Portland Real Estate Blog

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February 2009 proved another tough month for the Case Shiller Index for Portland. The index gave up another 3 points; down to 150.8. This puts the current index at June/July 2005 levels and a 12 month decline of 14.4%. The Dow Jones Industrial was down 36.7% for the same 12 month period.

I’m sure I wasn’t the first and I know I wasn’t the last since we just discovered the issue in a house we inspected: install a dryer vent when remodeling! Seems obvious that a laundry facility, a standard washer and dryer requires:

There is no perfect world for the laundry location in most houses. If they are in the basement, you probably have more space but the odds are most of washing is being created on the upper floors. A chute is nice but it only delivers it one way. Basements are not always finished to the quality of the rest of the house.

Some people won’t even look at a house if they are in the attached garage (I grew up with them there and it isn’t a deal breaker for me). Its probably the best place for them if there is ever a problem with the water supply or drain.

If they are near a bedroom they may to be too loud to run at night. There is often less space available. Uprights were often considered the considered the sofa bed of laundry: got the job done but not ideal. The modern day front loading stackables have fixed that but keep in mind that the standard for all machines is 27 inches wide. Narrower exist but they are not the norm.

If you have an electric dryer, take a picture or drawing of the socket before heading to the store. There are different layouts and it’s a lot easier if you now which one you need when looking at them in the store.

There are hundreds of forums outlining the $8000 First Time Buyer Credit.  I’ve been really careful not to give tax advice and have referred you directly to the IRS Form 9054 in my previous post regarding the tax credit.  There are many forums where the advice given seems to counter the information on the IRS form.  If you have questions as to whether you qualify, seek advice from an accountant.

The tax credit has become an integral part of “Now is a great time to buy.”  First Time Buyer beware!  Did you know there are provisions that will force repayment of the credit for a house purchased in 2009 (credit is set to expire Dec. 1  so you must close on or before Nov. 30)?  IRS Form 9054 was updated in February to include the $8000 credit (previously a $7500 “credit” that has to be repaid over 15 years).  Form 9054 reads:

Homes purchased in 2009
You must repay the credit only if the home ceases to be your main home within the 36-month period beginning on the purchase date. This includes situations where you sell the home, you convert it to business or rental property, or the home is destroyed, condemned, or disposed of under threat of condemnation. You repay the credit by including it as additional tax on the return for the year the home ceases to be your main home. If the home continues to be your main home for at least 36 months beginning on the purchase date, you do not have to repay any of the credit.

If you and your spouse claim the credit on a joint return, each spouse is treated as having been allowed half of the credit for purposes of repaying the credit.

Exceptions. The following are exceptions to the repayment rule.

• If you sell the home to someone who is not related to you, the repayment in the year of sale is limited to the amount of gain on the sale. See item 8 under Who Cannot Claim the Credit for the definition of a related person.) When figuring the gain, reduce the adjusted basis of the home by the amount of the credit.
• If the home is destroyed, condemned, or disposed of under threat of condemnation, and you acquire a new main home within 2 years of the event, you do not have to repay the credit.
• If, as part of a divorce settlement, the home is transferred to a spouse or former spouse, the spouse who receives the home is responsible for repaying the credit.
• If you die, repayment of the credit is not required. If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the credit

You need to ask yourself how long you are going to be in your home since you just can’t take the money and run.

When I picked up my copy of the Oregonian this morning, I was expecting my ritual dose of bad news. We’d spent the previous evening watching the Blazers nearly snap victory from the jaws of defeat so knew that story was going to be on the cover but the one below it really caught my eye, “Time May Be Right To Buy First Home.” Is it a turning point for local mainstream media? Clearly not a “BUY NOW” which is what I have been advocating for months- no matter what the market, the are opportunities out there for the right buyer- not every buyer.

Reasons to look at buying include:

• a recent drop in home prices.
• historically low interest rates.
• low down payments for FHA qualified loans and buyers.
• a historically large inventory of home for sale and motivated sellers.
• the $8000 first time buyer tax credit for those that qualify and close by Dec. 1, 2009.

Reasons to be concerned:

• no clear “bottom” of the market.  It could continue to slide.
• high unemployment rates and the possibility of it getting worse.
• must be able to qualify for best case scenario.
• overall economic uncertainty.

Each individual needs to decide what is best for them. Start by asking yourself how you weigh each factor. Plan on talking to a Realtor, accountant and mortgage broker. Talk to an accountant to verify that you qualify as a first time buyer (check the details). Talk to a mortgage broker and see how much you qualify for and decide if that works within your budget. Talk to a Realtor (preferably us) about assembling all the pieces and putting them together.

The Blazers have proven they can come back, the housing market can do the same.

I’ll be holding 2356 NW Hoyt open today (4/25/09) from 1-4 this afternoon.

We’ve made the switch from our previous platform to a Wordpress site powered by Dakno/BrokerTec. We’re excited about the new look and tools that will be available us.

The Oregon Office of the FBI is cracking down on real estate related mortgage fraud in conjunction with the US Attorney General’s Office.  The dedicated web page on mortgage related fraud in Oregon is very interesting.  The first scheme target is homeowners by Foreclosure Specialists:

Foreclosure Rescue Schemes

One of the biggest concerns for consumers now comes in the form of
unscrupulous “foreclosure specialists.” In some cases, desperate
homeowners sign over the deed to their home to these “specialists”
believing that they can stay in the home, make “rent” payments, and
eventually re-purchase the property. In many cases, the “rent” payments
that are supposed to go to the mortgage company never get sent. The
“specialist” simply pockets the payments and any extra fees. The home
continues into foreclosure, and the homeowner loses even more money.

The second has two parties scheming together to defraud banks:

Short Sales

A second area of concern involves “short sales.” In this instance, a
buyer purchases a home with no intention of making payments.
Oftentimes, additional funds are included in the loan for
“improvements.” The buyer pockets that money and informs the bank
several months later that the house will foreclose. The buyer presents
a possible pre-foreclosure buyer. This second fraudster makes a deal
with the lender to purchase the home below the current loan amount. The
lender agrees, not knowing that the mortgage payments were deliberately
not made to fabricate this short-sale situation. Sometimes, the new
buyer or previous homeowner will damage the house to prove its lower
worth. After the deal closes, the fraudster repairs the damage, gets
the home appraised at a higher level, and re-sells it for a profit.

The FBI has a tip line and a list of advice on the site.

Citizens can send tips to the FBI at mortgagefraudtips.portland@ic.fbi.gov or call (503) 273-5813.

I’m looking at an electrical invoice for $385 for one of our listings.  The seller paid the $60 deductible on the American Home Shield warranty that we provide (through Prudential Northwest Properties) during the listing period.  The rest of the invoice is covered by AHS.

“Where’s it hurt?  What Happened?”  Our toddler is barely talking but he can point to what hurts and how it happened.  The last couple of days I’ve shown some houses and that small bit of communication would go a long way.  As a commodity, it doesn’t matter why the seller is selling a house but human nature wants to know the answer.  That’s proven that some states (not Oregon) require disclosure of events that do not have any impact on the physical condition of the property.

The last few days of showing property left us asking these questions: What motivated them to spray paint the bathtub construction orange?  Why was the open suitcase of children’s toys left open and behind in the center of the bedroom and the halmarked Sterling silver salad servers left amung the debris on the kitchen counter?  Were they trying to burn the house down by leaving the iron face down on the floor or was it an accident that was caught right before the flames started (burned all the way through the laminate floor into the subfloor)?

Regardless of the actual answer or the path to get there, the result is sad and tragic.

There are three or four real estate related articles on the cover of today’s Oregonian business section depending on how you count them.

1. Ryan Frank (of Front Porch fame) reports that JLS Homes is liquidating homes to avoid bankruptcy.  The potential sale of 70 homes, most of them at a loss, may allow them to start building again.
2. Umpqua bank is feeling the pain of the economy but not as much as some of its competition, in part  because, “Umpqua had less exposure to residential development that some other Northwest banks, nearly all of which had jumped enthusiastically into the housing sector boom.”
3. The owners of Pioneer Place have filed for Chapter 11.  General Growth Properties has at least part ownership of a large list of malls in the state and throughout the country.
4. The feature story on the page is Secret Recipe: the Three Day Kitchen. Forty percent of all construction spending is spent on remodels.  The 3-Day Kitchen and Bath franchise put the interviewed home owner up at the Holiday Inn while they worked long days to complete the job.
5. For those of you in Eugune, there’s a foreclosure bus just for you.  The comments are delveloping into a pro/anti Realtor debate (Realtor is capitolized because it is a copyrighted name and really should be Realtor©).  Buy four articles, get the fifth for free (found the link to this while looking up the others on Oregonlive).

Go Blazers!