. In order to purchase a home, you have to disclose all your most closely held personal information, especially if you are financing your purchase. All this information is shared among a plethora of individuals in multiple offices around the country because there are so many moving parts and interested parties involved in the purchase of property.

And, of course, huge sums of money are being exchanged during the process. Why wouldn’t hackers target you?

There are two hacking schemes being used recently that are pretty scary, so please read on if you or anyone you know is in the process of buying a house now or in the near future.

Regardless of which scheme the hackers are using, the route to your information is either via your realtor or your lender. Once they hack into one of our email accounts, they do nothing to let us know they are in; but rather watch for information about buyers and sellers.

Scheme 1 has been around about a year now, and this one is definitely targeting your money.

As your sale closing approaches, your title company or attorney will send you instructions that includes what you need to take to your closing. In addition to a photo ID you will also be told  the amount of funds required, and where and how to wire funds to close the transaction.

At very close to the same time, the hacker will also send you what appears to be an official looking email from the “title company” with “updated instructions” on where to wire funds. (Remember that your agent and escrow officer have been communicating frequently during your purchase, so hackers have the official signatures each has been using, and these are easy enough to copy to make your email with updated escrow instructions look legit.) Some hackers may even include other information about your transaction to make the email look even more like it has come from a trusted source.
Generally speaking, this will not impact the majority of buyers who hand carry a cashiers’ check for down payments and closing costs to the title company at closing. But, for out of state buyers and cash buyers, it is not uncommon for funds required for settlement to be wired to the title company. Cash buyers, this can be hundreds of thousands of dollars that you could be wiring directly into the hacker’s bank account.

Scheme 2 is an attempt at ID theft and comes to you in the form of an email that appears to be from docusign.

hackers target home buyers

This is an actual email a home buyer received

If you’re like most buyers these days, you sign your offer to purchase documents via electronic signature. Docusign is just one of the businesses that offer this service, and so far as we know, it’s the only one that is being used in the recent hacks. Unfortunately, you might get documents to sign from either your realtor or your lender, and the emails you receive are just ambiguous enough to fool you into thinking they are official documents that you have already signed.

Here’s a sample of such an email that was recently received from a home buyer:

As you can see, this email isn’t even from docusign but from an Eden Guthrie, and apparently Google knows about this scheme because a warning is attached as well; so please do NOT click on the ACCESS DOCUMENT button.

 

However, Google also uses this warning on legitimate documents from other e-signature providers, so be sure to check with your lender or realtor to make sure that whatever you have received is legit.

How can you protect yourself from hackers?

  1. Make sure that your realtor, lender and title company are all taking every step possible to keep hackers out of their email. Personally my email is encrypted and I use strong passwords that I change frequently which makes watching my email much more difficult for hackers.
  2. Ask those involved in your transaction to always alert you when any document has been sent to you for electronic signature. I always send a text to make sure you’re watching for email from me or whoever the email will come from.
  3. Be aware that it is very uncommon for a real estate agent to request sensitive information from buyers, especially via email. We don’t need your bank statements (unless you are a cash buyer) or any information with your social security number. That type of information should always be handled by your lender. When we do require proof of funds for a cash transaction, buyers should always redact most of your account number (leaving only the last 4 digits), and should send proof of only enough funds required to settle the purchase. If you are able to encrypt the email, that would be even better.
  4. Before wiring funds, always double check with your title company or attorney to make sure that you have the correct wiring information for your bank.
  5. Be sure to keep and check old emails you have received from the title company to make sure you are calling or emailing the correct person, because hackers will include their contact information in case you are looking for more information.
  6. Don’t click on any links in the email, giving the hacker access to your email (if they don’t already have it).
  7. Remember that all final loan documents must be signed in person. Electronic signatures are never used.

It’s an Internet world out there, but there are always steps you can and should take to protect yourself. Unfortunately, if you’re a potential victim of scheme #1, once your bank wires funds, even if to an incorrect account, the money is gone. And if you’re a potential victim of scheme #2, once a hacker has all your most sensitive information, you become an ID theft victim and have to deal with all the hassles of getting that squared away. Your bank accounts can be locked, your credit will be flagged, and so on.

The good news is that banks, title companies, lenders and realtors are all aware of these threats and are all taking whatever steps we can take to tighten security on your behalf. But at the end of the day, responsibility for protecting your money and your ID  is still yours. So, be careful out there. Check and double check with whoever you’re working with just to make sure that whatever you are receiving is legitimate, and proceed from there.

 

 

 

Portland home prices hit new median highs as of end of 2015

It’s official. Throughout the Portland-Vancouver metro area, home prices have hit new median highs as of the end of 2015. All four counties have surpassed the values and prices last seen prior to the housing crash of 2007.

What’s driving all this growth? I’ll recap some of the reasons covered in the past, and add a couple new reasons that aren’t as common knowledge.

  1. Approximately five hundred new people are taking up residence in this area every week and they need a place to live.
  2. More high paying jobs are being created as technology businesses create outposts and new offices in the Portland area.
  3. The extreme volatility in the stock market has many investors re-thinking the wisdom of investing on Wall Street. Institutional investors are buying up the Portland housing market and are aggressively competing with all cash offers often at premium prices as they consider our market a better investment than Wall Street. Portland is currently the 2nd most desirable area for institutional investors in the country.
  4. Mortgage rates remain low for those still financing their purchases.
  5. Millennials have entered the housing market.
  6. Record low housing inventory has buyers driving up prices with bidding wars as new buyers try to get into the housing market. This is especially true for houses priced at or below $400,000.
  7. Builders have been very much behind the eight ball in catching up to housing demand; though big developers such as DR Horton and Lennar Homes just completed purchases of huge tracts of land. Still it will be a couple years before they are able to sell houses on those parcels because plans must be submitted to cities for approval of developments and of course the infrastructure has to be completed before they can even start building houses.

It seems that every day new articles cross my desk talking about just how hot the market is in Portland, but the prognosis for how long this housing boom will last continues to be extended. Last year the “experts” were saying that we would see a robust market at least through 2016, but now some experts say that with the unprecedented job growth, low housing inventory, and rate of migration to this area, our housing market may very well not slow down until sometime in 2018! 

 

 

Which Portland neighborhoods saw 20+% median price increases in 2015?

median price increases in Portland

 

Did you know that RMLS now breaks up the Portland metro area in 122 neighborhoods (primarily for statistical purposes)? While most neighborhoods throughout Portland saw median price* increases last year of 10% and more, a few just rocked the statistics with greater than 20% median value increases in 2015. Several of those areas have been rising stars for a few years now, such as Woodstock, Cully, Kerns, and Sabin, but there were some surprises east of I-205, such as Mill Park, Park Rose, and Centennial. But the biggest single median price gainer was East Columbia which saw a 42.1% increase in median prices for the year!

It’s true that a few of the neighborhoods that saw the biggest increases were lower priced areas (average home list prices below $250,000), but a few now have median prices at or above $400,000, so price was not the single factor that contributed to the gains. However price has been a factor in driving attention to those areas that have emerged over the last few years.  

How did your neighborhood fare? Check out the interactive map here, along with a chart with even more statistics by neighborhood. (Please note that the interactive map includes a second map showing neighborhoods outside Portland city limits). And if you’d like even more information about the value of your house these days, please feel free to contact me directly and I’ll be happy to do more research for  you.

Overall, real estate remains on fire throughout the Portland metro area. Bidding wars continue to be the norm, especially for homes that are basically move in ready. It’s becoming increasingly difficult to find any listings priced under $225,000 anymore as avearge and median prices continue to rise due to demand exceeding inventory. This trend is expected to continue at least through 2018, when it is hoped that new construction will catch up to demand. 

 

*median price = half of all homes sold were above prior median price and half were below

 

The average home in Portland Oregon increases in value $2.82 every hour

girl saving pennies in piggy bank

Did you know that the average price of a home in Portland has risen to $357,500 as of the end of February 2016? That’s a huge increase over the average sales price of $283,300 at the end of February in 2013. Put another way, a home owner who purchased a home in February 2013 at an average price of $283,300 has seen their value increase by $74,200! That means that home owner was actually earning $2.82 in equity every hour from the day they closed until now.

Remember this represents an average price and value increase over the last three years. In some areas of the Portland metro area, values were increasing at a much higher rate, and of course the reverse is true that many areas saw lower rates of inflation.

For those who are still waiting to buy a home, or are trying to save for the down payment, are you saving at a rate of $2.82 every hour?

Yes, this is all based on averages. Not all future potential home buyers can afford an average priced house or $357,500. If this is you, should you just give up on your dream of home ownership?

The truth is that  less than half of all home buyers can afford an average priced home in Portland anymore. These last two years in particular have seen an explosion in home values due to low inventory, low mortgage rates, and the number of competing buyers (which is being exasperated by the high migration rate to Portland. 

Many buyers are moving further out from downtown to make the dream of home ownership a reality. The end result is that prices east of I-205 and south of I-84 are now sky-rocketing too.  Yes, the hottest neighborhoods are still predominantly close in to downtown Portland, but areas way further east, such as Gresham, or southeast, such as Oregon City and SE Portland are in high demand lately, and this is likely to continue as we move through 2016 and even into 2017-2018. In the southeast, Woodstock and Milwaukie have seen almost astonishing growth. 

Where will the next hot neighborhoods be?

There is really no definite way to predict which areas will take off and become the next Alberta, Sellwood or Hawthorne, but buyers should look for anchor restaurants that see a lot of traffic. Just look at what happened on Division Street after PokPok opened just 10 years ago. Also watch for great little coffee shops to open nearby. Sure Starbucks is a good indicator, but a boutique coffee shop where residents are comfortable hanging out with laptops and tablets are even more significant. Little shops are likely to follow to hopefully cash in the traffic generated by the anchor establishments, and a new “in” neighborhood can emerge. You’ll know your area has fully emerged if a Trader Joes or New Seasons opens nearby, but that takes a while. 

In the meantime, enjoy your new home and work with neighborhoods to beautify where you live.

Your piggy bank will thank you. 

 

 

 

Two tips to net top dollar when you sell your home

Every home seller wants top dollar for their home, but many are going at pricing wrong, and it’s costing them money!

List your house with a realtor®

  1. Sellers think that by trying to sell their home on their own, they are saving the cost of the realtor commission. The truth is that study after study has shown that sellers who list their homes with a professional actually sell for much higher prices than those who try to go it alone.

“The median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $151,900. However, homes that were sold with the assistance of an agent had a median selling price of $249,000 – nearly $40,000 more for the typical home sale.”

FSBOs vs listed - median sales prices

The truth is that realtors have a lot of tools to market your home that you do not have. Just listing your home on the local MLS (multiple listing service) gives your home thousands of times more exposure than the typical home owner has. 

  • Local realtors may not even know your house is for sale if it’s not listed.
  • Realtors who list a home have the capability of broadcasting your listing via email to all realtors in a given area letting them know there’s a hot new listing to show. 
  • There are more than 5,000 realtors in the Portland metro area working with buyers. How can a single home owner compete with the sheer numbers of possible real estate professionals who might show your home to their buyers?
  • You are free to go on vacation and leave the work to us. 
  • Most buyers prefer the seller NOT be home when they are viewing your home.
  • We know what our buyers are looking for, so know what features to point out that could be just the right selling point for your home.
  • Lock boxes give listing agents the capability of calling the buyers’ agent to follow up and get instant feedback from buyer viewings; and to keep those agents in the know if prices are changed, when offers are received, etc.

The MOST important reason to list your house is that most buyers prefer to work with a professional realtor. As a home owner, you are not permitted to use our state sanctioned offer forms (10 pages of legalese that protects both buyers and sellers). Most buyers want that protection, and the comfort of knowing that their realtor will watch out for them and guide them through the process.

In short, far more potential buyers will view your house when listed than when for sale by owner. The more people who view your house, the more likely you are to receive more and higher offers.

Price your house slightly below market value

Most sellers think that if they price their houses just above comparable value, they have room to negotiate with buyers. This actually makes some sense in a normal housing market. But NOT in a sellers’ market.

Look how many more people will view your house when it's priced below market value!

Look how many more people will view your house when it’s priced below market value!

The truth is that the secret to making more money on the sale of your home is to get more buyers to view it. In order to do that, we will often price your house just below actual market value so it looks like it’s a bargain.

Home buyers are pretty savvy these days. They do their research and have a pretty good idea what a house should be priced at in any given neighborhood based on size and features. But, everyone wants to pay less for a house than fair value and that will bring hoards of buyers to your home. Who can resist a house on sale?

Because the buyers think they might get a good deal, more of them are likely to “throw their hats into the ring” to try to pick up this bargain. When there are multiple offers for a house, the buyers actually end up competing with each other for your house, rather than haggling with you over the price. This is why in multiple offer situations, so many homes end up selling for considerably more than list price, making you Mr./Ms. Seller “the winner.”

 

You might also like to read:

Factors that can increase the value of your home

Great curb appeal can net sellers up to 10% higher prices

Staging your house for sale nets sellers higher offers

 

16 signs your home is seriously dated

maintained bodyHomes are a little like people. They require continual maintenance and updating to maintain their integrity, appearance, and safety. Potential buyers to your house will watch for any features that spell money to them after the purchase closes. But beyond that, failure to invest in proper maintenance and updating WILL cost sellers money, and can be dangerous to current residents.

Obvious signs that a home has not been well maintained or upgraded in a long time:

  1. Fuse boxes – especially a fuse box with only four fuses! Fuse boxes haven’t been installed in new construction in decades with good reason. They simply don’t have the safety features that new circuit breaker electrical panels have. Yes, fuses trip or burn out if over loaded, but it was too easy to bypass those safety features and create a fire hazard in doing so. In addition, there are no fuse boxes out there with enough capacity to handle new appliances, big flat screen TVs and sound systems, computers, and all the new gadgets that are being manufactured every day to safeguard your home.
  1. Old electrical panels – especially where additional panels have been wired into the original panel, or where there are signs of cobwebs, frayed wires, etc. inside. Electrical panels need to be replaced to accommodate new technology, or can also be a fire waiting to happen.
  2. No GFCI outlets – especially in any room with water access such as bathrooms and kitchens. Again, these are dangerous and should be upgraded. Electrical shock and potential electrocution are the obvious readily apparent dangers here.
  3. Aluminum wiring According to the Consumer Product Safety Commission, homes wired with old technology aluminum wire “are 55 times more likely to have one or more connections reach Fire Hazard Conditions than is a home wired with copper.” Enough said.
  4. Old furnaces that obviously have not been serviced regularly (if there are dust mites inside, this furnace needs at the very least, a good cleaning and inspection). But buyers are also looking for energy efficiency, and old furnaces were not built nearly as energy efficient as newer models. If you have an old furnace in your home, make sure it is cleaned and serviced prior to listing, and if possible get your servicer to write up a letter stating that the furnace is in good working condition.
  1. moss covered roofMoss covered roofs – If your roof is so covered in moss that you can barely see the roof, most buyers will assume this roof needs replacing. At the very least, have that roof professionally cleaned and inspected.
  2. Carpet in the bathroom – This is a definite replace it now situation. It is not only unsanitary, but mold can be hiding in and under the fibers of the carpet.

 

 

More flags that will cost home sellers in their ultimate sales price

  1. Wall to wall shag carpeting is definitely out, and if stained or has well-worn or bare patches, dollar signs are going off in your buyers’ heads.
  2. White appliances – especially if they are old. White appliances have been out of favor for a decade or more, and especially those older electric stoves with coils rather than flat surface tops. Even worse are appliances in colors such as sage green, gold or beige.
  3. Busy dated wallpaper and bold colored paint. Remove both and go neutral with your color scheme.
  4. Brass fixtures (lighting, drawer pulls and door knobs) really date your home.
  5. Linoleum
  6. Tiled counter-tops – OK – you love that electric blue tile, but it will be the very rare buyer who loves it as much as you do. And the grouting is very hard to keep clean and sanitary.
  7. Formica counter-tops – enough said.
  8. Popcorn ceilings – These are not only dated, but in a huge percentage of homes built prior to 1978 or so, contain asbestos. Popcorn ceilings definitely have to go. But be careful about doing it yourself before you have it tested for asbestos.
  9. Wood paneling – We’re not talking log cabins here or beautiful wood details such as wainscoating. We’re talking about the inexpensive wood paneling that was so in vogue half a century ago. If you can’t afford to tear those out and sheetrock the walls, at least paint them a neutral color.

Remember that home buyers have their eyes on their wallets

If there is anything in your house that seriously needs updating, sellers should always consider making those upgrades before listing. Buyers almost always over-estimate the cost and time to do those upgrades themselves and will low ball sellers to the extreme IF they make offers at all. All too often buyers won’t even want to go see a house with photos showing white appliances, popcorn ceilings, wood paneling and gold fixtures. 90% of buyers out there are looking for move in ready.

If you Mr./Ms. Seller are looking for top dollar for your house, talk to your realtor® about what not upgrading your house could cost you in real dollars and cents. Remember the more potential buyers you can attract, the more money you will make on your sale.

 

 

 

Portland tops the list of fastest rising home prices in US for last 3 months

home price appreciation 2015 in USAccording to a recent article in the Oregonian, Portland continues to lead the nation with the fastest rising home prices in the U.S. with prices rising more than 10% in 2015 (followed by San Francisco and Denver. Seattle and Dallas were the next runners-up with price increases above 9%). For the last couple months of 2015, and now two months into 2016, the market is screaming hot and home prices just keep rising.

For those considering buying a house, you should know that prices for starter homes are closing in on $300,000 in most of the Portland metro real estate market. To be sure, there are homes still priced in the low to mid $200,000 – $250,000 range, but with more buyers than available properties, bidding wars are the name of the game. Within hours of being listed, sellers will receive often multiple offers, resulting in a sale price 20-30% higher than list price.

I’ve heard it many times, “I’ll just wait for the market to cool off.” But the forecast is that the demand is so high most economists forecast that this condition is likely to persist well into 2018 (when it is anticipated that new construction should catch up to demand.)

Where are houses priced under $250,000 in Portland?

If your budget and pre-approval is for less than $250,000, you should be looking in SE Portland. I know, everyone wants to live as close in to downtown as possible. The “hottest” neighborhoods are moving east too. It used to be that everyone wanted to buy west of 82nd Street. Last year that barrier moved to I-205, and this year we are looking at almost anywhere between I-205 and 130th as hot neighborhoods. But there are pockets east of 130th that are getting to be equally as hot.

Currently prior overlooked neighborhoods such as Maywood, Park Rose, or Mill Park are becoming the Montevillas and Cully neighborhoods of last year.

How to spot neighborhoods on the rise

Forecasting where the new boutique areas will pop up is tough, but here are some signs to watch for:

  1. Restaurants opening to anchor a shopping area – remember that Division street started with the opening of Pok Pok and just expanded from there to be one of the hottest little neighborhoods in town.
  2. A great little café offering freshly baked pastries and more atmosphere than a Starbucks.
  3. Nearby strip malls that can easily become little boutique malls.
  4. Small boutique type shops squeezing into more commercial strip malls.

You will know the neighborhood is “on the map” if a Trader Joes or New Seasons market opens nearby. But by then, it’s already too late to get in on what has already become a trendy neighborhood.

 

Portland-Vancouver metro area home prices hit new highs

Housing prices UP

 

 

Housing prices UP

 

 

It’s official. Throughout the Portland-Vancouver metro area, home prices have hit new median highs as of the end of 2015. All four counties have surpassed the values and prices last seen prior to the housing crash of 2007.

 

There are multiple causes for this explosive growth:

  1. Five hundred new migrants are moving to this area every week and they need a place to live.
  2. More high paying jobs are being created as technology businesses create outposts and new offices in the Portland area.
  3. Investors love Portland housing

    Investors & Portland housing

    The extreme volatility in the stock market has many investors re-thinking the wisdom of investing on Wall Street. Institutional investors are buying up the Portland housing market and are aggressively competing with all cash offers often at premium prices as they consider our market a better investment than Wall Street. Portland is currently the 2nd most desirable area for institutional investors in the country.

  4. Mortgage rates remain low (for many below 4% last week for 30 year fixed rate loans.)
  5. Millennials have entered the housing market.
  6. Record low housing inventory has buyers driving up prices with bidding wars as new buyers try to get into the housing market. This is especially true for houses priced at or below $400,000.
  7. Builders have been very much behind the eight ball in catching up to housing demand; though big developers such as DR Horton and Lennar Homes just completed purchases of huge tracts of land. Still it will be a couple years before they are able to sell houses on those parcels because plans must be submitted to cities for approval of developments and of course the infrastructure has to be completed before they can even start building houses.

It seems that every day new articles cross my desk talking about just how hot the market is in Portland causing the prognosis for how long this housing boom will last continues to be extended. Last year the “experts” were saying that we would see a robust market at least through 2016, but now some experts say that with the unprecedented job growth, low housing inventory, and rate of migration to this area, our housing market will very likely not slow down until sometime in 2018!

Portland’s explosive housing market grabs more headlines

Portland Oregon hottest housing market in the US

 

If you’ve been watching and reading the news lately, you would have noticed that the Portland real estate is in the headlines. The state of our housing market has been featured in The Oregonian, on national news and there was even an article in CNN Money  published on February 5, 2016 asking “Who’s to blame for Portland’s soaring home prices?”

According to the report in CNN, “Everyone wants to move to Portland, Oregon. But the more popular it gets, the less affordable it becomes.” Portland was the fastest growing city in the country in 2015, and appears to be on pace to top the charts again in 2016.

Anyone currently shopping for a home in Portland already knows how crazy our housing market is. As in 2015, the normal slow-down of home buyers never happened during the holidays, and January again broke records for number of home sales. In fact, sales were up 25.9% over number of sales for January 2015, and posted the most January sales ever since RMLS began keeping records in 1992.

Sellers are still receiving multiple offers and homes are almost always selling for more than list price. Eighteen to twenty offers on a home are not uncommon.

According to KATU, in a news report last night, buyers who offer $20,000 above list price often find themselves outbid. In fact, we have seen houses sell for as much as $150,000 higher than list price in the last year or so in the most popular neighborhoods.

According to RMLS, the average price for houses in Portland as of the end of January 2016 was $355,700, up from $333,400 as of end of January 2015.

Are prices soaring everywhere in the Portland metro area?

Yes, but of course some neighborhoods are hotter than others. According to Zillow, the three hottest areas in Portland so far in 2016 are St. Johns, Woodlawn (Dekum Triangle) and Parkrose.

Other sources say that the hottest neighborhoods are St. Johns, Hawthorne, and inner NE Portland (west of I-205). 

Regardless of which neighborhoods are in fact the very hottest, what we know is buyers searching for homes anywhere west of I-205 should expect high demand and unfortunately bidding wars.  Since prices anywhere west of I-205 tend to run from $300,000 and up, buyers in lower price ranges are being forced to look further east, so homes sales anywhere west of 130th are now booming too; the closer in to downtown, the hotter the neighborhoods.

So, who’s to blame for Portland’s soaring house prices?

There are many reasons for what’s going on in this area, but following are some of the primary reasons housing prices continue to rise so quickly:

active home listings 2012- 2016

  • Supply and demand. There simply aren’t enough homes available for the number of buyers. At the end of 2015, inventory dropped to just 1.2 months (if all listed homes sold with no new listings added, the supply would be gone in 1.2 months). That number did rise to 1.8 months as of the end of January, but we’re not even into the spring months yet; typically when the majority of buyers are out shopping.
  • Migration to Portland. New migration numbers show that there are now approximately 500 new migrants arriving in Portland every week! 
  • Employment opportunities paying high wages. Many of the migrants arriving in Portland are being moved here by their employers, often at the same salaries they were being paid in areas such as San Francisco or Silicon Valley. This gives these migrants much greater buying power than the typical Portland resident. 
  • 25% of all buyers pay cash. This is especially true with migrants being moved for jobs, and those buyers coming in from California and other areas of the country with even higher housing prices. (The median price of a house in San Francisco is $1.1 million!)
  • Developers are buying properties in the most high in demand locations at premium prices. They tear down the existing homes, especially if those homes are on larger lots or are in need of updating. Then they build two, three or even more higher priced homes on the same lot. Most buyers can’t compete with the price developers are willing to pay and the developers know even if they pay more for the property, they will reap in the profits on the multiple homes they construct.
  • Low mortgage rates are enabling buyers to qualify for increasingly higher prices.

How can anyone win the bid for a house in Portland these days?

As realtors, we know how busy the market is. We try to get our buyers out to view new listings the same day they go live on our multiple listing service because sellers often receive several offers the first day. Most of us do try to stay in touch with the listing agent to determine how many offers are on the table and when the seller will be reviewing them. (Most sellers know that leaving their properties on the market for at least one weekend will maximize the number of offers and selling price.) This gives us a sense of how high offers might go on these listings, so we can better advise you when preparing your offers.

Here are some tips that might help:

  1. If at all possible, look at homes considerably lower priced than what you can afford to pay so you have room to increase your offer and still qualify. 
  2. Be prepared to look outside your preferred area to cut down on the competition. Currently virtually anywhere west of I-205 is in high demand, and prices are much higher as well.
  3. Don’t automatically reject houses that are in need of cosmetic updates. Most buyers; and especially those who can afford to bid high or who insist on the neighborhoods in highest demand will make the highest offers on “move in ready” homes.
  4. If you are willing to paint, upgrade appliances, kitchens, bathrooms and flooring, you have a much better opportunity to win the bid. AND the upside to this is you will actually pay less after updates than you would have paid for the same house if it had already been updated by the previous seller or a house flipper. New construction properties also sell at premiums relative to comparable homes, sometimes just a few years old.  

If you find yourself in a bidding war,  you might be asked to give up some of your rights:

  • It is not uncommon for winning bidders to give up the right to ask for repairs that are found during a home inspection.
  • If you want or need help with closing costs, be prepared to offer an even higher price to cover that cost for the seller.
  • Sellers may insist that if you win the bid, you give up your right to re-negotiate price if the appraisal comes in lower than your accepted offer. 

It’s a tough market out there, but not hopeless. Many buyers last year walked away from the market in frustration; hoping this year would be better. We are already hearing that many of those buyers are regretting that decision as rents continue to rise almost as fast as housing prices. Remember, those who managed to buy last year are already building equity quickly. But the market will eventually calm down, and even return to normal.  

Builders are buying up land as quickly as they can, but it takes at least two years from date of closing on land purchases to actually selling homes at those sites. At current rates of new home construction it is now estimated that our housing market should catch up to demand some time in 2017. 

Banana peels, coffee grounds and egg shells are gardeners’ best friends

Bananas egg shells and coffee grounds

Tips to organically nourish your soil for spring and summer planting

Bananas egg shells and coffee groundsIt’s never too early to start preparing your soil for spring planting. When the rain gives way to those intermittent sunny days, many of us start just can’t wait to get our veggies into the ground, or plant flats of color to chase away the gloom. February is still a little early for most of the planting we’ll get to when the weather really warms. Here are a few tips to get a jump start on feeding your soil organically with banana peels, coffee grounds and egg shells.

To compost or not?

If you’re an avid gardener or just ready to tackle your first garden, you’ve certainly heard a lot about composting all your kitchen scraps; from fruit and vegetables to egg shells and coffee grounds, composting is a great way to enrich your soil. But composting, even if you’re using a composting bin, attracts bugs, and who wants all those bugs and bug larvae around? There is an easier way to use some of that waste.

Banana peels can be cut into smaller pieces and placed into the ground around the base of your plants, just an inch or so below the surface is all that is necessary but deeper is better. They are full of all kinds of great nutrients like potassium, phosphorus, and calcium, and other minerals your plants need. OR, if preparing soil for your veggie garden, get those banana peels into the ground now so they can break down before you’re ready to plant. There are many other ways you can use banana peels – such as drying and grinding them up, but this is by far the easiest. (Don’t leave the peels on the surface of your beds unless you want to attract bugs and squirrels.)

Coffee Grounds are rich in nitrogen a nutrient that all plants need to flourish. Contrary to popular belief, the grounds are not acidic but are pretty much PH neutral, so can be added around any type of plants. Be sure to start slowly with coffee grounds though, just adding a tablespoon or so a week, and stop using if you see existing plants start to react badly to them.

Egg shells add calcium to soil and have the added benefit of deterring slugs. Crush eggshells – just put in bag and crush with your foot or hand, and scatter around the base of plants, especially those that slugs like to eat. The sharp edges keep slugs away, but soften and break down quickly, so you need to put fresh shells out every week or so for best results.  

Vinegar is NOT for mulch but is an organic weed killer. It will kill plants as well, so use carefully. If you’ve looked out in your garden or lawn recently, you have probably noticed that dandelions and crab grass are already growing. 5% vinegar (which is what you buy at the store) will fry those tender young dandelions and crab grass shoots, and will kill them to their deep roots. Yes, you might see brown spots in your lawn, but it’s better than hundreds of dandelions appearing and taking over your lawn later in the year. Unlike chemical weed killers, vinegar won’t harm the soil for the grass that will soon take over that brown spot. Vinegar is best sprayed to make sure you get the whole plant. If going after well- established dandelions, you might need to spray them a couple times to kill them off, but they shouldn’t be producing offspring once well sprayed the first time.

 

Job growth driving huge migration of new residents to Portland

According to the Oregon Office of Economics, approximately 40,000 people are moving to Portland every year. These new migrants come from everywhere and include all ages and ethnic backgrounds. The biggest numbers of migrants are those in the 20-30 year age group and are well educated, even if many are unemployed. That may seem like an oxymoron, but for the educated, areas with high job growth are natural locales for seeking employment. And the young are generally more mobile than any other age group.

Most people move for two economic reasons; jobs and housing costs.

Portland has been leading the country for migration, and our pace of people moving into this area far exceed the number of those leaving.

Because there are so many people moving to the Portland area unemployed, our unemployment rate is higher than most cities in the country. While 50,000 new jobs have been added since the recession, this number is not nearly high enough to accommodate the number of new job seekers who arrive every year, never mind put back to work those who lost their jobs during the recession.

The good news is that picture is changing this year. Currently Portland is adding approximately 4,000 new jobs every month, so at this current rate, our unemployment numbers should start to drop at least in line with the rest of the country.

Housing is an issue though that has everyone concerned. As our housing prices continue to rise, more current residents find themselves priced out of the market. In some areas of the country, housing starts are up, but Oregon starts remain relatively flat which has caused our inventory to hit alarming lows – down as low as 1.2 months inventory at the close of 2015. Optimistically speaking, the hope is that housing starts will increase enough to keep up with demand within the next 1-3 years which should stabilize housing and rental prices.

Oregon Office of Economics forecasts “By this time next year, if our forecast comes to pass, employment in Oregon will have fully caught up to the population gains since the onset of the Great Recession.” Hopefully our housing needs will catch up to our needs within the next few years too.

 

Great curb appeal can net home sellers up to 10% higher sales prices

Before and after photos of curb appeal
Before and after photos of curb appeal

Hard to believe these photos are of the same house. Yes, the portico over the front door adds dimension to the flat surface of the house, but even without the portico, the paved walkway, plants and mulched garden beds make buyers believe that the AFTER photo shows a house that will be in much better condition indoors as well. Which house would you offer more for?

If you’re thinking about selling your home, don’t overlook your front yard. Buyers form their first impression of your house as they drive up to it, so failure to make a great first impression can cost you a LOT of money. Statistics show that homes with great curb appeal sell for up to 10 percent more than comparable homes without it.

Did you know that you have only about 10 seconds to make a first impression on potential home buyers, and that first impression will last all through the first walk through of your property. Whether your potential buyers love or hate gardening is irrelevant. Everyone wants to impress anyone who visits them and often invite guests to see their new house, so they want their homes to look as good as possible, both inside and out, from the day they move in.

It’s great that you’ve got a killer house indoors, but if potential buyers won’t even get out of their car to look indoors, you have lost a potential sale.

Tips on sprucing up the front yard to maximize your sales price

  1. Rent a pressure washer to clean up walkways, the home exterior, driveways, etc.    
  2. Wash all your windows.
  3. If you have a lawn, make sure it is trimmed and edged.
  4. Add some gardening beds if they don’t already exist, and at least put in some foundation plants to add interest and dimension to the front of your home.
  5. Weed the flower beds and apply a fresh layer of mulch to make your plants stand out.
  6. Prune trees and shrubs.
  7. Plant some color in the beds if possible. Annuals are very inexpensive and add instant warmth to the exterior. But flowers are not absolutely necessary, (especially if you list your house during the late fall and winter months). There are many evergreen shrubs and grasses in multiple shades of green that can stand out beautifully against fresh mulch.
  8. Fill some planters with fresh lush plantings, especially near the front door, to welcome visitors into your home.
  9. Get a new welcome mat.
  10. Paint your front door.
  11. Replace torn screens, especially if you live in an area where open windows invite flies and other unwanted bugs indoors. 
  12. Dig up dead or sick looking plants and if necessary fill that space with containers with fresh plants. These are almost always available at nurseries, even during the winter months.
  13. Store excessive yard décor type items. Not everyone likes pink flamingos or gnomes in their yards.
  14. If you have a water feature, be sure to clean it up.
  15. Repair leaking faucets. If your faucet is leaking outdoors, buyers will wonder what other deferred maintenance might be indoors.
  16. If you are planning to dig up any plants or trees to take to your new home, you might consider doing this before you start showing your house.
  17. Touch up any areas on the exterior paint that might make the house look like the entire exterior requires a paint job.
  18. Chain link fences are very out of favor and are most often nothing more than an eyesore. Buyers see this as a big job and expense to remove, so if possible remove or have it removed prior to listing your house. Leaving it there will more often than not result in low offers. 

A well kept front lawn is better than no landscaping or weeds in front of your home. But the front of your house is both the first and last impression of your home as buyers drive away. Remember, no matter how beautiful the interior of your home is, you should always strive to make your home as inviting and warm as possible, and good curb appeal will result in higher offers. Your wallet will thank you for the efforts you make before you list your property. 

More information about increasing the value of your home:

Factors that can increase the value of your home

Tips for sellers in a hot housing market – staging your home results in higher offers

Portland housing market posts biggest nationwide gains for 2015

Average Median Sales Prices Portland metro 2015

                                Portland metro area average/median sales prices 2007-2015

S&P’s Case Shiller’s most recent housing report, (which includes statistics only through November 2015), the Portland housing market has seen the biggest gains in housing prices year over year than any other city in the country.

“Portland prices were the strongest, rising 11.1% compared with a year ago. San Francisco, at 11%, and Denver, at 10.9%, followed. Some 14 cities had stronger yearly price gains in November than in October.

While the composite index is still roughly 12% lower than the peak set in summer 2006, Dallas, Denver and Portland have all touched fresh highs. San Francisco prices have pulled even with the earlier peak.”

(If you bought a house for $300,000 in November 2014, your home is very likely now worth approximately $333,000! That’s nice appreciation in just one year, especially when compared to the national average of only 5.8% price increases over the last year. Only??? A 5.8% home price increase in one year is historically a very high rate.

Will Portland housing prices continue to increase at this same pace in 2016?

Forecasts for the housing markets nationwide are a bit mixed. Low housing inventories, coupled with job growth and low mortgage rates have buyers motivated and have been driving housing value increases for the last few years. But some say that buyers are tired of over-paying for housing and are being much more picky already this year.

In Portland, rapidly rising home prices have been exacerbated by our explosive population growth over the last decade. Technology businesses are moving into Portland with outpost offices here and many new start-ups have their home offices here. This is bringing in higher than average wage earners with money to spend, including on housing. And of course Portland’s reputation has gone from “why would anyone choose to live in Portland where it rains all the time?” to “Portland is a great place to live.” So we keep topping the charts for number of people migrating here from other states around the country and even around the world.

The truth is that while home prices have risen dramatically in Portland, the west coast continues to attract people from around the world for our climate, life style, and all that the west coast has to offer. Portland housing prices are about half the price of homes in cities such as Seattle, San Francisco, Los Angeles, and San Diego.

Upside – rent increases in Portland forecast to slow

Last year we reported that Portland led the nation in rental rate increases. In fact, we were dubbed the toughest rental market in the country. It was not uncommon for renters to receive notices that their rent was being increased by up to $500 a month and more.

Bidding wars for rental properties in some of the “most desirable” neighborhoods became all too common.

Last year we saw average rent increases of 9.7% metro-wide. Zillow predicts that number will drop to 3.8% in 2016.  Hopefully they are right. Still, at only 3.8% increases, Portland is forecast to have the 6th highest rate of rent increases nationwide in 2016.

Will the housing market crash again?

housing bubbleThere are many would be buyers out there who are calling this housing market a bubble ready to burst at any minute. The truth is that housing values, similar to the stock market, do go up and down, though not nearly as dramatically or as quickly. 

Now that lending standards have tightened, there is less likelihood that we’ll see another crash like that of 2007. So if you’re buying, you should be thinking a bit longer term. Most home owners tend to keep their properties an average of seven years before they start thinking about moving up or down sizing. Home ownership, for those who can stay the course, has always been a good investment. You are not just investing. You are also locking in your monthly payments for the long term, and putting away equity for your retirement years.

 

 

Forbes names Portland housing market as one of eight cities most likely to outperform in 2016


portland housing pricesForbes Magazine
recently released their predictions for the 2016 national housing market. They forecast which cities are most likely to outperform or underperform the rest of the country. The predictions are based primarily on job growth and housing affordability. Portland was named as one of the housing markets most likely to outperform the rest of the country.

While Portland housing prices seem high to many long term residents here, and to outsiders considering a move to the northwest, our home prices are still low relative to other major cities on the west coast, which is why some of those cities are on the most likely to under-perform even with strong jobs numbers.

According to Forbes, “the candidates that are among the top performers in regards to both rising home sales and home prices will generally be out West and in the South. Salt Lake City, Portland, and Riverside will likely experience a good year in the West.  Atlanta, Charlotte, and Tampa look solid for gains in the South. One Midwestern city will shine and that market is Grand Rapids. For the Northeast, Providence could surprise us.” With the exception of Providence, all these cities had more than 3% job growth during 2015 though Providence was not too far behind.

The under-performers forecast all experienced significant job losses, and historically, as job trends go, so goes the housing market.

Job growth driving huge migration of new residents to Portland

According to the Oregon Office of Economics, approximately 40,000 people are moving to Portland every year. These new migrants come from everywhere and include all ages and ethnic backgrounds. But the hugest number of migrants are in the 20-30 year age group and are well educated, even if many are unemployed. That may seem like an oxymoron, but for the educated, areas with high job growth are natural locales for seeking employment. And the young are generally more mobile than any other age group.

Oregon is in fact a state of migrants. 51% of all current residents are from a different state or country. Yes, it’s true that the majority of migrants are from California and New York, but all states are represented and 15% of the migrants are from outside the US.

So far it seems that all major housing analysts are predicting a very strong year for the Portland real estate market in 2016 as compared to the rest of the country.  

Want to know how your neighborhood ranks in terms of sales and pricing? Check out the links below to learn more about where homes are selling the fastest and at the highest prices. Close in neighborhoods dominate both lists, but there are many more suburban neighborhoods on these lists too.

Don’t blink: Here are Portland’s 25 fastest-selling neighborhoods in 2015

Portland’s 25 priciest neighborhoods of 2015

 

Portland home sales for December 2015 blast through all prior records in pricing and number of sales


sold pendingThe Portland Oregon real estate market closed out December 2015 on fire. While home buyers typically take a break during the holidays, there was literally NO slowdown in the Portland housing market. Sold and Sale pending signs dominated the landscape throughout the metro area.

December 2015 sales were 21% higher than those for December 2014, and were the most sales ever recorded for December in the Portland metro area in the 24 years these records have been maintained.

Average home prices also rose in December to $367,000, up $36,000 from last year during the same month, and up $20,000 from just one month earlier in November 2015.

Portland home inventory drops to lows not seen since 1999

Due to the surge in buyers, real estate inventory dropped to 1.2 months (the number of months it would take to sell all houses on the market if there were no new listings). This is the lowest housing inventory Portland has seen since 1999.

According to RMLS statistics, 2015 beat out 2014 on all averages including number of pending sales, closed sales, new listings, sales and median prices.

Many realtors and lenders credit this surge of home buying activity to the anticipated rise in mortgage rates, which fortunately has not yet occurred. But we can’t lose sight of the fact that rents in this area are rising so fast, that for many, home ownership is actually cheaper than renting, and offer the advantage that monthly payments are locked in for the life of the loan (principal and interest).

Analysts predict drop in number of home buyers in 2016

For 2016, some analysts are predicting a slight drop in the number of home buyers as rising prices could price them out of the real estate market. But with rents rising as fast, if not faster than home prices; some of those renters could get more motivated to buy a house as quickly as possible; if for no other reason than to lock in their monthly housing payments.

In fact we are already seeing price increases on existing listings; and new construction is already pricing higher for homes under construction than buyers paid for identical homes during 2015.

Buying versus renting – tough call for many Portland area residents

Research and sales show that a large percentage of renters would like to be home owners. But with rents rising as fast, if not faster than home prices, it’s becoming increasingly difficult to save for a down payment. Many long time renters could get more motivated to buy a house as quickly as possible if for no other reason than to lock in their monthly housing cost.

For more information about what is driving the Portland metro real estate market, you might want to read:

Portland among top four housing markets in the US

Businesses moving to Portland citing affordability as #1 factor

Zillow rates Portland among top 10 housing markets for 2016

Portland rents among fastest rising in the country

 

 

 

2015 wrap for Portland Oregon

2015 was quite the year for Portland Oregon. We ranked as one of the top cities in the country in many ways:

Portland ranks banner

  • PDX named best airport (Travel Pulse).
  • Portland among top four housing markets in the US (Redfin Realty).
  • Second best best city for foodies (Washington Post).
  • 4th highest ranked city “on the edge of greatness (Sperling best places.net).
  • 4th best city to retire to (Sperling best places).
  • 10th highest ranked city for being “green.”
  • Third “quirkiest city in the US (Travel & Lesiure).
  • Among the top ten in most pedestrian friendly cities(Travel & Leisure).
  • Top 5 in most improving housing markets (Freddie Mac).
  • Portland named among top 25 best cities to live in the world (Monacle Magazine).
  • Millenial generation chooses Portland (CBS News).
  • Portland farmers market named best in the country (Huffington Post).
  • Among the top food cart cities in the world.

As with any city that is growing faster than we can keep up, Portland also has its share of problems we have to tackle; so Portland also ranked high in some areas we’d prefer not to rank:

  • 8th worst city in traffic congestion
  • Almost at the bottom of the list in educational scoring
  • Almost at the top of the list in number of high school drop outs
  • Increasing crime rates and gang violence (182 gun violence deaths in 2015 with almost 40 of those related to gang violence)
  • Fastest rising rents in the country
  • 10th highest ranking city for online crime
  • And finally we’ve even caught President Obama’s attention for the very high number of homeless in our city. As more people move here, some without money or jobs, the number of tent cities continues to rise; as do folks with signs at every freeway on and off ramp.
  • Gentrification of inner city neighborhoods driving long term residents to the streets.

2016 is slated to be the year we tackle many of our biggest problems.

  • Steps are already being taken to deal with education deficiencies. While many of our schools are very highly ranked, others need some help. To solve these problems, Portland will no longer require students to take national tests as too much time is spent on preparation causing other areas of study to lapse behind. New school boundaries have been drawn to better balance the populations in different areas around the metro area. The new boundaries are scheduled to go into effect in 2016.
  • Rent control measures are being discussed and implemented to control excessive rent increases to tenants.
  • Portland police department is in recruiting mode offering signing bonuses to beef up our forces to combat crime and gang warfare.
  • The homeless problem has been acknowledged and local politicians and committees are looking for ways to better house and feed our residents.

The one thing we can say about this city is that deficiencies do not go unnoticed. Portland residents take pride in all that’s great about this city, and campaign actively and get involved to improve what needs fixing. One has to believe that this is among the top reasons that so many people want and do move here. We’re not perfect, but we’re always striving to be better. 

Portland among top four housing markets in the U.S.

Move over Silicon Valley. The hottest tech sectors in the U.S. are now Boston, San Francisco, Seattle and Portland.

Portland skyline with Mt HoodAccording to a spokesperson at Redfin, “We’ve talked a lot this year about the great tech migration and how the influx of tech companies, tech workers and tech money is affecting the real estate market in places like Portland, Seattle, Denver and Boston. It should be no surprise that major tech hubs were home to some of the fiercest bidding wars this year, but even we were taken aback when we crunched the numbers to find the nation’s most competitive neighborhoods for home buyers in 2015.

The 30 most competitive neighborhoods of 2015 were all located in just four cities: Boston, Portland, San Francisco and Seattle. The rankings are based on several indicators of competition, including the percentage of homes that sold above asking price, how quickly homes went under contract and the percentage of Redfin offers that faced bidding wars.” In fact, the rankings on the charts below were compiled based on a lot of Redfin broker stats, so other reports could differ somewhat from this list.

As has been reported previously, Portland has been aggressively courting technology companies, and the tactic is working. Many of the high tech industry giants already have offices here, and new tech start-ups are locating here attracted by the relatively lower cost of living as well as other amenities that Portland offers.

As you can see from the chart below, according to Redfin, Portland’s hottest neighborhoods included Hawthorne, Belmont, Brentwood, and Woodstock. Check out the columns showing percentage paid above list price, price increases, and percentage of cash buyers! While most tech businesses report that they are looking for their talent first in the talent pool within Portland, they all too often find themselves being forced to recruit from around the world to find people with the right education, skills and experience to fill the positions.

This is in no way meant to imply that only the four neighborhoods named below were hot in 2015. All of the Portland metro area has been feeling the pressure in the housing market; due to new residents, home buying college graduates, and current residents who are looking to become first time home owners, or to move up or down within the markets.

New and expanding businesses are locating throughout the metro area, and of course, every buyer is looking for different features in their neighborhoods.

Home buying in the four cities mentioned Redfin’s report has definitely become challenging and the forecast is that this trend will continue well into 2016.

REdfin statsREdfin stats2

 

Businesses moving to Portland citing affordability as #1 reason

businesses that have offices now in PortlandOne of the factors that had kept home prices low relative to Seattle and San Francisco, was our inability to attract big businesses to Portland. This has all changed recently. According to an article in Portland Business Journal, Portland is still affordable relative to other big business locales around the country. But, “Economic development agencies statewide have been using Portland’s affordability to aggressively recruit companies from high-dollar markets.” The strategy has succeeded in attracting “Google, SalesForce.com, Airbnb and eBay, who all now have Portland offices and collectively employ more than 1,000 workers. Additionally, startups like the targeted email provider Customer.io and rental management software maker Cozy have relocated their companies from New York and San Francisco, respectively, to take advantage of Portland’s lower costs and availablity of talent.” And of course, business giants like Nike, Columbia Sportswear, and Intel have been in Portland forever.

How do lenders determine your mortgage rate?

Libor Index graphicMortgage rates are tied to a variety of indexes such as the mortgage bond index, the LIBOR index, etc. These indexes change continually which is why mortgage rates are an ever moving target, though usually stay within a relatively small range on a daily basis.

Banks will add their profit margin to the index rate to determine their “best rates” at any given time. “Best rate” is the key here though. Depending on the type of mortgage you are applying for, your lender may make adjustments to that “best rate” based primarily on your credit score and amount of down payment.

Conventional financing (Fannie Mae loans)

Mortgage rates chart Oct 15 through December 10, 2015

                               As you can see from the above chart, mortgage rates change frequently

After the recent housing crash when so many home owners who had adjustable rate mortgages lost their homes, most buyers who qualify are opting for 30 year fixed rate mortgages.

IF your credit score is at least 720 AND you have a 20% down payment, AND there are no recent prior derogatory credit issues (such as short sale, foreclosure, bankruptcy), AND you don’t need a co-signer, you should qualify for the best conventional rate you see quoted all over the Internet. But remember that those posted rates may be quoted just once a day, while rates can move up and down, even during the course of a single day.

Important note: Rates quoted on the Internet are often for adjustable rate loans or include a buy down cost.

The reality is that mortgage rates are all about risk. Currently mortgage rates are very low compared to historical averages. This is risky to lenders because you are locking in your rate for 30 years. Banks are all too aware that means that if you keep your house and take the full 30 years to pay it off, they will likely experience an interest rate loss on you at some point during that 30 years as mortgage rates rise. That’s why they build in a substantial profit margin over the rates they are paying to borrow money to lend to you.

If your credit score is below 720, or if you have less than 20% down payment, or if you can’t qualify based on just your own income; you are considered a higher risk, so you will be charged a higher rate to minimize that risk to the lender. We refer to this as “risk based adjustments”. Also, the type of property you are purchasing can trigger risk based adjustments. For example, you will pay a higher rate if purchasing an attached condo. You very likely will not be able to purchase a manufactured home even if you own the land under it, nor a floating home, even if you are also buying the slip, with conventional financing.

ARM (Adjustable rate mortgages)

Adjustable rate mortgages are still available. You’ll hear them referred to as 5/1 ARM, 10/1 ARM, etc. These loans have a locked in fixed rate for 5 or 10 years, or whatever type of ARM you have, but then the rate can (and usually does) begin to rise, as often as twice a year, and up to 2% at a time. For the lender, this means you are assuming some of the interest rate risk so ARMs are generally offered at lower initial rates than 30 year fixed rate loans. It is highly advised that unless you are absolutely sure that you will sell your home prior to the end of the locked in rate period, because the rates increases can be quite a shock to most home owners when they kick in, you should choose the 30 year fixed rate loan if you can afford to do so. (Your mortgage rate can go from 3.5% to 5.5% over night!)

Conventional ARMs are also subject to risk based pricing adjustments. So, all of the above mentioned variables can apply to these loans as well as 30 year fixed. 

Conventional financing can end up being very costly for those who do not qualify for the best rates, because when it comes to risk the banks always win. Buyers always pay for higher risk.

Other loan options

There are several other types of mortgage financing available. FHA, VA, USDA, private lenders, hard money, etc. Each type of financing comes with its own good, bad and ugly features, so each type of financing should be looked at and carefully considered when you are shopping for home financing.

FHA financing

FHA has historically been the option for those who are credit challenged. But, increasingly, those with lesser down payments are opting for FHA financing because the minimum down payment is only 3.5% of the purchase price, and, the fact that you have only 3.5% to put down does not affect your rate. BUT, FHA covers their risk by charging you both an upfront fee for the loan, plus monthly mortgage insurance to cover their risk for the life of the loan. Rather than the rate, the amount of the monthly mortgage insurance will be affected by how much risk you are to the lender. For example, if your credit score is lower (as low as 620), or if you have prior derogatory credit issues, you will be charged a higher monthly mortgage insurance premium. Some lenders do offer FHA financing to borrowers with credit scores lower than 620, but then rate as well as mortgage insurance will be higher. 

FHA rehab loans are a great option for those who want or need to purchase a lower priced home that requires renovations in order to make it safe and habitable. Make sure, if you are looking at fixers, that your lender is aware of this in advance, because there are defined steps you must take in order to close your purchase. Otherwise, FHA is very picky about the properties they finance and have very strict standards about the condition of the property if you are not getting a rehab loan.

Another downside to FHA financing is that the maximum purchase price is lower than the maximum price for conventional financing.

FHA does lend on manufactured homes, but does require a minimum 20% down payment, and these homes must be in excellent condition and must have been built after 1978. 

USDA loans

USDA loans cover up to 100% financing! But there are restrictions.

They are offered only in “rural” areas (as determined by population as of the last census.) In the Portland metro area, USDA loans are pretty hard to get, because only neighborhoods that are way out from downtown Portland still qualify. Additionally, there are income limits for home buyers, maximums on purchase price, and minimum credit scores are higher than for FHA financing.

But, if you are looking in a USDA eligible neighborhood, be sure to talk to your lender about whether or not this option will work for you. Anyone who qualifies gets the best conventional 30 year fixed rates with zero down payment and minimal mortgage insurance premiums.

VA loans

VA loans have been around forever, and what a great program they are for veterans. In most cases, there is zero down payment required, and vets will get the best rates with lower credit scores as well. They do have to pay mortgage insurance, but it is minimal as compared to the MI charged on FHA or conventional loans.

Thank you veterans for your service! You definitely deserve the best mortgages possible for the sacrifices you have made for the rest of us.

Hard money and private lender financing

As a general rule, only those who cannot qualify for any of the above types of financing will turn to hard money or private financing. The exception is when you want to purchase a property that does not qualify for any of the more well known forms of financing. If you seriously want to purchase a home and cannot get a loan, be prepared to pay much higher rates and more points for your loan. These private lenders know you have no other options, and are in a position to take advantage of that fact. Also, these lenders almost never lend without your having considerable “skin in the game” in order to protect their investments in you.

It’s important to talk openly with your realtor and lender when buying a home

Because a mortgage is the biggest debt most people will ever take on, and buying a home is the biggest and one of the most eventful purchases of your lifetime, home buyers need to talk openly with both realtors and lenders to help us guide you to the best purchase and financing for your unique circumstances.

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