House Hunters Still Busy with the Holidays!!

Lockbox Activity Dips Again

Potential House Hunters Still Busy With Holidays

When comparing the week of December 14-20 with the week prior, the number of times an RMLS subscriber (could be a Realtor or appraiser) opened a lockbox decreased 2% in Washington state and 7.2% in Oregon.
  

Washington

Oregon 

More Changes Coming in the Mortgage Industry! An FYI for Portland, OR Buyers & Sellers!

Again, more changes coming in the mortgage industry!  This time it involves “Good Faith Estimates” for potential buyers.  In order to compare “apples to apples” you must compare a combination of elements when interviewing Mortgage Brokers to partner with you on your next real estate transaction.  One of the first is to speak with other friends or trusted advisors (such as your Real Estate Broker) to get the names of mortgage brokers they have found reliable and referred.  The 2nd step has always been to ask for a “Good Faith Estimate” or GFE.  A GFE has always been a list of closing costs to acquire the loan plus the most appropriate interest rate available from the lenders available to that Broker and, finally, the monthly PITI (principal, interest, taxes, insurance).  Beginning January 1st, 2010 we will see some changes in the industry.  Now a GFE will be more akin to a “Truth-in-Lending” document that was formerly provided during the loan process and, again, with the closing papers.  Truth-in-lending gave you the APR or annual percentage rate (the full cost of the loan including closing costs) and the total of your payments over the life of the loan (never a pretty sight).  Now GFEs will look more like truth-in-lending and the other information, such as closing costs and PITI will be in a summary sheet provided by each mortgage brokerage house.  Another big change is the new requirement for getting a GFE from a mortgage broker or lender and that will include pulling a credit report.  Thus, receiving this document will take a bit more time!

Other changes include that the “Owners Title Policy” (usually a seller paid cost) will show up on the buyer’s GFE (and will be very confusing for buyers…just know to subtract that amount, but it must now be disclosed). Also, the escrow officer in charge of preparing the documents for signing and recording must now compare the original GFE to the final HUD closing document to make sure they are in line.

Just know that you will want to compare both the GFE and the summary to get a true picture of which loan would fit your needs.  This is simply another example of the pendulum swinging (and, perhaps, occasionally “over-swinging”) to compensate for the former “loosey-goosey” lending practices that helped propel us into this new era of real estate.  Sighhhhhhhhhhhhhhhhhhhhhhh!  However, the good news is these new regulations will force marginal Mortgage Brokers to stay the course on fees.

“It’s Hard out There for a Mortgage Broker”!

It’s a difficult time in the money-lending business and Portland Mortgage Brokers are not escaping!  Man, I would not want to be in the business of trying to get loans approved right now.  As if the real estate market needed MORE challenges, getting $$$ has become much more difficult.  It started with condos and new regulations and has filtered throughout the lending world and impacts all property types.  FHA paperwork has become amazingly more redundant and conventional financing demanding higher credit scores and/or more money down.  As a buyer and self-employed small business owner, it has always been a trying process for me.  So, I feel your pain.  It almost becomes a full-time job getting all the reports, paperwork, verifications, letters of explanation and notes from your dead great-great-grandmother.  It’s a wonder we don’t all lose our existing employment while trying to comply with the almost daily requests for additional information.  Well, “it is what it is” for awhile I suspect.  This is the pendulum swinging way too far the other way to compensate for years of “loosey-goosey” lending practices.  I would definitely rely on your Real Estate Broker or the referral of a trusted friend or family member to connect with a reliable Mortgage Broker.  Otherwise, a little patience, understanding and resiliency will help get us through the process.  I often compare the loan and escrow process to childbirth, the memory fades and we have that second child (or get that next loan).  It’s all good!

Portland Metro Monthly Real Estate Stats…Come and Get ‘Em!

The very best to you and yours this holiday season. I hope you are enjoying the magic that also comes at this time of year. We officially start the beginning of winter next week, but that means the days will start lengthening again. I think the Portland real estate market is also reaching the end of a long dark period, and I look forward to a new and brighter year for 2010. The tax incentive for home buyers has been expanded to include certain current or repeat homeowners, so if I can be of service, please contact me at 503-709-0802 or jj@janeesejackson.com.

FAQ’s on Repeat Tax Credit:  http://bit.ly/RepeatBuyerTaxCredit

FAQ’s on 1st Time Buyer Credit:  http://bit.ly/Original1stTimeBuyerCredit

Sales activity in the Portland area increased in November compared to the same month in 2008.  Closed sales were up an amazing 72.4% and pending sales rose 7%. New listings dropped 7%. Year to date pending sales were up 2.6% although closed sales were behind last year’s total by 4.1% (my guess is the number of short-sales that fail to close). Y-T-D listings decreased 19.9%.

The monthly inventory rose just slightly to 7.1 months from the previous month (which is typical for the holiday season), which means it would take approximately 7.1 months to sell the 12,697 active listings. The average price for is down 12.9% and the median sale price declined 11.1% compared to the previous 12 months in the Portland area Metro market.

 As always, information is very neighborhood specific, so contact me for info about your area!

Track your ‘hood or find your new home or investment on this site by signing up for daily listings!  You are enjoying www.fabulousportland.com

Season’s Greetings!!

Buy the Least You Can Buy and Still Be Happy!

It seems like an obvious statement, but whether it’s buying your first home or your move-up or move-down home in Portland, Oregon or elsewhere, deciding how much to spend on a home is often stressful.  Many times it is dictated by how much a mortgage institution will lend you but often buyers have the conundrum of being allowed to borrow much more than they need.  I have maintained since the beginnings of my real estate career in 1985 that it is less a matter of what you can afford and, rather, should be a matter of what you really need (both practically and aesthetically).  There is no “right or wrong” answer to this real estate question as it is entirely a personal decision based on personal circumstances!  There are different needs based on the stage of your life:  single, single w/roommates, newly married, starting a family, family growth and empty nesters.  Often, buyers purchase based on the “fantasy” of what their life is or might be and I always think it is much more prudent to determine your “real life” and make your choices.  Remember, there are plenty of other ways to make real estate investments, like rental properties to plan for passive income in retirement or real estate properties to buy and hold or refurbish!  It probably applies to all things, but in real estate I believe you should buy the least you can buy and still be happy!!!

“Are We There Yet”??? Predictions for Housing and the Economy for Portland and Oregon!

“I’ve Been Down So Long, It Looks Like Up to Me”**!!!  Today the Oregon State Economist, Tom Potiowsky presented his “State of the Oregon Economy” predictions and updates for 2010!  I read a lot of financial blogs and feeds so I wanted to see if Mr Potiowsky’s predictions corroborated other analysts.  The answer is “yes”!  The era is being called the “Great Recession” (note: not “Great Depression”) due to this being the longest economic downturn since 1930!  According to economists, this recession actually began in December 2007 and has now been deemed “technically ended” for the US in summer 2009 and for Oregon in the fall of 2009!  Mr. P emphasized time and time again in his discussion today that the “technical” ending is quite different than the “feel good” ending.  This “feel good” ending to our downturn will be very personal and much slower to realize.  He predicts that by the 2nd half of 2010 and/or the first half of 2011 we will begin to “feel better”.  And, the key to recovery is continued repair and loosening of the credit markets!

This has been a global recession.  For the US, imports and exports slowed considerably and our CPI (consumer price index) has decreased in ‘09 for the first time since 1955!  Consumers, businesses and governments have restrained spending.  Now there are inflation>deflation>inflation worries.  But, Mr. P did not believe that inflation was a big worry for 2010 and 2011.  Fiscal stimulus and lower energy prices have helped to spark the recovery and there’s still a lot of stimulus money to spend.  Labor has to get higher wages to pay for inflationary prices.

Despite the fact that this morning there were positive numbers for unemployment (10%, down form 10.2%), Mr. P feels that the unemployment rate is a lagging indicator of economic condition.  He expects that there could be more job losses in early 2010.  We should, he believes, pay more attention to job creation!  How many jobs are actually being created?  In the 2001 recession, it took four years for jobs to completely recover.  It may take 5-6 years to get back to our former job rate this time around.

The US dollar recovered briefly but has dropped again.  Mr. P feels that the value of the dollar is a relative value against other currencies….that’s all!  The dollar value is going down to where it used to be and where he believes it should be, at a more natural level.

What happens after we spend all the stimulus money?  What’s behind the stimulus to continue the recovery?  Labor markets may remain weak because businesses will be conservative and reluctant to re-hire until they’re sure this recovery “has legs”.  He compares our recovery to the constellation “Cassiopeia” (the shape of a soft “W”) and there could be a recovery with a slight dip.  In Oregon we hit 12% unemployment in March of ‘09 and down to 11.3% in October ‘09.  For some perspective, we were at 5% in April of ‘07!!  Some of our jobs are gone for good, others are simply in hibernation.  And, keep in mind that unemployment figures do not include those that have quit looking or those that have taken part-time work until they find full-time employment.

Mr. P believes we are at or very close to the bottom and predicts a slow housing recovery with a possible 35% increase in housing starts by between 2013 and 2015.  Metro predicts that our population will grow by one million people in the next 10 years.  The Housing Price Index “Rate of Decline” slowed and California is starting to gain ground.

Leading indicators for Oregon show that the economy has turned, but it will be a slow growth!  We will see more signs of this recovery in the 2nd half of 2010 and in 2011.  Mr. P predicts some positive job growth for Oregon in the 2nd half of 2010 but it could be 2011 before we really start to show positive numbers.  Commercial real estate will remain weak till 2012 with a mild recovery that is absolutely dependent on the credit markets.  Private investor groups will continue to buy up property since credit markets are tight.

Risks to this forecast:

• Credit Markets: There must be credit availability to the credit worthy.
• H1N1 Virus:  He does not see this as a risk as big as the media plays it.
• Export Markets:  Must stay viable.
• Geopolitical:  Some unseen geographical/political event.

**Referencing the book by Richard Forina

How Interest Rates Affect the Bottom Line!

Did you know that a ½% change in interest is approximately equal to a 5% change in sales price? It’s powerful to realize the importance of the relationship of interest rates to your monthly payments.  This is the reason why our present low interest rates are so important!!  When I started my real estate professional life, interest rates were at 13% and when they dropped below 10%, we thought we’d just won the lottery!!!  So, our historic low interest rates coupled with the present market reality of decreased pricing is a serious reason to consider real estate as an investment!!!