Two years ago, we used to tell our clients to expect around $280-$300 a square foot for downtown Portland condo space. Last year it was about $350. Now $400+. We’re not talking penthouses here. Just a nice condo unit in a Pearl/downtown complex.
Last night the Benson Tower sales office opened. You’re too late if you want the top floor penthouse. It is already reserved. 360 degree views from the 26th floor? $1129.03 a square foot for the 3100 square foot unit.
Now that it is possible to view a property’s address from an Internet search, we are seeing more clients do their own drive bys before contacting us for a showing. Here’s a couple of things to keep in mind.
Look – Don’t Touch
Do drive by and check out the neighborhood. Feel free to park the car for a few minutes, roll down the windows and listen to the noise level, observe how much (or little) traffic is present, etc. If there’s a yard flyer, you’re invited as far as the flyer box to take one.
Don’t go onto the property, knock on the door, peek in windows, trample the landscaping, or let Fi Fi out to go potty in the lawn. 
All jokes aside, trespassing on private property – even VACANT property – without a real estate license is a no-no.
Inevitably, I field this question during just about every loan application, backyard BBQ, and even in my dreams.
So what’s the buzz around “Interest-only” loans? Are they good? Bad? Are they going to cause the “real estate bubble” to pop?
The answer is……it depends. Let’s take a closer look at what interest-only loans are.
Under traditional programs a borrower’s monthly payment remains fixed. A portion of that payment is applied to the interest charge determined by the remaining balance and interest rate. The rest of the payment is applied to paying back the loan. Over time, the proportion of each payment that goes towards paying back the principal increases.
With interest-only payment programs a borrower is only required to pay the interest portion of the monthly payment. This keeps the monthly payment lower but delays repayment of the loan.
To compare, lets evaluate two brothers who take out a $200,000 loan at 6.00% on a 30 year loan. Brother A decides to take out a traditional principal and interest mortgage. Brother B takes out an interest-only loan.
After 36 months, brother A has made $43,168 in total payments and owes $192,168 on his original mortgage.
Brother B, who took out an interest-only mortgage has made $36,000 in payments($7,168 less than brother A) and still owes $200,000 on his loan ($7,832 more than brother A).
At initial glance one may say that brother A is $664 better off than his brother.
However, this may not be the case. Let’s say that brother B had taken his $199 savings per month and invested it in a liquid asset that earned an annualized return of 7.00% over those three years. In that case, brother B would have a liquid investment account worth $7,946 after 36 months.
At this point brother B would be better off by $114. Now lets say that brother A and B both lose their job and their ability to pay their mortgage. Unless brother A had other savings he may have a difficult time paying his mortgage. Brother b however has a liquid asset account that he could use to pay his mortgage for ay least 6 months.
The bottom line is that there are very real risks associated with interest-only loans. However, when used properly, interest-only loans offer borrowers a tool which can increase liquidity and security.
Since buying property in the Historic Alphabet District, I’ve become much more educated about where it is and what it means to live inside of the District. Our current house is just two blocks away from our new house (under major remodeling) but is outside the District.
I’ve been trying to set up a property search that only includes properties that are truly a part of the District. If I search by neighborhood, the only active listing I get is actually outside the District. That’s potentially a liability to both the listing agent and the seller if the buyer thinks they are buying within the District (Buyer Beware). In the neighborhood listing field properties within the District have been listed as NW Flats, Nob Hill, 23rd, Northwest, and, of course, the Alphabet District.
Why is it important?
If I want to remodel our current home, I trek down to the City of Portland Bureau of Development Services and get a permit. If I want to do the same remodel at the new house, I make the same trek, apply for a permit, follow all of the Community Design Standards and the Historic Alphabet District Guidelines Addendum, wait eight to 12 weeks for the review process and pay an approximately an additional $700 above the price of the normal permit. Wouldn’t that be a shock if you didn’t know what you were getting into? The design review process applies to any exterior alteration- including paint color!
Additionally, some properties within the District are eligible for the State Historic Preservation Office’s Special Assessment Program. If the property is a “contributing property” to the District, the process for being accepted into the Special Assessment Program is streamlined for the homeowner. The program freezes the property taxes for 15 years.
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