Contractors are such an integral part of my business! From preparing homes for market to property inspections for sellers and for reliable repairs for my buyers during and after the buying process. Why is our relationship so “bittersweet”???

There is this continual “battle”. Sellers who are selling their home (thus, already deep into the “divorce” process), want their home “show-ready” and repaired, however they don’t want to spend unnecessary money (understandable). Buyers want the seller to repair but don’t want to input any money (also understandable). So, finding a contractor who will do the small jobs on a regular basis, show up on time and perform the work with integrity is a challenge. Then, add that the reason someone would opt for a vocation such as this, would mean they are looking to control their time (again, understandable and a lifestyle choice). And, contractors willing to do these jobs are often “living la vida loca” on their own terms (it may or may not be your “la vida loca”). In many ways, we need them more than they need us. If they needed more, they’d opt for another source of income. We have to make make peace with this conundrum. Life is about compromise!

Ricky Martin “La Vida Loca”

I’m not scared by lions and tigers and bears, either…oh my!  That could be because I don’t encounter them on a daily basis.  But, the entire process of buying real estate is certainly convoluted these days and I do encounter that daily.  I’ve always contended that working with less than professional Realtors, inspections and possession could be the “stickiest points” in any real estate transaction.  However, real estate deals are like “walking through quicksand” from beginning to end right now.  I have been diligently looking with my investment partner for our next income real estate property and finally located one on which to bid.  I had to make a “sight-unseen” first bid contingent upon seeing and approving the property, of course, if we agreed on the other terms of the that offer.  Upon seeing the condition, running the numbers “ad nauseum”, I concluded that it was too much work for the price I was initially willing to pay.  I revamped the offer and the response was a counter-offer from the seller AND they lowered the price officially to that countered price.  Even though a couple of weeks had passed during this initial series of events, I suddenly encountered a multiple offer situation.  This just confirms my “pricing trumps location” theory.  Price is king! 

My third attempt at an offer prevailed and the offer was accepted!  Now we have had an oil tank sweep (found two older oil tanks, no longer in use, that must be decommissioned), we’ve had a sewer scope (the 1929-built home’s sewer line “shows the signs of age” but is functional) and a full-house inspection (we knew the house needed remodeling but now found some relatively minor structural issues).  I’m glad I’m “in the biz”.  I’ve seen enough inspection reports not to let it deter me from the “greater good” and that would be getting 5.5% mortgage interest rate for 30 years in a buyer’s market (even if well-priced investment properties are likely to generate a competitive bidding situation)!!!

Stay tuned for lots more on the exciting adventures of getting through the loan process.  Also, our future remodeling experiences  and tribulations and learning experiences  and set-backs .  Our last summer’s renovations should hopefully help prepare us for this new project.

So, what does the Portland Oregon real estate market feel like today?  Like “walking through quicksand” or like getting “stuck in the mud”.  It’s moving in slow motion.  Our market gains a bit of perceived momentum and it’s suddenly “dead in the water”.  The Oregonian says in today’s (05/18/10) Business Section:  “Home sales rise, but prices drop”.  These are mixed signals at best!!  There has been a lull since the end of the Federal tax credit and when comparing the week of April 26 - May 9 with the week prior, the number of times an RMLS subscriber (Realtor or appraiser) opened a lockbox decreased 15.6% in Washington and decreased 17.3% in Oregon.  Even if you find your new dream home or a great investment property or get a willing buyer for your home, the roller-coaster ride is just beginning. In an attempt to manage and normalize an industry that went a bit bonkers…no doubt, the mortgage market pendulum has totally swung to an incredibly tight credit market, less mortgage options, extreme difficulties with appraisals and transactions unable to close due to new regulations and restrictions! I’m still waiting to get back “to business as usual” (although I can’t really remember what that was), so at least a “new normal” !!!

This is a rendition of an article that I wrote for April 2009 and it’s nothing if not even MORE true today!!!  You remember the age-old real estate adage: “location, location, location”?  Well, it’s been trumped by PRICE!  There are buyers out there but they are looking for a “steal or a deal” in order to entice them into the marketplace. 

Location will always be an important component of real estate value, however, pricing has usurped its position as a stronger element for a successful sale.  It’s all about price now! So, overpricing your home in this market is the “kiss of death” (and it doesn’t have to be much overpriced to accomplish this).  It is very difficult to determine pricing (and, no one wants to leave money on the table), but you almost have to run the comparable data and ignore it!  You absolutely have to price below the competition and price to lure the reluctant buyer to the table.  The foreclosures and short sales are compromising the sale prices of homes in many areas and to be competitive the other sellers must respond.  Properties with the possibility of selling short of what is actually owed on the property are often utilizing formulas for price reductions.  The listing agent will consistently and incrementally drop prices until that property’s price hits that “sweet spot” in the market pricing continuum.  You know you’ve reach the sweet spot when the activity and interest suddenly increases and there are often even multiple offers.  This can also happen in a non-short sale or foreclosure situation (I was just involved in such a situation when trying to purchase an investment property…overpriced and no offers…I come in low…seller is out of town…while I wait they lower the price…and, suddenly there are three offers…I have to up my offer).  This is a tough market, maybe tougher than most realize.  It’s a competition for a smaller pool of buyers.  You have to be competitive to even be in the game, you have to undercut the competition to win.

Today is the last day to get in contract on the purchase of a new home and receive either the “First-Time Home Buyer Credit” or the “Repeat Home Buyer Credit” .  Since many experts feel that these tax credits (especially the 1st-Time buyer credit) have fueled sales in the national and local Portland metro area real estate market, will there be a backlash in the market? I have read arguments on both sides and don’t really feel I have a clear picture. Locally, I’ve spoken to Realtors who feel it has been a substantial boon to their sales and others have not experienced as much affect.  Of course, that could be a direct result of the average age and/or income of each particular Realtor’s client base.  I do feel we will now see what our “real market” might be without artificial stimulus.  One piece of good news from the Fed last week was that they intend to keep the mortgage interest rates low for an extended period of time.  No one knows how long but we all know that interest rates do make a huge difference in our ability to purchase!  There have been multiple positive reports on the state of the recovery of our economy, so there are indications we are slowly digging our way out of a hole.  I believe one of the most critical elements of the recovery of our Portland real estate market will be mortgage availability and jobs.  (And, the real estate market often leads any economic recovery but we must have job security to have a real estate recovery and so it goes round and round).  I have seen the tightening of the mortgage market as the biggest deterrent to my client base moving forward with their next real estate adventure!  What do you think?

Attempting to “time” any market is tough! Whether it be the stock market, the real estate market or a marathon training. There are a lot of variables, conditions and goals that contribute to the decision to buy, sell or hold.

“The Gambler”: Kenny Rogers

I think our present marketplace has proven that not everyone should purchase property and there are lots of factors that should enter into such a decision. Just keep in mind how interest rates (and, they are already on the rise) affect the ultimate cost of a real estate purchase:

Did you know that a ½% change in interest is approximately equal to a 5% change in sales price?

It is powerful to realize the importance of the relationship of interest rates to the monthly payments.

Change in Interest vs. Reduced Sales Price
Purchase Price $200,000
Interest Rate 5% Term 30 Payment $1,073.64

½% Increase in Rate $1,135.58
5% Increase in Price $1,127.33
A ½% change in interest rates is approximately equal to 5% change in price

1% Increase in Rate $1,199.10
10% Increase in Price $1,181.01
A 1% change in interest rates is approximately equal to 10% change in price

Timbuk 3 – The Future So Bright, I Gotta Wear Shades

Found at abmp3 search engine

Our Future’s So Bright?

Portland is listed as the 8th city in the nation where it is smarter to buy than rent in a recent Forbes magazine study. To rank the cities, Forbes computed the premium to buy (the spread between what a consumer would spend to rent and what they would pay for a mortgage) and also identified locales where economists predict home prices will go up the most over the next five years. “Portland is a picturesque, culture-driven city with good local services and amenities”, noted the article. Check it out: Forbes Magazine Article and the part about Portland . So, I do believe in Portland (I’ve been blogging recently about “vacationing in my own backyard” in earlier posts). But, I also believe it will take a few years to dig out of this hole. A family hoping to put down roots here would normally pay a 62% premium to go from renting to buying. In the third quarter of 2009, however, that premium shrank by 16 percentage points. At this same time, Moody’s Economy.com anticipates that home prices will jump 19% over the next five years. That sounds about right to me. I’ve been using a conservative 3% appreciation rate when projecting for my personal real estate investments. See a recent post on “What’s the Buzz…Tell Me What’s-a-happening” 

Sales activity in the Portland Metro area continued to show improvement in February 2010 compared to a year ago. Closed Sales were up 18.4% and pending sales rose 45% compared to February 2009. But, a portion of those closed and pending sales were foreclosures and short-sales (which skew the statistics slightly in my opinion). Inventory levels rose from last month, so that at this month’s rate of sales it would take approximately 12.9 months to sell the existing active listings (the highs were 19.2 months of inventory in January 2009 and 16.6 months in February 2009). 

The average sales price for February 2010 was down 8.5% compared to February 2009, while the median sale price declined 9.3%. 

As expected at its meeting on Tuesday of last week, the Fed held the fed funds rate steady and the accompanying statement contained few changes. The statement retained the language about the fed funds rate remaining at extremely low levels for at least several months. The Fed’s assessment of the economy was a little more upbeat at this meeting, but pointed out that “economic improvement will occur slowly”. The continued to signal that the $1.25 trillion MBS (Mortgage Backed Securities) program will conclude at the end of March. With less than two weeks of Fed MBS purchases remaining, investors will be watching closely to see if the Fed’s exit has an impact on mortgage rates. This week’s inflation data showed that inflation is not a concern right now. The current low inflation environment makes it easier for the Fed to continue to hold the fed funds rate low to stimulate the economy. 

As always, information is VERY neighborhood specific, so contact me for info about your area.  Don’t forget you can track your neighborhood or find your new home or investment by using the “Just Search Listings” or “Sign up for Daily Listings” in the navigation bar of this page. 

                   “It’s a Beautiful Morning”:  The Rascals

In my continuing attempt to explore Portland metro area parks, I decided to try the downtown urban core area (and, yes, there are quite a few parks). It doesn’t get much more “spring-like” than the Portland Farmer’s Market in the south Park blocks adjacent to Portland State University.

Opening Day at Portland Farmer's Market

The market is great for fresh, local produce and a myriad of other “foodie delights” plus some world-class “people watching”.       

Fresh flowers at Portland Farmer's Market

So, I didn’t stop there.  I decided to visit several of the “urban parks” (of course, not including our incredible Forest Park in Northwest Portland or Kelley Park in NoPo or Hoyt Arboretum  which I’ve visited prior).  My focus today was Portland’s version of “inner-city” parks within the core downtown area.  We have many more in the close-in eastside (don’t worry, I’ll get there) and NW and SW Portland (I’ll be there too)!!

A little bit of sunshine brings out the “children in all of us”.   It’s not quite hot enough yet for the cascading waterfalls that usually dress Jamison Square in the Pearl District, but just warm enough to start bringing the children, dogs and families to enjoy the sunshine! 

Jamison Square Park in the Pearl

And, then there’s the “Contemplative Park” or Tanner Springs Park also in the Pearl District.  No dogs allowed as it is a “wetlands wonderland”.  Many children also enjoy this park, plus readers, sun worshipers and strollers.

I can’t forget the North Park Blocks as they offer a great entrance to Portland’s Chinatown plus basketball, bocci ball, a children’s playground and more!

North Park Blocks Playground

 There are many lesser know parks such as the peaceful park across from the Portlandia Building with our elegant and powerful statue of Portlandia .                                        

Entrance to the North Park Blocks

Portlandia

Kelley Point Park

So many Portland Parks, so little time!  I’m continuing my ”vacation in my own backyard” by exploring the many parks in the greater Portland metro area.  Kelley Point Park is located in the St Johns neighborhood of NoPo (North Portland, for those not familiar with real estate jargon).  St Johns was busy re-inventing itself during the real estate boom times and was fast become the destination for those looking for the “next big thing in real estate” due to it’s affordability.  Kelley Point Park, at the confluence of the Willamette and Columbia Rivers, offers a 40-mile loop of walking, running and/or biking trails but is not all that great a work-out due to the flat terrain (unless you run or bike).  It also offers small beaches down by the water’s edge.  The area is somewhat industrial mixed with across the water views of Sauvie Island, Forest Park and even Mt Hood!  You can watch the big ships come in and out of the Port of Portland.   It is mostly deciduous Cottonwood trees, so I’m sure it will be much more lush and green in the Springtime. 

Trails at Kelley Point Park

However, the driftwood made for interesting art….. 

Anyway, I digress.  To survive in the real estate business you must constantly reflect your buyer’s and seller’s needs and the requirements of the marketplace in present tense.  Real estate information is no longer proprietary and we are not the “gate-keepers” of listing inventory or property details.  Home buyers and sellers have access to multiple sources of information and with 90% of buyers starting their real estate search on the web and xx% of sellers researching their position online, the public does not need real estate agents as their first point of contact.  There are a myriad of ways to access much of that data.  Our industry must keep re-structuring and re-inventing itself to reflect the times.  We need to “kick it up a notch” and be a partner in an important set of decisions that revolve around a real estate purchase.  We must be a source for other referrals such as mortgage brokers, title and escrow companies and property inspectors.  We must be an educated and experienced resource.  We have to be a strategist, a fellow brain-stormer, an advocate and a sponge (take it all in, wring out what we don’t need).  We have to not chase the immediate sale, but rather embracethe long-term relationship.  We have to negotiate with a win-win attitude while solidly championing our clients’ position.  We absolutely have to maintain a certain level of technical proficiency and constantly be willing to upgrade our technology….it is a “people-first business”, but you must have access to fast information and an even faster response time!  We have to read, take classes, attend seminars/webinars and scour real estate, financial and economic “rags” to keep abreast of the “latest and greatest”.  We have to respect ourselves and our clients by first investing in ourselves, personally and professionally.  You cannot be an advocate if you’re not mentally, physically and spiritually at least trying to be at the “top of your own game”!

The emergence of this new breed of real estate agent will, of course, begin with the on-going edification of existing professionals.  The rest of the evolution of the industry will have to launch with hiring practices.  Instead of pressure on managing Brokers in real estate offices to “fill seats” or simply produce “warm bodies”; instead of a “numbers game” the industry will have to embrace the age-old “quality over quantity” ideology!  The public will have to insist on “full-time” vs “part-time” agents to represent them.  Why does this matter?  It matters because experience matters!  Everyone has to start somewhere, so why not institute “mentoring programs” within real estate offices, where new agents can actually shadow experienced agents and learn the basics.  Instead of fueling a state of paranoia, the agents develop a sense of community and camaraderie.  Of course, a little old fashioned competition mixed in doesn’t hurt, but sharing the wealth of knowledge is essential.  Lack of training is rampant and handing someone an RMLS-web code, a desk and a phone is not enough to secure the success of that agent or the clients they represent!

I am one of the lucky ones.  Not only do I love my job (despite the fact that 2008/2009 tested my stamina), but I started my career in another down market with interest rates at 13% and a stampede of real estate agents had left the business.  There were only 12 agents in my office and we were given individual attention and weekly required classes.  I know that many newer agents have never seen a downturn…till now.  This temporary down market could give managing Brokers the opportunity and time to really participate in their agents’ development.  Instead of setting the bar so low, we can now demand from ourselves our very “highest and best”.  Just some thoughts……………