Portland Real Estate Blog

According to a press release issued today by HUD, using the $8000 first time buyer credit as your down payment is back on:

For Release
Friday May 29, 2009

The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today’s announcement details FHA’s rules allowing state Housing Finance Agencies and certain non-profits to “monetize” up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.

We’ll see if it sticks this time.  It was previously announced and then retracted.  As of this posting time, I’m not finding any mention of it on the news websites or Google to confirm.

There are a couple of real estate adages that sellers can live by:

• You don’t live in your home when it is not for sale the same way as when it is listed.
• If you want to guarantee a showing don’t make your bed; the closer it looks like a bomb went off in your usually pristine home, the more likely you are to get a short-notice showing appointment.

Murphy’s Law type statements have limited use but now that RMLS has started to release actual Supra lockbox showing activity we might see some trends.

Portland area real estate is a seven-day-a-week activity but did slow considerably (but not stop) on Mother’s Day.

The two weeks in the graph show some departures to the YTD graph where Saturdays garner about 25% more showings than week days:

The Case Shiller report for March 2009 was released on Tuesday. The Portland index is 147.68, about the same level as June 2005.

Ryan Frank over at the Front Porch details how Portland’s rise and fall lagged behind many of the other cities in the index.

I previously wrote “What/Who is Case Shiller.” The first comment astutely points out that condos are not included.

We’re going to try offering a property search engine that allows you to access all shared IDX RMLS listings right here on the blog. The version below is one of a few that are available. Your feedback will help decide if we keep it, dump it or change it. What do you or don’t you like about it?

I’ve looked at about 20 properties with an out-of-town buyer in the last 48 hours.  Both on the east and west side of the Willamette River but no further out than about 60th in either direction.  The properties all, priced between $350,000 – $485,000 ran the entire spectrum of, “why hasn’t this sold” to “this is $100,000 over-priced.

Some of my personal observations (some will agree, some will disagree because they diagree and some will troll because they can):

• The $425,000 house that has been remodeled scores higher in general than the house that needs $x to bring it to the same condition and is priced $x lower than the $425k house- Buyers don’t want the project…
• …Except when the remodel screams the discount rack at a big box hardware store- finding the right balance between cost and quality is imperative in a given price range.  It’s possible to “cheap out” or overdo in any price range and in any portion of a project.
• Showing feedback is important to both the seller and listing agent.  Request saying, “you showed my listing with the remodeled kitchen” cannot elicit the detail that an automated system with set questions and photographs can.  Sellers should insist that their agent uses a feedback program, whether third party or company driven.  The system we use carbon copies the seller.
• Make it easy to show.  A lockbox on the backdoor that has a key for the front door is not useful (at least it wasn’t raining)!  I made the majority of the appointments the day before but four were added by the buyer that morning; thank you for being flexible.  Favorite typo in a listing: “Small Jack Russel dog must speak to owner prior to showing.”  Smart dog.  Least favorite: 1 1/2 bath house listed as two (not going to work of a family of 5).
  
• I’m a fan of the “green” flier and think that it will only get more popular.  Hasson has their own eco-flier program but any sign making company can produce them for any agent.  We are in the process of creating and bidding our own.  It replaces the print flier.  One property we visited had eschewed the traditional real estate sign and flier box for a custom sign specific to the property.  Smart phone apps will make it even easier to exchange the dynamic information on a listing (price).  None of the listings we saw had a dedicated URL (www.123MainSt.com).
• Neighbors matter.  The major fixer and the beautifully landscaped double lot are both causes for concern in the future.  Will the fixer get fixed or get worse?  Will the double lot suddenly become a McMansion?  The same can be said for views.
• Everyone has a different set of deal breakers or must-haves and they don’t necessarily get equally applied to each property when balancing trade-offs.  “I don’t like the X but it has a great Y so maybe I can get over X.”  I previously swore I wouldn’t by a house without a garage but settled on a driveway because I loved the rest of the house.  Online floor plans may be even more useful than a virtual tour if the house has been photographed well.
• About 50% of the listings that have been on the market since 2008 have been relisted with new RMLS numbers (an RMLS number that starts with 7 was listed in 2007, 8: 2008, 9: 2009 etc).  There are lots of reasons (some better than others) that listings get relisted with a new number but I can guarentee that an educated buyer and buyer’s agent is not fooled into thinking that a recent number equals a new listing (though most automated computer systems are).  The listing history is readily available on the agent side of RMLS.

HUD announced this week that last week’s announcement was null and void.  Reported here and most outlets regarding real estate, it was thought that qualified first time buyers would be able to use the $8000 credit as a part of their down payment.

Lenders, home builders and real- estate agents had reacted favorably to the bridge-loan proposal, saying it would open up the housing market to more first-time buyers.

However, not everyone was in favor of using the tax credit as collateral on a down-payment loan.

“That tax credit should be savings, not debt,” said Patricia Garcia-Duarte, of Neighborhood Housing Services in Phoenix.

Garcia-Duarte said the proposal too closely resembled a now-illegal practice known as seller-funded down-payment assistance, which allowed a home’s seller to “gift” the down payment to a specific buyer through a non-profit organization.

AZCentral.com

We’ll have to wait and see what happens next.

My property search of the Portland’s South Waterfront shows 110 active listings in RMLS.  They range in price from $170,000 to $1,999,000.  Both units are in the John Ross.

The South Waterfront was not insulated from the real estate market decline.  The Adrea (the far left building in the picture above) was converted to apartments (as was the Wyatt in the Pearl and 2121 Belmont in SE).  From there, we have Atwater Place, the John Ross, the two Meriwether Towers and OHSU’s building on the far right.  This is a great picture of the proposed build-out of the area.

***Update: No longer true.  New post 5/20/09.

The US Department of Housing and Development has approved a plan which will allow qualified buyers to put their $8000 first time buyer credit towards their down payment.  It must be used in conjunction with and FHA loan.

How the secondary financing works:

• The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower. The second lien may not exceed the total needed for the downpayment, closing costs and prepaid expenses.
• The tax credit advance must provide that if the borrower does not repay the amount borrowed by the designated deadline, that principal and interest payments begin
  automatically.
• If payments on the tax credit advance are required, they must be included in qualifying the borrower and, when combined with the first mortgage, cannot exceed the borrower’s
  reasonable ability to pay.
• If payments on the tax credit are deferred, the deferment must be for a minimum of 36 months in order for the payment to not be included in the qualifying ratios.
• The tax credit advance second mortgage must not provide for a balloon payment before ten years.

The full text of the letter and the qualifications cited above are here.

Today’s RMLS Market Action reports the first drop in March to April inventory since 2004.  The drop in inventory is attributed to the increase in pending sales as the actual number of active listings increased to .  Inventory calculated as the number of active listings divided by their rate of sale.

The market still lags behind 2008 in pending and closed transactions but continues to see month-over-month improvements.  Current market time was 148 days in April (152 days for the year).  The method of calculating days on market has changed, but as a comparison, July 2006 had a DOM of just 38!  When the change was made the DOM jumped by about a factor of two so the difference is still significant.  Inventory for July 2006 was 3.5 and that calculation has not changed.  There were 11,457 active listings.  NE Portland’s 107 days on market is the lowest reported for April 2009.

The market over $1,000,000 remains slow.  In 2007, there were 74 sales in Portland over $1M in the first four months of the year.  In 2008, it dropped to 56.  In 2009, there are a total of 17 recorded sales through April 30th.  I obviously would like to add number 18 to that list with the sale of our remodel project at 2356 NW Hoyt.  I have a vested interest in hoping that the return of reasonable rate jumbo loans will accelerate the higher end of the market.

The debate to change the name Portland’s SE 39th Avenue to Cesar Chavez continues.  Portland’s Planning Commission voted 7-1 on Monday to keep the process moving.  Would a name change have a positive or negative (or any) impact on the street’s real estate?  There are at least two components that I can think of.  I’m not convinced either makes  a significant argument for or against a change (I personally would like to see something new (a bridge or park) named).

1) Does renaming a street mitigate the institutional memory of a street?  “I would never live on SE 39th because it is too busy” or “I want to find something on SE 39th because I want the flexible zoning so that I can live and work there.”  I don’t think there is a meaningful difference with a new name.  Busy streets remain busy regardless of name and there are advantage and disadvantage to buying on a busy street.

2) Portland Blvd became Rosa Parks a few years back.  I found a sold listing in RMLS on Rosa Parks from 2007.  The 1926 house had no listing history prior to that linked to the property.   But it does have history if searching by Portland Blvd.  I’ve always thought that listing history is overvalued as a metric in real estate.  What a house was worth back then or sold for back then has little to do with what a house is worth today.  It may be an indicator that further investigation is needed but it does not determine value itself.

We didn’t have any active transactions on Portland Blvd when it became Rosa Parks in 2006 and don’t remember any issues being brought up then so I am sure the change would be smooth in this case as well.  It might require an extra step when looking at histories and comps but again, I don’t see a significant impact.