Cherry blossoms in bloom along the westbank of the Willamette River!

It definitely doesn’t rain ALL the time in Portland Oregon.  As a matter of fact, we often enjoy these unexpected explosions of early Springtime.  If we weren’t true Oregonians, we’d be packing away our sweater and galoshes and pulling out the flip-flops and shorts.  But, we know this is just a welcome “tease”.  As I was “tooling along on my townie”, I noted that I am constantly amazed at the beauty, the cleanliness and the diversity of Portland!  I enjoy seeing that “Spring had Sprung”, then bike over one of the ten outstanding bridges in downtown to the eastbank of the Willamette River and check out rowing lessons.  

Rowing lessons offered on the eastbank of the river!

A little further down the eastbank is the OMSI (Oregon Museum of Science and Industry) with the ever-changing array of exhibits and the IMAX theatre. 

Oregon Museum of Science and Industry

 Then back across the Hawthorne Bridge to head down to the South Waterfront and check out the new construction there.  Despite a challenged real estate market, they continue with the development.  The park is almost finished and will add an inviting element for the enclave.  The tram to OHSU still a relative new addition to the Portland skyline.  

The tram on it's way up "Pill Hill" to OHSU

 Biking back to downtown with what seemed like the entire population of the Portland metro area all enjoying the sunshine and warmth, you would occasionally see what “keeps Portland weird”.  

Bagpiper on unicycleStolling musician!

 And, finally a bite to eat at the Saturday Market.  Today market the “Grand Opening” of the 37th annual Portland Saturday Market!  

Tie-dye and flambuoyance at the Portland Saturday Market!

And, a possible Jimi Hendrix sighting???   

Jimi, is that you???

One of my favorite Jimi Hendrix tunes:  “All Along the Watchtower” 

http://www.youtube.com/watch?v=14qTXRkAKr8

There is also a property-tax deduction for non-itemizers.  You don’t have to be a new homeowner in 2009 to deduct qualifying property taxes, but prior to 2008, you did have to itemize your taxes in order to receive the benefit–not anymore.  Under the new rule, homeowners who don’t itemize can boost their standard-deduction amount by up to $500 if they’re single and up to $1,000 if they’re married and file a joint return to account for property taxes paid during 2009.  You’ll need to include a Schedule L with your 2009 tax return, but it’s definitely worth it if your qualify.

If you paid refinancing points, you get to deduct the points over the life of the loan.  That means you can deduct 1/30th of the points per year if it’s a 30-year mortgage.  It’s not a lot of savings, but everything helps when you’re legally trying to lower your tax bill.

There are multiple energy and home improvement credits.  Homeowners can make energy-conscious purchases that will provide tax benefits when filling out their tax returns for 2009.  The new law provides tax credit for making your principal residence more energy efficient and for buying certain energy efficient items.  There is the Residential Energy Property Credit and this new law increases the energy tax credit to 30% of the cost of all qualifying energy-efficient improvements to existing homes.  This includes windows, doors, insulation, water heaters, energy-efficient heating and air conditioning systems, roofs, biomass stoves.  And, there are no income limits and no AMT (Alternate Minimum Tax) ramifications. It also raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010.  Go to http://www.energystar.gov for loads more information!

There are a few other tax breaks such as new car purchases.  If you bought a qualifying new car or truck ($49,500 or less) between February 16 and December 31, 2009, you may be able to deduct the sales or excise tax (for state of Washington buyers).  Your income must be less than $125,000 for a single taxpayer or $250,000 for a couple to get the full deduction.  The benefit applies to more than one vehicle, as long as all of them qualify and delivery was taken by December 31st.

Unemployment benefits are usually fully taxable.  If you received any unemployment benefits at any time during 2009, you are eligible to exclude the first $2,400 of these benefits when you file your tax return.  For a married couple, the exclusion applies to each spouse separately.

If you were unemployed in 2009 but you got a new job, moving expenses may be deductible, if you moved more than 50 miles away and you don’t have to itemize to get this deduction.  For 2009, you can deduct the cost of getting yourself and your household goods to the a new area 50+ miles away, this includes 24 cents per mile for driving your own vehicle, plus parking fees and tolls.

Don’t forget the Private Mortgage Insurance (PMI) tax deduction!  If you put down less than 20% on a house, you were required to purchase private morgage insurance, which protects the lender in the event you default on the home loan.  Starting with loans issued or refinanced in 2007, and continuing through 2010, you can deduct each year’s premiums paid on PMI for your principal residence and for a non-rental second home.  The tax break was originally good for 2007 only, but the government extended it for three years.  The deduction begins to phase out once your adjusted gross income (AGI) reaches $100,000 ($50,000 for married filing separately) and disappears entirely at an AGI of $109,000 ($54,000 for married filing separately).

There is also a Residential Energy-Efficient Property Credit witch covers very expensive but green products such as solar electric, solar water heaters, geo-thermal heat pump, wind energy and full-cell power plants with a 30% credit for qualifying costs.  With all of these credits, financing is permitted!  Again, go to http://www.energystar.gov for specifics and, of course, always consult with your tax professional!!!

Ted C. Jones, Chief Economist for Stewart Title

•   ”and, I think it’s gonna be alright,
• yes, the worst is over now.
• The morning sun is shining like a red rubber ball”. 

The Cyrkle/1966  http://www.youtube.com/watch?v=hOxLaHPPzzw

  Ted C. Jones, Ph.D.
Senior Vice President-Chief Economist, Stewart Title Guaranty Company
Director of Investor Relations, Stewart Information Services Corporation NYSE-STC  gave a robust presentation today, Thursday February 25th, 2010 at the Columbia Yacht Club to a room full of Real Estate Brokers, Mortgage Brokers and Title reps hungry for information and tidbits of foresight on economic predictions for Portland, Oregon.  There were no “defining moments” or “jarring revelations” at this seminar, but lots of good facts, figures, opinions and observations!  His real estate and economic predictions (which he reminded us were just about “spot on” last year, except concerning interest rates) simply concurred with a lot of other reading and presentations I have attended.  However, he made the material interesting, palatable and interspersed what he called “Ted’s Solutions” to a myriad of problems.  You don’t have to agree with everything but he certainly backed up his opinions and prophecies with a lot of graphs and historical data.   

• Wall Street:  liquidity and Washington realizing that they can’t contol
• Jobs:  he feels the stimulus is not working
• Time-Bomb loans:  now concerned about commercial
• Terrorists attacks
• Pandemic:  like Bird Flu
• Inflation and cap rates going up
• Tax-cuts
• Energy:  US imports 63% of oil
• All the band-aid fixes for real estate, autos, credit cards and banks

Just as a regular citizen trying to reign in a budget and make their finances work, the US must start with decreased spending.  He definitely believes (as do most in the industry) that interest rates are artificially low and will definitely begin to creep up.  He believes we will not see interest rates as low as we are now experiencing in our lifetime again (I guess it matters how old you are).  Those buyers with good credit or cash, a bit of patience and some luck will make some great buys in the existing market.  And, he feels our next crisis will be in the commercial real estate market.  “History doesn’t repeat itself, but it certainly does rhyme!”….Mark Twain.

Hoyt Arboretum Visitor Center in Portland Oregon

So, I’m continuing my exploration of Portland and our former five days of “wall-to-wall sunshine” made another hike a requirement!!  You can see more about my park adventures and Forest Park, in particular, in a former post at http://fabulousportland.com/2010/01/23/in-appreciation-of-one-of-the-many-portland-wonders/ .  This time I meandered up the trails to the Hoyt Arboretum Visitor Center and found an absolute wealth of information on the fabulous park trails in Portland!  They offered plenty of trail maps (instead of my usual wandering aimlessly, I can plan for the areas of the park I want to discover), lots of historical data about the park and information on the endless varieties of trees.  We have a world-famous collection of conifers, by the way.  You can choose to hike through the Evergreens or enjoy the Oaks, Elms and Magnolias.  All the trees are labeled and the trail names reflect the interesting variety.  I didn’t realize there was a fire in 1889 that burned almost everything to the ground.  Trees were re-planted by Hoyt Arboretum in 1931.  Some of the native trees were left and, thus, there is a unique mixture of native and exotic species!  There are over 8,000 specimens representing more than 111 plant families.  It’s fun being a tourist in your own backyard!!! 

A nice piece of real estate in Portland Oregon

If you continue up the trails (and you have your choice of varying durations and exertion) you can choose to visit the Pittock Mansion!  This grand old dame is full of Portland history and charm and the spectacular view can include all of downtown Portland plus Mt Hood, Mt St Helens, Mt Adams and even Mt Rainier!!!

Though I was never particularly a huge fan of John Denver’s**,every time an unexpected burst of sunshine visits Portland Oregon, I can’t help but start humming “sunshine on my shoulder makes me happy”!!!  This photo was taken yesterday (the first of two days of wall-to-wall sunshine in Pdx) of Tanner Springs Park in the Pearl District of downtown.  The sunny weather brings out a sunny disposition in Portlanders, as even as there is a chill in the air, folks are enjoying the parks, sitting in the sun and jumping on their bikes.  If we weren’t “true Oregonians” (and transplants count), we’d be stowing our down vests and coats and whipping out the shorts and flip-flops.  However, we know better!  We are experiencing a “teaser”.  All the same, this a commonly known secret (amongst Oregonians) regarding Portland and Oregon area weather, it doesn’t really rain ALL the time!!!  But, if the secret got out, we’d look like the endless city-upon-city/freeway-upon-freeway that has been visited on SoCal or even the Bay Area.  The reason that Portland continues to be  a destination for people/families on the move searching for quality of life is: “THE QUALITY OF LIFE”!  We have a void that we have filled in the USA where we embrace “Keep Portland Weird”, see Kink.fm’s take on that ( http://www.kink.fm/Keeping-Portland-Weird-makes-sense/6400344 ), while we entertain arts and culture at every level and have plenty of venues for a very elegant lifestyle ( http://www.pcs.org/) ( http://www.obt.org/) ( http://www.portlandopera.org/ ) and SOOOOOO much more!  We have this undercurrent of fabulous restaurants that “foodies” embrace with a vengeance and that “word” travels see how Portland is nominated for Budget Travel magazine’s “Best Food City in America” ( http://budurl.com/z6×7 )!  We have this superb Tango culture (that I just recently discovered) and our city hosted the equivalent to the “Tango Olympics”, by the way ( http://www.claysdancestudio.com/tangofest/index.shtml) !!  We have this bicycle friendly, ever-developing national presence. Go see the Portland Bicycle Plan for 2030 ( http://bit.ly/2030PortlandBikePlan ) . Or, see how Portland ranks #2 in an airport satisfaction survey ( http://bit.ly/dlAQ1t ).  Anyway, we are constantly hitting the national and international scene for our exhuberance (on so many issues, on so many levels). You don’t have to agree or disagree, I just see it as positive for giving Portland the opportunity to be “all that it can be”! It’s NOT the end of the story.  My father, Joe B Jackson, was involved in my hometown city government (including being Mayor) of Murfreesboro, Tennessee for so many years (I can’t actually come up with an accurate number…however, maybe more than 30???) so now I beginning to understand his passion for a place he finally found to call home.  I have that passion for Portland!!!!

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……………

So, are you following me so far?  We have the impending end of the tax credit, the possibility of interest rates rising, lots of existing inventory and low pricing.  Most of the tricky, sticky, weird and wild loans are gone but other mortgage issues could have a negative impact on buyers relying on FHA (Federal Housing Authority) insured loans.  The FHA upfront mortgage insurance (MI) premium is going from 1.75% to 2.25% of the base loan amount on April 1st, 2010.  For example, on a $275,000 purchase price with an FHA loan, the down payment would be $9,625 with a base loan amount of $265,375:

Before April: Upfront MI FHA =$4,644 (1.75%), Tax Credit=$8000

After April:  upfront MI FHA=$5,971 (2.25%), Tax Credit=0

Many people rely on FHA secured financing because they are more forgiving on credit scores and homeowners can have a higher loan-to-value ratio (less money required for a downpayment). 

Forbes.com recently has an article on the Top Ten cities where it was a good time to make the jump to homeownership because of increasing rents (and Portland Oregon made the list) (go to http://www.forbes.com/2010/01/21/buying-versus-renting-lifestyle-real-estate-homes.html  and http://www.forbes.com/2010/01/21/buying-versus-renting-lifestyle-real-estate-homes_slide_11.html to read more).  And, if you’d like to explore a good rent-vs-buy calculator go to http://www.gonorthwestloans.com/mortgageLoanCalc.html

If you have decided that a new home is in your future, let’s make it happen!!!

Now that I can call, receive and send e-mail, get my texts and import my contacts and calendar (from Outlook), I’m a happy camper.  What else do I love?  I can actually download RMLS (the Portland Realtor’s Multiple Listing info) on the DROID and read it!  I can surf the web with much more proficiency, I have multiple apps (much like the IPhone), I have an individual icon for texts, e-mails, voice-mails, more.  I love that you have the choice of the touch-screen PLUS the qwerty keyboard (it makes the transition smoother between the Blackberry and the Droid).  I love the high resolution screen.  I love the 5GB camera.  I love the voice activation feature.  I love the GPS.  It’s so new, I’ll admit I don’t know all the advantages.  As I know more, I’ll share!  Anyway, it’s a Brave New World out there….love it or leave it!??

“What’s the buzz…tell me what’s-a-happening….what’s the buzz…tell me what’s-a-happening”.  I certainly don’t have a crystal ball, but sure could use one these days!  Perhaps on Craig’s List??? I’m doing a lot of market analyses of Portland properties lately to determine an appropriate possible sales price.  It’s not easy in a market where foreclosures and short sales undercut and undermine the market stats (and expect more of those this year).  It’s often difficult to define that “sweet spot” in the market where you don’t leave money on the table but still entice buyers to offer!  There ARE buyers and there ARE properties selling IF they appear to be a “steal or a deal”.  It is still very much a buyer’s market with the possible exception of well-placed, well-staged and well-priced homes at the first-time buyer price point.  At that entry price point (which is looking oh so much more attractive and accessible than it was a couple of years ago), I have run into some multiple offer situations.  Other higher price points do also move but with much more consideration and due diligence.  The move-up/repeat buyer market moves more slowly and it’s all about price!  The more money at stake, the more enticing the price must be.  With inventory as high as it is, you must consider pricing your home to sell as a competitive sport!  You must out-shine and under-cut the available competition. 

Are the first-time home buyer tax credit and repeat home buyer tax credits helping our real estate marketplace?  I definitely believe that the credits are an incentive.  But, no one should buy a house merely for a tax credit.  However, if a new home was a goal I would most certainly be amenable to “free money” from the government!  I guess if I were thinking I was ready to make a move, I would be hustling to get my house on the market while that stimulus is still available (buyers must be in contract by April 30th and the transaction closed by June 30th).  I do believe that it’s a good time to buy real estate (and put my $$$ where my mouth is by purchasing a duplex this summer).  Interest rates are very low and there is the potential that rates will rise this year.  I’ve also sold one of my real estate investments this year, so “I feel your pain” regarding how much you may have once thought your property was worth  .  Real estate is still a good addition to any well-rounded portfolio and has always stood the test of time (with “time” being the operative word here).  For some stats on how low interest rates affect housing costs, go to http://fabulousportland.com/2009/04/07/to-buy-or-not-to-buy/ and for a great rent-vs-buy calculator, go to http://www.gonorthwestloans.com/mortgageLoanCalc.html .  Investment real estate is a wonderland of positives in my book.  Someone else pays the mortgage, you get multiple write-offs and depreciation on your taxes, you work towards a positive cash-flow with increasing rents over time and you enjoy appreciation of the value of the property (albeit slow in our current environment). 

So, that brings me to appreciation and what can we expect for our recovery?  See paragraph one as I’m definitely in the market for a crystal ball!  I do read a lot about this subject and attend presentations, I’m “in the trenches” everyday and have worked through multiple real estate market conditions since 1985 (remember interest rates at 13%???).  There are ups and there are downs.  Also, remember if you are buying and selling in the same market you are feeling the pain of selling, but enjoying the benefits of buying.  I do see two unknowns in our immediate future:  unemployment and the commercial real estate market and how they will continue to affect our residential supply and demand.  Otherwise, I believe it will be a slow climb.  It could be five years (give or take) before we see a full recovery.  And, what does “full recovery” mean?  I think our minds will be reluctant to embrace another real estate frenzy anytime soon.  So, a slow and steady plod is a more reasonable expectation.  I’m cautiously optimistic about real estate in 2010!  We are likely to see a slight rebound in sales this year as stabilizing home prices and record-high affordability conditions (along with continued low interest rates) draw buyers into the market.  It’s not as sexy or exciting, but I’d always rather be the turtle than the hare anyway.