Happy Monday Friends! I found this article from “Oregon Business.com” really interesting and pretty true to our sales and rental market. Great time to buy more investment properties!!!
Oregon arrived a little late to the housing crash and didn’t fall quite as hard as states like Florida and Arizona. But as real estate in some states begins to recover, prices here have continued to fall. Homes have lost about a quarter of their median value since their peak in 2007.
Meanwhile, household incomes are still reeling in the wake of the recession, pummeled by higher-than-average unemployment and wage stagnation. So even though home prices continue to fall, more Oregon homeowners and renters are spending in excess of one-third of their income on housing.
Housing costs that take more than 30% of a household’s income are considered unaffordable. The U.S. Department of Housing and Urban Development (HUD) uses 30% to figure low-income housing subsidies; lenders use it to determine mortgage qualification. Households paying more are deemed “burdened.”
In 2010 Census estimates indicate that 54.3% of Oregon renters were burdened, increasing 7% from 2006, while 42.8% of mortgage holders were burdened, a jump of 15% in five years.
One factor in expensive rentals is the state’s low inventory. The statewide rental vacancy rate in 2010 was 5.6%, the fourth tightest in the country.
Oregon’s homeownership is among the lowest in the nation and has fallen further since the recession. In addition, of all occupied homes in 2010, 37% were rented, the seventh-highest rate in the nation.
“There’s a lot of pressure on rental rates, and that’s probably because more people who had been in homeownership are now looking in the rental market,” says Margaret Van Vliet, director of Oregon Housing & Community Services, the statewide agency that administers federal money and tax credits for low-income housing. “There’s been hardly any construction of new multifamily [housing] for many years,” she adds. “The market is re-correcting but, in the meantime you’ve got folks who are really kind of stuck. So it’s a tough time across the whole spectrum of housing needs.”
According to a report from the National Low Income Housing Coalition, Out of Reach 2012, America’s Forgotten Housing Crisis, a full-time worker in Oregon needs a “housing wage” of $13.01 per hour in order to afford to rent a one-bedroom apartment at fair market rent (calculated by HUD at 40th percentile market rents). The average wage in Oregon of a full-time worker is $12.59 per hour. The biggest affordability gap in the state is in Columbia County where the average wage is $8.26 and the housing wage is $14.83. Portland has a small affordability gap because it has more multifamily housing and better-paying jobs; its housing wage also is $14.83 and its average wage is $14.33.
Van Vliet says persistent unemployment and underemployment have been most responsible for the inability of Oregonians to afford rents, as well as contributing to foreclosures. Hiring is slowly improving, though most of the new jobs are in the Portland metro area “so the recovery is going to be lopsided, and that’s going to put rural communities further behind,” she says. The five counties still suffering seasonally adjusted unemployment in excess of 12% in February were all rural: Crook, Grant, Harney, Jefferson and Lake. The statewide rate was 8.8%.
Within the state’s urban areas, Bend and Medford stand out as the least affordable housing markets, though both may be improving. In 2010, 48% of mortgage holders and more than 64% of renters in the two fast-growing metros were housing burdened. Since 2006 the burden hadn’t changed for homeowners, but renters’ burdens grew 22% in Bend and 12% in Medford. Meanwhile, the Federal Housing Finance Agency’s All-Transactions Home Price Index, an indicator of single-family home prices and refinance appraisals, dropped 40% for Bend and 30% for Medford.
Bend also witnessed the most dramatic surge of another indicator of unaffordable homes: foreclosures. In Deschutes County, notices of homeowner default shot up from 45 in 2007 to 314 in 2010. John Helmick, CEO of Eugene-based Gorilla Capital, which buys, remodels and resells foreclosed homes, says that after peaking in 2010, this indicator is finally brightening in 2011: “Throughout all the 20 Oregon counties in which we track the data, we saw an average of 25% decline in the number of new foreclosures being filed, and we see that same decline continuing in 2012.”
Jaynee Beck, a realtor with Duke Warner Realty in Bend and president of the Central Oregon Association of Realtors, also has reason for cautious optimism on the ability of new buyers to afford a home. “Our market has really done a big correction,” she says, “and it’s brought a lot of the buyers back to our market that were priced out of it in the boom.” That includes many locals who grew up and worked in Bend but had to commute 45 minutes away to find affordable housing when the minimum price in Bend was about $300,00.
“Now we actually have homes under $100,000,” says Beck, “so those people can come back to Bend.
Happy Wednesday Everyone! Found this article pretty interesting. My listings have definitely seen an increase in investor buyers and a lot of long time clients are starting to “get back in the game” with rates and prices so low. Call me if you have ANY real estate needs!
- Michelle and Kyle Hayes
The 2011 Colliers survey, compiled near the end of last year, has found that many investors are tired of waiting for opportunity, and they are beginning to look to smaller cities to obtain higher rates of return.
Though bargains can be found in some secondary and tertiary markets, today’s savvy investors aren’t just looking at price. They appear tired of waiting, and they want to find properties with good leases, strong tenants, and a good ROI.
Another comment being heard by investors is that they are concerned about inflation being just around the corner, and having assets is better than having cash. Interest rates are also hard to beat at the present time.
Aside from the promise of higher yields, what’s drawing investors to secondary and tertiary markets? The simple answer is jobs — and the prospect of more jobs. Cities with strong financial, energy, trade, or biotech sectors and population growth are generating the most interest,
Cities with their strong economies and universities continue to be favorites as well, particularly among office investors. Many purchases of existing buildings are coming in below replacement costs.
You may want to consider ways to share what is going on in your local markets with jobs and growth industries. This is a once-in-a-generation opportunity – with both pricing and interest rates at all time lows. Don’t miss the opportunity!
Source: Commercial Investment Real Estate, March 2012 issue.
Exciting news! I completed my Short Sale HAFA Specialist training last week and now have my HAFA certification!
A lot of people have not heard about this government program but its a sister program of HAMP- Home Affordable Modification Program. The media is starting to talk about this program more and more. I project more Realtors will be familiar with this program within the year.
Your tax dollars are paying into this program… so if you know of someone that has had a hardship and receiving a check for $3,000 at closing could help them, please have them contact me for eligibility requirements.
The Home Affordable Alternative Program (HAFA) was created as the next option for borrowers who did not qualify for a HAMP Modification or preferred to go directly to a foreclosure alternative such as a short sale or deeds-in-lieu of foreclosure.
Here’s the skinny on the program-
Unlike previously, you may NOT need to miss any mortgage payments
You WILL receive $3,000 at closing for relocation support
Debt forgiveness (no deficiency judgement)
You may be able to purchase another home immediately after closing
You will not have a foreclosure sale as long as the borrower performs in accordance with the terms of the HAFA agreement.
There is a percentage built in for outstanding liens on the property- this is HUGE if you have tax liens, divorce liens and so on. Most short sales do not allow proceeds for these to be paid.
Do you have a friend or family member this may be able to help? Have them contact me ASAP to see if they qualify. If anything, I can help them with a modification for free!!!
Great news for Portland! Have a great Tuesday! Kyle and Michelle Hayes
February 6, 2012 – The list of housing markets showing measurable improvement expanded by 29 metros in February to include a total of 98 entries on the National Association of Home Builders/First American Improving Markets Index (IMI), released today. Thirty-six states are now represented by at least one market on the list.
The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. The February index adds some metropolitan areas that have been particularly weak; this is due to the fact that the IMI measures improvement from a bottom, and some of the hardest hit markets are showing signs of coming off of extreme lows. Keeping this in mind, notable new entrants to list in February include Miami, Fla; Boston; Detroit; Kansas City, Mo.; Portland, Ore.; Memphis, Tenn.; and Salt Lake City.
“The number of improving housing markets has risen for six consecutive months, and 36 states now have at least one metropolitan area on the list,” noted NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “This indicates that despite the many challenges that continue to drag on a housing recovery – including the tight lending environment for builders and buyers – improving conditions are slowly but surely spreading from one housing market to the next.”
“While many of the markets on the February IMI are far from fully recovered, the index points out where employment, home prices and housing production are no longer retreating and have held above their lowest recession troughs for six months or more,” said NAHB Chief Economist David Crowe. “This is a sign that a large cross section of the country is starting to turn the corner as local economic conditions stabilize.”
“The fact that there are nearly 100 markets now on the improving list shows that the momentum is building for a housing recovery and that more buyers and sellers are starting to feel confident enough to return to the market,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.
The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.
Seven markets dropped from the NAHB/First American Improving Markets Index in February as they experienced softening house prices. These metros include San Jose, Calif.; Washington, D.C.; Kankakee, Ill.; New Orleans; Worcester, Mass.; Jackson, Miss.; and Sherman, Texas.
A complete list of all 98 metropolitan areas currently on the IMI, and a separate breakout of metros newly added to the list in February, is available at: www.nahb.org/imi.
Editor’s Note: The NAHB/First American Improving Markets Index (IMI) is released on the fourth business day of each month at 10:00 a.m., ET, unless that day falls on a Friday – in which case, the index will be released on the following Monday. A full calendar of release dates can be found at www.nahb.org/imi.
The index started in September with 12 metro areas and has expanded steadily. February marks the first time Portland made an appearance. In all, 29 new cities were added to the list this month.
“This is a sign that a large cross section of the country is starting to turn the corner as local economic conditions stabilize,” said David Crowe, the group’s chief economist.
But seven markets were knocked from the list in February after posting weaker home prices.
The group uses employment data from the U.S. Bureau of Labor and Statistics, permit data from the U.S. Census Bureau and a home price index published by Freddie Mac. That pricing index is reported on a quarterly delay, so the most recent pricing information is from September.
Interesting article I wanted to share. The numbers seem to be right on from what I’ve been experiencing although I thought the amount of homes that sold as short sales would be higher. But it makes sense if a home doesn’t sell as a short sale it will eventually be bank owned and sold. Enjoy ~
More homes in the Portland area sold last year than in 2010, but that didn’t stop prices from losing ground.
Falling values have dogged the housing market, keeping buyers and sellers on the sidelines. Foreclosures and short sales have weighed on market values, and observers are still watching for Portland-area prices to hit bottom.
The 19,682 Portland-area homes sold in 2011 represent a 4 percent increase compared with 2010, according to the Regional Multiple Listing Service. But the median price for the year fell 7.9 percent, to $221,000.
The increase in transactions couldn’t outpace the price declines. RMLS reported $5.2 billion in Portland-area home sales in 2011, an 11-year low.
Distressed properties continue to weigh on prices. Of the homes sold in 2011, 22 percent were bank-owned. Those had an average sale price of $170,000, a 36 percent less compared with market-rate properties. Another 11 percent sold as short sales at a 17 percent discount.
On the upside, year-over-year declines got smaller in 2011, which is generally a sign of pricing stabilization. Some analysts have said prices could reverse their trend this year after 4 years of slipping and sliding lower. Clear Capital, a real estate research firm, said it expects Portland-area prices to increase by 1.9 percent in 2012.
“You’ve got to get confidence, income, jobs,” said economist John Mitchell of M & H Economic Consultants. “That’ll keep this real estate thing going. When you see prices start to stabilize with continuing low interest rates, consumer confidence, rising rents, I think you’ll see activity up more.”
Many would-be sellers sat on the sidelines in 2011. The number of homes listed for sale during the year dropped by 25 percent, to 34,000.
That’s led to a sustained decline in the overall inventory of homes. At December’s sales rate, it would take only 5.3 months to sell every home on the market, the lowest point in at least three years.
“People realize that if they bought a house in 2005, 2006, they’re not going to make any money putting their home on the market,” said Tim Duy, a University of Oregon economist. “Consequently, they’re just holding. There’s really not any faith in these individuals to put their house on the market.”
Some buyers who might buy a home in other market conditions are reassessing the value of buying a home as an investment, Duy said.
Happy New Year again everyone! We are back in town and the real estate sales market seems to be picking up already! Good news after a pretty slow December/Holiday break. Below is a little insurance blog info but one thing to think about- Umbrella Policy. If you own a rental home or something similar talk to your agent about a one million umbrella policy. It’s cheap and worth the money. We have 2 million just to be safe.
Take Care- Hayes Team
Insuring Your New Home
Your home is your castle, so the saying goes. And you’re going to want to protect it. Homeowners insurance can give you just the protection you need. It provides coverage if your home is damaged or destroyed. It also covers your family’s possessions and provides you with compensation for liability claims, medical expenses, and other expenditures that result from property damage and bodily injury suffered by others.
Why you need it
If you finance your home, your mortgage lender will require it. But even if you own your home outright, you still need homeowners insurance to protect that which you can’t afford to lose. Without homeowners insurance, all of that hard work can go down the drain in a matter of minutes when, for example, a tornado devastates your house, a burglar robs and vandalizes your home, or your dog bites and severely injures your neighbor.
Your policy may cover not only the cost of the damage but also your living expenses (up to a limit) while you wait for your home to be repaired. But be aware that homeowners insurance does not cover a wide variety of perils (e.g., flood, earthquake damage). You may need to purchase an endorsement or separate insurance policy to ensure adequate coverage in these instances.
Purchasing homeowners insurance
If you have a trusted insurance advisor, discuss your needs and potential new home with them. They can show you ways to save money and ensure the maximum protection you need. If you need to find one, log in to the Faculty section of MFIC or call us for a personal introduction.
Homeowners insurance policies are written individually, typically at the time you purchase a home or when you take out a mortgage on a home. For the most part, you’ll want to purchase enough property coverage to cover the replacement cost of your home and its contents. The amount of liability coverage you’ll need to purchase will depend on the assets you would like to protect (e.g., home, car, investments). Your lender will also require a certain minimum amount of coverage, so be sure to have your mortgage professional discuss with your insurance agent.
Day 3 of our Hawaiian adventure in Kauai without the kiddos. We had a fun new years eve and actually made it it midnight. Yesterday we thought we would try a short 4 mile hike on the breathtaking Nali Pa coastline. 2 miles into to a secluded beach and 2 miles out. Being we are from Oregon we thought no big deal. Each mile takes just over an hour and the ENTIRE hike was huge slippery rocks. We were smart enough not to attempt this when it was not raining but it really didn’t matter. Half the people took off their shoes and were covered in mud up to their knees. The views were spectacular and it was once in a lifetime opportunity but we are so thankful we brought proper hiking boots and camelbacks.
Today is relaxing recover day and of course watch our Ducks. Snorkeling with the turtles tomorrow and kayak/hike Wednesday to a waterfall with a refreshing swimming hole.
Aloha and Go Ducks!
Hi Everyone, Prices are low and rates are still down. This is the year to invest in real estate!
Info below courtesy of Phil Lyman of Mortgage Trust. I’ve worked with Phil for nearly 10 years and he’s the best. Contact him at at 503.997.2545 or email@example.com
Make it a great week! Michelle Hayes
Applying for a mortgage
With all of the paperwork and questions that you need
to answer, applying for a mortgage can be stressful. But knowing what’s involved
in the process can make things a lot easier. Here’s some information to get you started.
Before you apply
Do some homework before you apply for a mortgage. Think about what type of home you want, what your budget will allow, and what type of mortgage you might seek. Later in this series you will learn about some of the most common types of mortgages and what might make the most sense for you.
It can be a good idea to obtain a copy of your credit report, and make sure it’s accurate.
Be prepared to answer any questions that a lender might have of you, and be open and straightforward about your circumstances.
What you’ll need when you apply
Be prepared to provide your mortgage professional
a lot of information about you (and, at some point, about the house you’ll buy)
to determine your loan eligibility. He or she will provide you a list of what is
needed, but here is a general idea to help you prepare:
Asset statements, including the name and address of your bank, your account numbers, and statements for the past three months
Investment statements for the past three months
Pay stubs, W-2 withholding forms, or other proof of employment and income
Tax returns, both personal and business, if you’re self-employed or own investment real estate
Information on consumer debt (account numbers and amounts due). A credit report may suffice for this; just ask your lender.
Divorce settlement papers or bankruptcy papers, if applicable
You’ll sign authorizations that allow the lender to verify your income and bank accounts, and to obtain a copy of your credit report. If you’ve already made an offer on a house or condo, you’ll need to give the lender a purchase contract and a receipt for any good-faith deposit that you might have given the seller.