News Roundup

I got so many email updates on news for buyers, sellers, and home owners this morning I'm just going to list it all out!

• Banks will go after people that walk away from mortgages or sell in short sales- they have up to 6 years in Oregon to take a former mortgage holder to court and get a settlement to pay the difference. Numbers of banks doing this actively will likely increase after the foreclosures ramp up this year.
• 20% of home buyers are single women, and they are focusing on eco-friendly homes- consider this when making upgrades or buying new appliances!
• Fannie Mae homes sold under the HomePath program will come with 3.5% of closing costs paid for buyers, and the option of using some of that money to buy new Whirlpool appliances. The sales must close by May 1st, way before the first time home buyer tax credit expires. This program works with the $8000 First Time Home Buyer tax credit, or the $6500 Moving Buyer tax credit.
• Interest rates have been hovering around 5% for FHA and VA loans, a little lower for conventional financing, but economists and loan officers expect them to shoot up to 6-7% this summer.
  

Northwest Dominates Overvalued Markets List

According to CNNMoney.com Atlantic City NJ is the most overvalued city in America, but the rest of the list is dominated by Oregon and Washington. Based on the percentage of homes valued over the median home price, here's the list:

Metro area	Median home price	Percent overvalued 2010	Percent overvalued 2006
Atlantic City, N.J.	$232,100	30.2%	59%
Wenatchee, Wash.	$240,900	28.9%	13%
Ocean City, N.J.	$294,800	26.6%	47%
Longview, Wash.	$184,700	22.3%	24%
Honolulu, Hawaii	$605,300	21.9%	31%
Asheville, N.C.	$172,900	21.8%	24%
Portland, Ore.	$267,600	20.8%	35%
Bellingham, Wash.	$280,200	20.0%	43%
Corvallis, Ore.	$266,400	18.9%	14%
Salem, Ore.	$201,000	18.2%	25%

Source: PNC Financial Services and IHS Global Insight

I knew that Corvallis would be on the list, I was born and raised there, and my family still lives there, and compared to the home prices in even just the Willamette Valley, Corvallis is ridiculous. The good news is that Portland is much less overvalued than it was in 2006, down about 15%. The market is evening itself out, settling back into an affordable range.

10 Cheap Ways to Make Your Home Shine

Sellers always want to know the cheapest things they can do to make buyers love their home. These 10 things will make your home shine whether you are trying to sell, trying to impress the neighbors or family, or want to feel more at home in a rental.

1. Entry Way: Touch up the paint on the front door and other areas that are seen first.
2. Clean the Yard: Trim the hedges and trees and plant some annuals in the flowerbeds.
3. Fresh Paint: A coat of light yellow or cream with contrasting white woodwork looks fresh and clean.
4. Refinish the Floors: Buff the hardwoods. Install new carpets – or at least get them professionally cleaned.
5. Fix Structural Issues that are Visible:. If the house needs a roof or the front stoop is crumbling, get them fixed.
6. Get a Home Warranty: Putting appliances under warranty gives homebuyers a secure feeling.
7. Improve Energy Efficiency:. New windows or improved insulation tell a potential buyer the seller is on top of things plus they come with tax benefits.
8. Replace Light Fixtures. Updated fixtures, especially at the entrance way and in the foyer, create a good first impression.
9. Buy a Stove. Home owners whose kitchen isn’t top of the line can jazz it up for a few hundred dollars by buying a new stove, which gives the room a fresh feel.
10. Tidy Up the Bathrooms. Get rid of mildew, replace caulking and replace stained sinks.

Must Haves in Houses in 2010

Houses have gotten smaller, on average, in the last year, down 40 ft from 2008 to 2009. But that doesn't mean that buyers are looking for simpler homes. Items that used to be considered luxurious are now seen by buyers of old and new homes as necessities. The trends in new and remodeled home for 2010 are:

1. Walk-in closets in the master bedroom.
2. Laundry rooms.
3. Insulated front doors.
4. Great rooms.
5. Energy-efficient windows.
6. Linen closets.
7. Programmable thermostats.
8. Energy-efficient appliances and lighting.
9. Separate shower and tub in master bathrooms.
10. Nine-foot ceilings on the first floor.

Spring Buyers Surge is Happening Early

March is typically the beginning of the home buying season, but this year buyers are starting early. Thanks to the first time and move up buyers tax credits, of course, both of which buyers have to have an accepted offer on a property no later than April 30th to get. March through May usually is the busy time for buyers, especially those that want to move while the kids are out of school and be settled before the next school year starts.

"The tax credit will absolutely have an effect," says Pete Flint, CEO of residential real estate search engine Trulia.com. "It is going to shift demand from the later part of the year to the first part. January and February will be very strong. The next three months, there will be a surge in demand."

This is true for the winter, but there will be a huge drop in buyers from May on. The rest of 2010 will not be good for sellers.

Great PDC Workshops

The Portland Development Commission holds free workshops once a month for buyers, which I have attended in the past, and am going to tonight. They rotate from downtown, to the Lents neighborhood, and North Portland, the later two areas are part of their zones that have grants for buyers, tax abatement on new construction, and other support. The workshops last about 1 1/2 hours, and are really informative. Several Realtors usually attend, so it's a great place to meet some to interview to be your agent. Like I said, I'm attending one downtown tonight, and probably the next several as well. The next dates are February 18th, and March 18th. To register, click here.

Down Payments on FHA Financing Get Tough

If you have a less than stellar credit score, below 580, the FHA will still give you financing, but you'll have to pay for it. Down payments will have to be 10%, as opposed to the 3.5% that borrowers with higher credit scores will still pay. While not good news for those with lower scores, this will put the FHA in a more stable financial situation. They are currently exploring more ways to improve their financial situation, which has received lots of bad publicity lately. More to follow as the updates are released.

FHA Changes Flipping Rules

As of February it will be easier to by a house that has been flipped by with an FHA loan. Over the years the FHA has been loosening it's regulations on buying bank owned, short sale, and homes repossessed by Fannie Mae, Freddie Mac, and state and federally charted financial institutions, even if they have only been owned for less than 90 days. That was not the case with private investors that bought homes and immediately put them back on the market. But, from February of 2010 to the end of January 2011, buyers will not have to rule out homes that have been put back on the market after less than 90 days of ownership, no matter who is the owner. This will encourage investors to buy bank owned and short sale homes, since so many buyers are using FHA financing, they will have a market to sell to even if they only have the property for a few weeks.
Read more here.

Street Trees Increase Portland Home Prices

Everyone who has walked or driven down stately streets with beautiful homes and gorgeous mature trees lining the road knows that the trees add to the emotional and visual experience. Now a Portland study has confirmed this.

In a paper published in Landscape and Urban Planning, Geoffry Donovan of the U.S. Forest Service's Pacific Northwest Research Station found that, on average, street trees add $8,870 to a home's sales price and reduce its time on the market by 1.7 days.

There is a great organization in Portland that has community planting days. Get cheap trees put in your yard or on your parking strip, and all you have to do is volunteer 1 day. My husband and I are signed up for our neighborhood, I'll let you know how it goes!
To find a planting day in your area, click FriendsofTrees.org.

Real Estate Recovery Will Take 3-4 Years

This morning real estate expert Kenneth Rosen testified before the Financial Crisis Inquiry Commission (FCIC) and said that the residential housing market will have a slow recovery that will last 3 to 4 years. Rosen is chair of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley’s Haas School of Business. The FCIC is a bi-partisan, 10-member panel established by Congress to examine the causes of the financial crisis. Rosen presented the commission with several policy and reform proposals to combat the crisis.

“The embryonic recovery in housing has been highly depending on massive federal government intervention rather than an organic increase in buyer demand,” said Rosen. However, he notes the termination of several federal programs will stunt the market’s recovery. His recommendations included:
• A loan modification plan to address “underwater” mortgages when a home’s value is well below the mortgage balance
• A shared appreciation second mortgage that allocates part of the future appreciation of the home to the government and to the private lender to encourage loan modification
• A government-sponsored “unemployment bridge loan” to address unemployed households who do not qualify for a loan modification."

This comes as no surprise, and is good news for those buying homes now. It will take longer to build equity in a home, but it will not be a false equity that disappears at the first sign of a downturn in the economy.

Newest Trends for Green Living and Building

Green has been the key to many new developments and remodels in the last several years, especially in the Northwest. Here are some of the trends in the green building industry that will become very familiar in the next year and years to follow:
1. Smart grid and connected homes. Measure your personal and community use of power, from each appliance, and what it is costing.

2. Energy labeling for homes and office buildings. Buyers and consumers will be able to accurately opt for more efficient homes and buildings, and this may push for green upgrades for those that were unmotivated previously.

3. Building information modeling software. Computer drafting will make it easier to design green buildings.

4.Financial community buy-in to green building. Lenders and insurers will get behind green building because it’s good for their bottom lines.

5. "Rightsizing" of homes. Builders are not focusing on mansions, and buyers are looking for a space that fits them now, not anything too huge.

6. Eco-districts. The creation of walkable, low-impact communities in the suburban setting is gaining steam.

7. Water conservation. The Environmental Protection Agency finalized the voluntary WaterSense specification for new homes in December of 2009, which reduces water use by about 20 percent compared to a conventional new home. Water will be the essential resource in the next decade.

8. Carbon Calculation. With buildings contributing roughly half the carbon emissions in the environment, the progressive elements in the building industry are looking at ways to document, measure, and reduce greenhouse gas creation in building materials and processes. This effort will be heightened once a federal cap-and-trade mechanism is launched in this country.

9. Net Zero Buildings. A net zero building is a building that generates more energy than it uses over the course of a year, as a result of relatively small size, extreme efficiencies and onsite renewable energy sources. We are close to being able to do this routinely.

10. Sustainable building education. This will create opportunities for professionals involved in the building industry, from real estate to finance and insurance.

Info comes from The Earth Advantage Institute, by way of Realtor.com

2010: Real Estate Less Affordable, But a Better Investment

I found an awesome article today that has some interesting predictions for the economy and real estate market this year. First, since the unemployment rate has not been dropping quickly and is not expected to, prices over all will not rise. Markets in California and Florida are seeing a turn around, but the rest of the nation, including Portland, has not hit bottom yet. Second, the "shadow market" will come onto the real market, flooding most places with bank owned homes selling for pennies on the dollar. The shadow market is the homes that have been foreclosed on, are now owned by a bank, and are sitting vacant. When these go on the market they will only appeal to a certain buyer, most of them have been vacant for so long that they need lots of repairs, and the banks aren't willing to do those fixes. Third, the search for homes will be more lifestyle centric, and Realtors will have the tools to make that search happen. In a down economy people refocus on what is really important in their lives, and they want to live in a place that brings them close to their families, churches, hobbies, and favorite neighborhoods. Fourth and finally, the National Association of Realtors has launched an awesome new website for buyers and sellers, Houselogic.com, which I have blogged about before. It has tons of resources for buyers, sellers, and Realtors, and will only increase NAR's ability to lobby Congress.

Read the full article, which has lots of info on the future for Realtors, here.

Super Low Interest Rates May Disappear

With small improvements in the economy the sub-5% interest rates on mortgages may be a thing of the past. Rates for conventional loans and refinancing of existing loans have gone up from below 5% to above it, and FHA and VA loans have gone from about 5% to averaging closing to 5.25-5.5%. While this seems like a small change, the numbers will likely not be going back down over 2010. Economists across the country are expecting mortgage rates to creep toward 6% over the year. This means that people will be able to get a little less house for their money, and be less likely to refinance existing loans.
For more info, click here.

Pending Sales Way Down Nationally

But not in the West! The NAR report that national pending sales are down 16% from November 2008 to November 2009 is really bad news. Economists and Realtors expected sales and pending sales to drop because the first time home buyer tax credit was due to expire, and with no word until the end of November, buyers weren't offering on homes. The drop was greater than many expected and hoped for, but that is a national number, and in this region things are going much better. The West's numbers include states such as California, Nevada, and Arizona that had no where to go but up. Pending sales still declined 2.7% to 124.6 points from October to November 2009, but that is 21.4% above November 2008. So while the other regions of the country are continuing to have pending sales drop, the Western region only had a small drop, but still a huge increase from year to year. I would rather live and own property in a region that is improving year to year, rather than the rest of the country that had a good summer but is doing worse year after year.

Read more from NAR here.

Buyer's New Year's Resolutions

Many renters are thinking about taking the leap to buy their first home this year. If you are one of them, here are some resolutions to make to help you achieve that goal:
1. Plan on being in a contract by April 30th, 2010, if you want to qualify for the $8000 first time buyer tax credit. It's the same deadline for move up buyers to get the $6500 tax credit.

2. Make a budget. You need to save or have a family member loan you 3.5% of the purchase price for a down payment on a FHA loan, 10-20% if you want to do a conventional loan.

3. Research Home Improvement. If you want a fixer, find out what you can do yourself, what you'll need to hire a contractor for, and how much it will cost. That way you won't be shopping for a home you can't fix up, or afford to fix up.

4. Fix Your Credit. Talk to a financial adviser or mortgage broker about how to improve your credit, and find out your credit score.

5. Pick Your Battles. Make a long list of must haves and can't haves for your future home. Now narrow it down to a realistic size. Now do it again. Okay, you are ready to start looking for your first home!