13 Hours Left for the Tax Credit!

The first time home buyer and move up buyer tax credit expires tonight. If you don't have an accepted offer on a property by midnight, you won't qualify for $8000 or $6500. I have clients that just made it in, there was mutual acceptence yesterday! I'm glad that the whole tax credit will go away, now the market will actually adjust to what it should be. Forbes wrote today that Portland is one of the markets where the bottom has not hit yet, and I think that is partly due to the credit, and people feeling the need to buy now. I'm just glad that I won't have to remind people about the deadlines anymore!

How does Portland Rank Nationwide?

Relocate America released it's 13th annual list of Top 100 Places to Live, and it's no suprise that Portland made the list. Several Top 10 Places were also released for subcatatories. Here are the one's Portland placed on:

Top 10 Earth Friendly Cities

1. Portland, OR
2. Boston, MA
3. Madison, WI
4. Boulder, CO
5. Austin, TX
6. Chicago, IL
7. Minneapolis, MN
8. Fort Worth, TX
9. Ann Arbor, MI
10. Huntsville, AL

Top 10 Single/Young Professional Cities

1. Washington, DC
2.  Chicago, IL
3.  Dallas, TX
4.  San Diego, CA
5.  Boston, MA
6.  Austin, TX
7.  Scottsdale, AZ
8.  Minneapolis, MN
9.  Portland, OR
10. Pittsburgh, PA

Top 10 Large Cities

1. Chicago, IL 
2. Dallas, TX
3. San Antonio, TX
4. San Diego, CA
5. Austin, TX
6. Columbus, OH
7. Charlotte, NC
8. Boston, MA
9. Washington, DC
10. Portland, OR

Also, Corvallis Or made #6 in the Top 10 Recreation Cities, and Ashland Or made #6 in the Top 10 Small Towns.

Better Late Than Never!

Usually the day the latest market report comes out I blog on it, but this month too many other interesting things have come up for me to write about. I took some extra time today to really explore March 2010s data, and a few intesting things popped up. First, North Portland homes are moving the fastest, with only 89 average days on the market, compared to the next quickest of SE Portland at 101 days. Prices in North Portland are about the same as SE and Gresham/Troutdale. North Portland average a sale price of $233,800 last month, SE was at $235,800 and Gresham/Troutdale was at $235,100. Like I've always said, those less expensive homes for first time buyers and investors move quickly. North Portland is also getting a better reputation around the greater Metro area, St Johns is turning into a really cute and walkable area, and University Park has always been nice, but people know about it now.

Understanding Home Loans

About 90% of all home loans being taken out today are FHA loans. A few years ago they were almost all Conventional, with many of them 100% down, or 2 loans tied together, the first for the down payment of 20%, and the second for the balance of the purchase price. Since loan restrictions are getting tighter by the month, I thought I'd use the Mint.com blog post from a couple of days ago to explain the diffent loans. Here it is:
"Let’s say you’re ready to take advantage of low (and possibly rising) home loan rates and buy a little chunk of something to call your own.

Just three years ago, walking into the bank was like walking into the video store. You could go with Duplicity (a pay-option adjustable-rate mortgage) or Where the Wild Things Are(subprime). Home prices were going Up, and no one had any idea that we’d all end up in The Hurt Locker, and yes, I will now stop. Sorry.
Not any more. “In terms of product available, it’s very old-school at this point,” says Frank Ruzicka, a mortgage banker at Cornerstone Mortgage, Inc., in St. Louis. “Gone are the crazy things. You don’t see the pay-option ARMs anymore. You’re not doing subprime lending anymore.”
So what’s left? Here’s what you’re likely to find today.
Conventional fixed-rate mortgages
“The one product that is constant and still available everywhere is the traditional 30-year fixed-rate mortgage,” says Keith Gumbinger, VP at HSH Associates, which analyzes the lending market. “Thirty-year, 20-year, 15-year, still available in the marketplace. Those probably will never go anywhere.”
These are the safest, most boring loans around. To get one, you’ll need a good credit score–at least 680, according to Ruzicka, and a down payment. If you live in an area that saw major carnage in the housing market, that down payment will be at least 10 percent, and perhaps as much as 20 percent. In less exciting markets, like Ruzicka’s St. Louis, you can get away with 5 percent.
As always, if you put down less than 20 percent, you will be required to purchase private mortgage insurance, which adds a small chunk to your monthly payment until you hit 20 percent equity. Long gone are the “piggyback loans” that would let you duck this requirement. (If you don’t know what a piggyback loan is, trust me, you’re better off not knowing.)
Advantages: Fixed payment throughout the life of the loan; available everywhere.
Disadvantages: Need great credit to qualify; higher interest rates, on average, than adjustable-rate loans.
Adjustable-rate mortgages
ARMs have a bad reputation, but they’re actually a whole family of loans, and only some members of the family are bad apples. Those apples have rotted away now, and we’re left with mainly 5/1 and 7/1 ARMs (the good ones).
Both numbers are in years. The first refers to the length of the introductory interest rate period. So, if you get a 5/1 ARM advertised at 3.5 percent, you’ll pay a low rate for the first five years. After this, your interest rate will adjust every year for remaining 25 years of the mortgage. With a fixed-rate mortgage, your bank takes the risk that interest rates will rise over the course of the loan. With an ARM, you take the risk.
Exotic types of ARMs got people into a lot of trouble during the housing bubble. “ARMs were making up as much as about 40% of the marketplace in 2006,” says Gumbinger. That’s now down to about 6%. But plain-vanilla ARMs aren’t so dangerous: in fact, they’re the standard form of mortgage in that plain-vanilla country known as Canada.
Advantages: Low introductory rate; lower interest overall, on average, than fixed-rate loans; generally lower closing costs; good for buyers who plan to move within five years.
Disadvantages: Buyers tend to forget that the rate is going to adjust; high interest rates could send payments sky-high.
Government-insured (FHA and VA) mortgages
Who’s the biggest mortgage lender in the US? That would be Uncle Sam.
Buyers who would have been served by subprime lending–and many buyers with good credit, for that matter–are qualifying for loans insured by the Federal Housing Administration or Veterans Administration. Youneed a FICO score of 620 and a 3.5 percent down payment.
FHA lending is huge. Only 2% of the market in 2006, it has now surged to over 35%. The government wants a vibrant housing market and is putting its money where its mouth is. (Did you know the governmenthad a mouth? Its name is Rahm Emanuel. Sorry, political humor.)
“If you can’t scrape together tens of thousands of dollars for a down payment,” says Gumbinger, “you’re probably going to end up over in the FHA program, where you generally don’t need to.”
The FHA does have its own qualification standards. You can’t be carrying too much personal debt. You can’t take a huge loan; the maximum amount varies by county, and you can look up your maximum at the HUDwebsite. If you want to buy a condo, the building has to be FHA-qualified.
Advantages: Low down payment; low interest rate; available to buyers with good-but-not-great credit.
Disadvantages: Maximum loan amount tends to be lower than a conventional loan; must meet government qualifications; condo buildings may not be FHA-qualified.
Jumbo loans
Want to borrow more than the $417,000 maximum of a conforming loan? If you’re in a high-priced market, the FHA might lend you more than that. Most likely, though, you’ll be looking at a jumbo loan.
”Jumbos are definitely available,” says Gumbinger, “and the price of private market jumbo money is nearing historical lows.”
The catch–and you knew there had to be one, right?–is that you have to be Mr. or Ms. Clean to get one. That means at least FICO 720 (740 is better), a 20% down payment (even more in some markets), a reasonable debt-to-income ratio, and plenty of documentation.
If you think you can qualify, be sure to shop around. Jumbo loans vary a lot more in price (that is, points and interest rate)–even within the same city–than conforming or FHA loans. “Don’t assume that the first or even the second price you find is necessarily the only price you’ll find,” says Gumbinger.
Advantages: It’s a big pile of money, and rates are currently low.
Disadvantages: Rates and costs vary; tough to qualify.
What you won’t find
Subprime loans. “If you’re not dealing with at least a credit score of 680, you need to be going FHA,” says Ruzicka, “and if you don’t have a credit score of at least 620, you need to go to a credit repair place and get your credit straightened up. Because there really isn’t much of an option below 620.”
Option ARMs and interest-only ARMs. Want to see the principal on your loan go up over time instead of down? Me neither. “Pay-option ARMs have disappeared from the landscape,” says Gumbinger.
If you want excitement, go rent a movie, because you won’t find it in the home loan market. Isn’t that reassuring?
Matthew Amster-Burton, author of the book Hungry Monkey, writes on food and finance from his home in Seattle."

Today's Class on Selling REO Properties

I spent 2 hot, stuffy, but informative hours, in a class on listing Real Estate Owned property today. That's bank owned homes, for you laymen. The big difference in getting a REO listing versus a traditional one is that the bank doesn't care about your personality, just about your statistics. Since I've never listed a REO property, I found this a little discouraging. The most interesting thing I learned today is that experts are predicting 70% of sales over the next 3 years to be bank owned or short sale homes. Also, that banks are working hard to make it easier to communicate with agents, and short sale home owners. They don't want to have too many homes and dump them all on the market at the same time. That will just drop prices and revenue for everybody. They are actively working on improving their procedures and methods for handling short sales and REO, and if that much of the business is going to be in their hands, they better do a good job!

6 Biggest Mistakes Buyers Make, Only 3 of Them Are True!

CNNMoney has an article online about the 6 biggest mistakes buyers make. I agree with the titles of all of them, but the reasons they give do not prove to be true, at least based on Oregon real estate law, and the National Association of Realtors ethics. Here's the list, click here to read a few paragraphs on each one.
1. Not knowing your credit score- You'll need this before you even start to look at homes, if it's too low to get a good loan, you can bring it up with some smart changes to your spending and bill paying habits.
2. Buying a car before a house- This is true of about a year before you buy, and all the way up until you have the keys! If you buy a car now, and don't plan on buying a home for a few years, paying it off or making your payments on time will really increase your credit score.
3. Skimping on home inspection- Always, always, always get a home inspection by a licensed inspector, contractors don't look for the same things as inspectors, and sellers will not do repairs unless a reputable source calls for them.
4. No lawyer- The article claims that buyers agents are out to close any deal, even if it's not right for the buyer, so you better hire a real estate attorney to cover your butt. Hiring an attorney is always a good idea, especially if things start to go sideways. But, Realtors in general work off of referrals, as in if I screw you over you won't recommend me to anyone, and my business will die out and I will be done. And in debt. Most people get attached to their clients, and really just want to see them get into the prefect house for as little money as possible. We are in a service business, and nothing makes me happier than serving my clients well.
5. No contingencies- The article makes it seem as if buyers aren't writing the offer and setting the terms, which they do. In Oregon the real estate contract to purchase is 8 pages protecting both sides, and even more protections can be put in and often are. Ask your agent the worst case scenario when writing an  offer up.
6. Not budgeting for insurance- Basic home owners insurance is covered in your monthly mortgage payment. It has to be set up before you can close on your new home. If you want extras, talk to your insurance agent, and you can always make it more inclusive later on.

Foreclosure Trends

The mass media- my least favorite people for truthful real estate news- are all abuzz about foreclosures for March. Here's the truth from the foreclosure experts Realty Trac. 1 in 397 housing units in Oregon received foreclosure filing in March, which is higher than the national average of 1 in 351. That seems like a lot, and it is. Unemployment rates are still high, and the longer people are out of work the less savings they have, and the more likely they are to loose their homes. The foreclosures won't slow down until unemployment numbers fall and people have a chance to get back on their feet.  Locally, the hardest hit areas are those that are most populated, and that saw the big boom in prices during the mid 2000s.

The good news in Oregon is that home appreciation has risen dramatically in the last couple of month. Even though foreclosures are still going up, less people will be underwater in their homes, and hopefully people will work harder to hold on to them knowing that the value is there.

Remodeling Gets Tough With New Lead Based Paint Restrictions

18 years after a law was passed to toughen up on contamination of lead based paint during remodeling, the actual new conditions and requirements will come to pass on April 22nd, 2010.  Basically, "a new federal law will require contractors to contain and clean lead dust more carefully during renovation, repair and painting work. Their workers will have to attend training, and the firms will have to earn certification to do the work." This is meant to lessen contamination from lead dust, which can cause developmental delays and disabilities, as well as seizures and potential death. Lead based paint pamphlets are required by law to be given to any home purchasers who buy a house older than 1978, when lead based paint was outlawed. Sellers also have to disclose if they know of any lead based paint in the home or have had is tested. As a Realtor, I tell my clients if the house is older than 1980 or so, there probably is lead based paint somewhere. As a common practice, don't let children or pets chew on painted wood, or get into chips that may fall on the floor or exterior of the house.Containment during scraping, remodeling, and any time wooden or wall surfaces are cut is a must.
Read more here.

John Ross Auction Summary- 50% Off On Luxury Condos!

                                                                                                                Randy L. Rasmussen, The Oregonian 
More than 750 people gathered for the auction yesterday, and 47 condos sold, when one of the primary owners of the John Ross Building put up units that had never sold since it was completed in 2008. The average sale price on Sunday was $316,000, down from $711,000 at the height of the market. That's about a 50% discount... which shows how far the market in Portland has really fallen in the last few years. Condo are always harder to sell and resell, so it's no surprise that prices have fallen a lot more that single family homes. Also, the South Waterfront area has not boomed as many had promised or hoped. Empty buildings and continuing construction with little to no neighborhood development do not spur sales on. The John Ross is also become less expensive than the neighboring Atwater, with the Ross's average price per square foot at $200, and the Atwater's at $300.
Read more about the auction and the John Ross here.

New American Dream: Homeownership with Caution

In a recent Fannie Mae national survey 65% of people, both homeowners and renters, still think that owning a home is important. But caution has crept into that American ideal. Since the bubble burst, prospective buyers have become more careful about the home they are purchasing, and about being financially prepared for the responsibility. Buyers are also moving away from the idea of flipping a few houses, now safety and schools top the list of priorities when shopping for a new house. People in general still think that a house is the safest investment that can be made, but the number is down from 2003.  The good news for the mortgage industry and banks is that a majority of those polled thought that it is unacceptable for owners to stop making mortgage payments.
Read more here.

Stats I'm Too Busy to Make Myself

I follow a bunch of real estate blogs and websites, and today a Portland blog posted a set of awesome graphs. They track average sale prices by zip code. I'm too busy to make my own, so click here to see what's happening in the zip you live in, or the one you want to move too.

HUD Redefines "Foreclosure" and "Abandoned" Houses

In an effort to speed up the Neighborhood Stabilization Program- which helps low to median income families purchase and rehabilitate forclosed homes- the US Department of Housing and Urban Development is widening it's definitions for foreclosed and abandoned homes. Starting last month, homes that have been in default for 60 days or are 90 days behind on taxes are considered foreclosed. Also, homes that also are considered to not be habitable are now called abandoned. By making the definitions more flexible than they previously were, the NSP will be able to turn homes around more quickly and get buyers and families into them. There is nothing worse for a house, a neighborhood, or the real estate market than bank owned homes sitting vacant for months, or even years, so this change should help some of those properties become great homes for people.
You can read a much more detailed article here. 

Fed is No Longer Purchasing Mortgage Backed Securities, World Has Not Ended

Since the beginning of 2009 the Fed has been buying mortgaged backed securities, a total of $1.25 trillion has been spent, in order to keep mortgage rates low for buyers and re-finances. The program has worked really well, rates have been in the 4% to low 5% range for months and months. The Fed announced that it would be ending the program, and many economists and mortgage experts predicted that rates would jump up immediately because there wouldn't be any private investors buying the mortgage backed securities. Luckily, those private investors are starting to feel confidence in the market and have stepped up, and rates have remained basically the same, only up 1/4 to1/2%. Compared to the estimates of 6-7% rates, 5.25% isn't bad at all.

Read more from the New York Times.