Wednesday, December 30, 2015

Drivers of Local Supply and Demand - Portland Metro check out the local ecnoomic outlook

Portland Market Action for the week of 12-28-2015

More Homes Come With 'Pet Suites'

More spaces are being carved out for pets today, and the trend is even inspiring new home designs.
More than half of U.S. households now own a pet, according to a survey of more than 20,000 home shoppers by John Burns Real Estate Consulting. Forty-five percent of those surveyed say they treat their pets like royalty, while 44 percent say they'd like to have a dog park within walking distance of their home.
For the Dogs
"Pet suites" are a new feature more homebuilders are starting to offer in new homes. The suites are outfitted with dog wash areas, a bed, storage, and some even have a camera so that owners can check in on their pet when they're away from home. The pet suites range in prices from $1,500 to $16,000 and come either as an upgrade or added square footage within a floor plan. Pet suites are most likely to be located in an enlarged laundry room. 
Standard Pacific Homes in Sacramento, Calif., has a model that includes a pet suite within the laundry area but sectioned off by a high table. It includes a pet shower and cabinetry. Some builders are tucking the pet spaces under the stairs or other small nooks within a home. 
Source: “Increased Pet Ownership Inspires New Design Trends,” John  Burns Real Estate Consulting (December 2015)

Single Women Flirting With Real Estate Again

After taking a hit during the housing crisis, some analysts are expecting single women — who once made up a large piece of the housing pie — to make a strong comeback in the market in 2016.
U.S. Census data shows that single women are seeing rising incomes, which is critical because they typically stretch their budgets in order to purchase a home, Jessica Lautz, managing director of survey research for the National Association of REALTORS®, told Bloomberg. Many of these buyers are single mothers or widows.
What Women Want
"They are making sacrifices financially because they have a really strong desire to be a part of a community," Lautz says.
The environment has changed for single women since 2009, when lenders tightened their underwriting and made it tougher for many single buyers to qualify for a mortgage. The percentage of single female home buyers dropped from 21 percent of all purchasers in 2009 to 15 percent in 2015.
Single women often look for properties in the same price range as investors looking for rental properties, Lautz says. Investors receded somewhat in 2015, which could open the door to more single women to find affordable properties in the new year, she adds. 
The following 10 cities saw the biggest increase of women earning more than $100,000 between 2012 and 2014: 
  • Boston
  • San Francisco
  • Seattle
  • San Diego
  • Charlotte, N.C.
  • Baltimore
  • Fresno, Calif.
  • Columbus, Ohio
  • Louisville, Ky.
  • Los Angeles
Source: “Return of the Single Female Homebuyer,” Bloomberg (Dec. 28, 2015)

Rate Hikes May Hurt Foreign Buyers Most

The Federal Reserve's decision to gradually raise its short-term interest rates is expected to send mortgage rates higher in the new year and will likely have the biggest impact on foreign buyers from Western Europe and Canada, says Lawrence Yun, chief economist for the National Association of REALTORS®.
"The reason is [it] will make the U.S. dollar stronger," Yun writes in a column for "That, in turn, will make it more costly to buy in America for foreigners. One major exception to this trend is likely to be Chinese buyers."
Higher interest rates lure foreign savings into the U.S., which strengthens the dollar, Yun adds.
For example, Canadian currency has gone down 33 percent in value against the U.S. dollar over the past three years. American properties have risen by 24.7 percent in the same period, which means Canadians need to factor in 33 percent more for the cost of a home after currency conversion. That brings the total cost change to 57.7 percent to purchase a home in the U.S., Yun notes. 
Similarly, the cost of a U.S. home purchase has more than doubled for Russian or Brazilian buyers after currency conversion. 
At, you'll find a chart that shows the change in currency for some of the biggest foreign buyers of U.S. real estate. 

20 Markets Ending 2015 on a High Note

Residential real estate overall may have cooled as 2015 comes to a close, but the slowdown wasn't evident everywhere.®'s research team identified the top 20 medium-to-large markets where homes are selling the fastest and demand remains high (based on the site's listing views). Topping the list for the second consecutive month is San Francisco, followed by San Jose.
Other 'Hot' Markets
"While California closed out our latest ranking still firmly in control of the hottest markets, the Midwest and Florida are both seeing substantial improvement," says Jonathan Smoke,®'s chief economist. "Pent-up demand and robust economic growth combined with limited supply will keep California tight in 2016, but more markets will challenge them as demand improves elsewhere."
A few markets that are newcomers to®'s list this month are Tampa, Fla.; Fort Wayne, Ind.; and Midland, Texas. 
The following "hot" markets in December garnered about 1.4 to 2.9 times more views per listing than the national average at®. Also, homes in these locales sold 29 to 51 days faster than the rest of the country.
  1. San Francisco
  2. San Jose, Calif. 
  3. Vallejo, Calif.
  4. Dallas
  5. Sacramento, Calif. 
  6. San Diego
  7. Denver
  8. Santa Rosa, Calif. 
  9. Yuba City, Calif.
  10. Stockton, Calif.
  11. Los Angeles
  12. Oxnard, Calif.
  13. Nashville, Tenn.
  14. Palm Bay, Fla.
  15. Modesto, Calif.
  16. Detroit
  17. Boulder, Colo.
  18. Tampa, Fla.
  19. Fort Wayne, Ind.
  20. Midland, Texas
Source: “The Hottest U.S. Housing Markets in December 2015,” (Dec. 28, 2015)

3 Trends Sellers Should Know in 2016

There are three dominant trends in real estate that sellers should be aware of going into the new year. CNNMoney recently asked industry insiders to share what will be important when it comes to selling a home in 2016. Do you agree?
Prepare for Sellers in the New Year
  1. A seller's market dominates. Home prices have been climbing so much that they're even matching their 2006 highs. Seller's markets are more dominant in certain cities such as San Francisco, where bidding wars are widely reported and offers go well above asking price. "The more lucrative a region's economic future appears to be, the easier you can expect it to be to sell a home," according to the article. 
  2. Mortgages will get pricier. Low mortgage rates have been the standard in the last few years, but that will soon change. The Federal Reserve is gradually beginning to raise rates, which will move mortgage rates higher and dampen affordability. Sellers should be aware that it may become more difficult for prospective buyers to secure financing. 
  3. Tax benefits still abound. The largest tax break for ordinary taxpayers who qualify remains the exclusion on capital gains for the sale of personal residences. Single taxpayers are able to exclude a maximum of $250,000 in gains from the sale of a home. Joint filers get double that: $500,000.
Source: “Selling a Home in 2016? Here’s What You Need to Know,” CNNMoney/Motley Fool (Dec. 24, 2015)

Monday, December 28, 2015

Tigard Oregon Executive Summary

Top 5 Home Design Stories of 2015

Looks matter in real estate, and the best-dressed properties are likely to hold the biggest sway with home shoppers. But what projects offer home owners the biggest bang for their buck at resale? And what should you take the time to stage -- and not to stage? These were key questions our readers looked to REALTOR® Magazine for this year. Here, we highlight five of our top home and design articles for 2015.
New data: For the latest information on the value of remodeling, check out the new Remodeling Impact Report from NAR and the National Association of the Remodeling Industry.
1. Remodeling Cost vs. Value: Less Is More
The most cost-effective way for sellers to improve a home’s value can be through smaller replacement projects, notably ones that can boost curb appeal. This report offers insight into which remodeling projects offer the largest returns at resale.
2. 9 Modest Fixes for the Problem Kitchen
Home shoppers place high value on the look of the kitchen. But what if your seller has a dated, dingy one? A total kitchen renovation can be pricey. But a few cosmetic changes for a lot less can instantly transform a kitchen and freshen up its look to appeal to today’s home buyers.
3. 9 Real Estate Myths That Need Debunking
Have you been duped? What popular real estate myths have you been falling for? Some questions we looked at with a critical eye: Should you always change bold paint colors to neutrals before selling? Should sellers really expect to earn everything they invested in remodeling projects back at resale time? Sort out fact from fiction.
4. Top 10 Stupid Staging Ideas
Staging can bring out the best in the home, but some things professionals or home owners do to prep a home for sale just don't make sense. Home stager Justin Riordan offers up what he believes to be some of the oddest staging tricks and myths.
5. What If Your Listing Stinks? 
One real estate professional shares how the smell of her listing cost her one deal and eventually led to the home owners getting $50,000 less for their home when they sold it. You also might be surprised to learn that the old cookie-baking trick may do more to hurt a sale than help it. Here are some surprising findings on the smell of a home and how you can fix a home that really stinks.

Biggest Winter Home Risks

The winter season is a prime time for house fires. Half of all destructive fires tend to occur in December, January, and February, according to the National Fire Protection Association.
But most home fires are preventable. Here are some leading culprits to watch for:
Space heaters. These devices are the leading cause of house fires in the winter. Make sure the heater is at least three feet away from anything flammable. Plug it directly into the outlet, not an extension cord.  And do not go to bed with the spacer heater still on, experts warn. “Most space heater accidents happen while everyone is sleeping,” says Peter Duncanson, director of disaster restoration training for ServiceMaster.
Cooking. The leading cause of house fires year-round is stovetop cooking. Interestingly, the majority of these fires occur within the first 15 minutes of cooking. Never leave the house when the oven or stove is on. Keep oven mitts, dish towels, and other flammable items at least three feet away from the stovetop.
Electrical cords. Overloaded or damaged circuits cause 3,300 fires annually. The laptop, iPhone charger, toaster, and other electrical appliances all squeezed onto the same power outlet with extension cords and adapters can be dangerous. Feel your cords to make sure they’re not warm (if they are, it's a sure sign they’re overloaded and you need to unplug some). Also, never run extension cords under rugs or in walls, and don't connect several in a row.
Fireplaces and wood stoves. Make sure you keep any flammable objects at least five feet away. And don’t think vigilance only during active burning is enough; embers can smolder for up to two weeks and still ignite if given the opportunity. Empty ashes into a metal container and keep them away from anything flammable for at least two weeks, experts advise. Sabine Schoenberg, home improvement expert and host of ThisNewHouse, advises that home owners be sure to clean fireplaces and flues at least weekly.
Source: “The Biggest Risk to Your House This Winter,”® (Dec. 23, 2015)

Housing Outlook for 2016: Expect Change

Housing Outlook for 2016: Expect Change

While change is coming to the mortgage market, Freddie Mac says in its 2016 housing forecast that it's too soon to tell whether marketplace lending is the next Uber or just another flash in the pan.
“The current generation of marketplace lenders all may fail in the next economic downturn,” says Sean Becketti, Freddie Mac’s chief economist. “Regulators may impose higher standards on marketplace lenders. The cost advantages of marketplace lending may not extend to mortgage lending."
But Becketti says the new year will undoubtedly bring changes: "Innovation is difficult to stop. New startups will look for ways to improve upon current marketplace lending business models. Large bank lenders may incorporate the most successful of the marketplace lending innovations. It's difficult to say where all this will lead, but one prediction is indisputable. Expect change."
Here are five more predictions for 2016 from the mortgage giant:
  1. The 30-year fixed-rate mortgage will likely average below 4.5 percent for 2016 on an annualized basis.
  2. Mortgage rates will gradually move higher posing an affordability challenge. But expect a strengthening labor market and pent-up demand to carry momentum into 2016.
  3. Home prices will likely moderate slightly to 4.4 percent in 2016, driven in part by the reduction in home buyer affordability and reduced demand as a result of Fed tightening.
  4. But industry activity will grow in 2016 despite monetary tightening. Expect total housing starts to increase 16 percent year-over-year and total home sales to increase 3 percent.
  5. While home purchases will increase next year, higher interest rates will reduce the refinance volume pushing overall mortgage originations lower in 2016 than in 2015.
Source: Freddie Mac

Wednesday, December 16, 2015

Refinance Rush Ahead of Fed's Decision

Some home owners rushed to refinance their mortgages last week before the Federal Reserve raised interest rates Wednesday. The Fed raised its key interest rate from a range of 0 percent to 0.25 percent to a range of 0.25 percent to 0.5 percent, according to reports. But prior to that, owners were bracing themselves, with refinance applications for the week ending Dec. 11 rising 1 percent from the previous week on a seasonally adjusted basis.
Don't Be Scared
Still, the uptick in refinance applications couldn't keep overall mortgage activity up last week. Total applications for refinancings and home purchases dropped 1.1 percent overall, pushed down by a 3 percent week-to-week drop in home purchase applications. However, home purchase applications are still 34 percent higher than the same week one year ago. 
"Some borrowers may have moved to lock in current rates in advance of the Fed's increase this week," said Michael Fratantoni, chief economist for the Mortgage Bankers Association. The Federal Reserve's move Wednesday to raise the Federal Funds rate was the first in 7 years.
The average 30-year fixed-rate mortgage currently averages 4.14 percent, unchanged from last week, MBA reports.
Mortgage rates follow longer-term bond yields, so an increase in the Federal Funds rate will not necessarily send mortgage rates up, CNBC reports. That will greatly depend on how investors react to Fed Chair Janet Yellen's statements about the economy. Mortgage rates are largely predicted to edge higher by the end of 2016.
Even if there weren't Federal Reserve intervention, "the income a first-time home buyer will need to buy today's starter home a year from now will increase," says Mark Fleming, chief economist at First American. "Yet, we estimate the difference to be only $700 more. The price of admission into home ownership is going to rise, in part because of the leverage-assisted asset inflation caused by the low-rate environment. The time for rock-bottom mortgage rates needs to end, and the end of this era will only have a very modest impact on affordability for the first-time home buyer."
Source: “Mortgage Refinances Up 1% on Rate Fears,” CNBC (Dec. 16, 2015)

92% of Homes Now Have Equity

About 256,000 U.S. homes regained equity in the third quarter of this year, bringing the total number of residential properties with equity to about 46.3 million, according to CoreLogic's latest equity report. That equates to about 92 percent of all mortgaged homes.
Opportunities for the Equity-Rich
The number of residential properties in negative equity dropped to 8.1 percent, or 4.1 million, in the third quarter, down 20.7 percent year-over-year, according to CoreLogic's report. Negative equity refers to properties where borrowers owe more on their mortgage than their homes are currently worth.
"Home-price growth continued to lift borrower equity positions and increase the number of borrowers with sufficient equity to participate in the mortgage market," says Frank Nothaft, chief economist for CoreLogic.
In the third quarter, about 37.5 million borrowers had at least 20 percent equity, up from 35 million a year ago. In the last three years, the number of borrowers with at least 20 percent equity has climbed by 11 million, "a substantial uptick that is driving rapid growth in home equity originations," Nothaft says.
The bulk of properties with positive equity is concentrated in the high-end housing market, CoreLogic's report notes. Ninety-five percent of homes that are valued at $200,000 or more have equity compared to 87 percent of homes valued at less than $200,000.
Home prices are expected to rise at least 5 percent in 2016 and continue to build wealth among home owners in the new year, says Anand Nallathambi, president and CEO of CoreLogic.
The following 10 metros had the highest percentage of residential properties with positive equity in the third quarter:
  • Houston-The Woodland-Sugar Land, Texas: 98.2%
  • Dallas-Plano-Irving, Texas: 97.9%
  • Los Angeles-Long Beach-Glendale, Calif.: 95.4%
  • Minneapolis-St. Paul-Bloomington, Minn.-Wis.: 94.4%
  • New York-Jersey City-White Plains, N.Y.-N.J.: 94.3%
Meanwhile, the following metros had the highest percentage of residential properties with a mortgage that continued to be in negative equity:
  • Phoenix-Mesa-Scottsdale, Ariz.: 14.2%
  • Chicago-Naperville-Arlington Heights, Ill.: 13.8%
  • Riverside-San Bernardino-Ontario, Calif.: 11.4%
  • Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.: 10.8%
  • Atlanta-Sandy Springs-Roswell, Ga.: 9.7%
Source: CoreLogic

How Your Clients Misunderstand Mortgages

Americans significantly lack understanding about minimum mortgage qualification criteria, particularly renters who plan to buy a home within the next five years, according to a survey of 3,868 consumers by Fannie Mae's Economic & Strategic Research Group.
Mortgage Info for Your Clients
When asked about key mortgage qualification criteria — down-payment percentages, borrower's credit scores, and debt-to-income ratios — about half of consumers answered with "don't know" or failed to provide a valid answer, according to the survey.
For those consumers who did provide an answer, many respondents thought the requirement for a minimum down payment was four times larger than Fannie Mae's actual figure of 3 percent. When it came to minimum credit scores, many thought the requirement was 652 — when in actuality, Fannie Mae's requirement is 620.
The survey also showed, not surprisingly, that consumers cite lenders as one of the most influential sources of mortgage information, but real estate professionals follow closely behind along with family and friends.
Prior Fannie Mae surveys have shown that "the aspiration to own a home remains strong and that consumers perceive the down payment and their credit scores as leading obstacles to obtaining a mortgage," notes Mark Palim, Fannie Mae's vice president of Applied Economic and Housing Research. "Advancing from aspiration to sustainable home ownership is more likely to occur if consumers have an accurate understanding of the requirements to qualify for a mortgage. While it can take years to improve one's credit score or save for a down payment, undertaking such efforts based on inaccurate information may lead to a needless delay in reaching the goal of owning a home."

3 Ways to Buy Remotely With Confidence

Selling From Afar
It may seem impractical to purchase a home sight unseen, but one in five buyers have made an offer on a property without ever visiting it, according to a recent BusinessWire survey of 2,134 Americans. It's a risky way to buy, so for those who can't be there for an in-person showing and need to rely on the Internet to come to a purchase decision, here are a few tips to help them feel more confident that they're making the right choice:
  1. Get a bird’s eye view. Buyers should not only look at the home but also the neighborhood and surrounding area. "I recommend [buyers] look at Google Earth and do Street View to get a good feel for their area," says Benjamin Beaver, an agent in San Angelo, Texas. Beaver says that he'll do a video tour of the neighborhood for his clients to pinpoint any possible noise issues, such as from a nearby highway, that wouldn't be identified through online listing photos. Video tours also allow buyers to see every angle of the home itself — not just the most flattering ones depicted in listing photos. "I think it gives buyers that confidence of OK, I know what I'm getting here," he says.
  2. Hire an inspector. A home inspector can uncover any potential problems, but they are usually hired after an offer is made. For remote buyers, however, you could ask an inspector to skim the home's online photos, and they may be able to spot glaring issues sellers are trying to hide, says Frank Lesh, executive director of the American Society of Home Inspectors. Also remote buyers should ask an inspector once they are able to do an in-person evaluation about any odor issues, such as from a dank basement. Those are issues remote buyers can't identify for themselves online.
  3. Request a walk-through contingency. Negotiate a walk-through contingency into a contract, which will provide a safeguard if the home doesn't measure up to expectations in person. The buyer will then be able to walk through the property before signing papers at closing. But as is the case with any contingency, sellers don't have to agree to it and may demand a higher purchase price in order to comply.
Source: “How to Size Up a Home, Sight Unseen,”® (Dec. 15, 2015)

Wednesday, December 2, 2015

Check out the later Market Action Reports in Tigard, Lake Oswego, and Portland

FHFA: Loan Limits Mostly the Same for 2016

The Federal Housing Finance Agency announced that maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac will remain unchanged in 2016 for most of the country. Fannie and Freddie loan limits will remain at $417,000 for single-family homes in 2016, however, in 39 counties deemed “high cost,” the FHFA says that the conforming loan limits will rise next year.
Read more: More Home Buyers Bypass Banks for Loans
The conforming loan limits will rise in counties in the Denver metro area, Boston metro, several in Nashville, and three counties in the Seattle metro area.
Some of the largest conforming loan limit increases for 2016 will occur in Sonoma County, Calif., where the loan limit will rise by $33,350 – from $520,950 to $554,300. Also, several Denver-area counties will see sizable increases by up to $34,500 for next year – with loan limits rising from $424,350 to $458,850. Monterey County, Calif., which will rise by $26,450 – from $502,550 to $529,000. Also, in San Diego County, loan limits will rise $18,400 from $562,350 to $580,750.
However, FHFA says most cities will not see the change in loan limits because the agency determined that the average U.S. home value in the third quarter of this year remained below its level in the third quarter of 2007.
View this chart from HousingWire to see the 2016 loan limits for the 39 counties that will be posting increases next year.
Source: “FHFA Announces 2016 Conforming Loan Limits,” HousingWire (Nov. 25, 2015)

Real Values of Ownership: What Renters Miss

Writer Jason Zweig recently wrote a forward-looking letter to his grandchildren for The Wall Street Journal that documents the joys of home ownership and what many young adults may miss out on if they continue to be lifelong renters. Zweig writes that it took him decades to learn the true value of home ownership, beyond the advantages of equity building.
Read more: Millennials Are Saving for Home Ownership
Zweig reminisces in the letter as he and his brother help to move out their 87-year-old mother from the place she called home for half a century. The home contained memories for the family – where the family grew up and even where her husband died in that home in 1981. Their mother had turned the home almost into a museum of family treasures over the years.
As the mother told her sons: “I have no emotional attachment to the house; I never liked it physically. But everything important that ever happened in our life as a family is here, and I can’t just leave all that behind.”
Zweig’s letter talks about the true treasures of owning a home and the difficulty in saying goodbye to a place you call home for so many years.
“A home is more than an investment,” he writes. “It is the place that helps shape who we are. Your generation may well be thankful that you don’t have to bear the burdens of owning one – the mortgage, the maintenance, the pain of pulling up roots that run decades deep. My generation, and my mother’s, are thankful we had the blessings.”
Read the letter at The Wall Street Journal.
Source: “The Real Value of a Home,” The Wall Street Journal (Nov. 27, 2015)

Neighbor Spats Online May Cost You Deals

Neighbors are increasingly turning to the Internet to vent about one another, their homeowner’s associations, or boards. The public rants can dampen a neighborhood’s reputation, and possibly even affect property values, real estate professionals say.
Read more: Sticks & Stones Won't Hurt Worst
“Social media has given people more platforms to speak their minds, especially since they can do it behind closed doors — they don’t have to face the people that they’re arguing with,” Stacey R. Patterson, a real estate lawyer who represents condos and co-ops in New York and New Jersey, told The New York Times. “Between chat rooms and Facebook pages, you set up anything and you can start a war.”
You can also land in a lawsuit. In a recent case in Brooklyn, N.Y., residents disgruntled with their co-op board launched public websites that criticized board members and how the building is managed. The board members, in response, filed defamation lawsuits.
“As more buildings get a web presence and people generally become more web aware, you’re going to start having your dissident fights on the Internet,” says Dean M. Roberts, the corporate counsel for Trump Village Section 4, a complex in Coney Island, Brooklyn, with three-bedroom apartments that sell for around $450,000. At the Trump Village Section 4, residents launched a website, TV4 United or The board members sued some of the residents for defamation as comments became common from residents like “why we let a dirty no good politicians [sic] destroy our investment?”
A judge ruled this summer the case had enough merit to proceed.
Some property managers and board members say these websites allow renters and home owners to vent but can be misleading and jeopardize home sales.
“What do you do when Ms. O’Leary, the crazy cat woman in 5C, starts putting up these postings and you’re trying to sell your apartment?” Roberts says. “It’s hard to delineate the truthfulness of some Internet stuff because crazy cat woman’s comments look the same as the board president’s comments.”
Review sites such as Yelp have also become a popular place for others to post critical comments on various apartment complexes.
Indeed, real estate professionals say they believe the sites may be costing them deals. “I’ve had good sales there, but could I have had better sales? Could I have had more buyers? I don’t know,” says John Cerrone, a salesman at Douglas Elliman. “To say that people are openly expressing dissatisfaction and to say that cannot have an effect, I think that’s naïve.”
Source: “When Neighbors Tangle Online,” The New York Times (Nov. 6, 2015)

Tuesday, December 1, 2015

Sellers Are More Confident They’ll Make Money

Home owners’ fear of selling their homes for less than what they paid is abating, as sellers grow more confident that they’ll recoup the amount they spent. Over the past two years, their confidence has grown 29 percent, according to a survey conducted by the National Association of REALTORS® of 1,000 adults in the nation’s 50 largest metro areas.
Seventy-one percent of home owners disagreed with the statement: “I do not think I could sell my house for what I paid for it.” That is up from 55 percent in 2009, 2010, and 2013. Only 27 percent agreed with that statement, which is down from 42 percent in 2013, according to NAR.
Sellers’ confidence will likely extend into next year too. Four in 10 Americans surveyed say they expect home prices to rise in their market over the next year.
Only 23 percent said they would like to move but don’t think they could sell their house in the current market, down from 38 percent two years ago.  Some 74 percent of owners said that would like to move, but think they could sell their house, an increase of 17 points over last years.
Sellers are showing greater confidence today than in the past four that they could sell their home in the current market too. Today, 74 percent feel like they could sell in the current market compared to 57 percent who were confident about selling in 2013.
Seller confidence will likely extend to their outlook for next year too.  Four in ten adults in the survey (41%) expect prices to rise in their market. Some 47 percent said prices will stay the same and only 6 percent expect them to decrease.
Strategies designed and administered this telephone survey conducted by professional interviewers.
Source: “Confidence in Recouping Purchase Price Soars,” Real Estate Economy Watch (Oct. 15, 2015)

Portland-Metro Market Action - October 2015

Monday, November 30, 2015


Some Home Renovations Can Raise Tax Bills

Home owners tackling a remodeling project may want to consider how their renovations could impact what they pay on their taxes. Renovations can increase a home’s assessed value, and assessed value is used to determine the property tax owners pay.
The improvements that can increase a property’s reassessment can vary considerably by location. Home owners may be wise to ask their city in advance how a certain improvement might impact their home’s assessed value, if they want to avoid surprises later on.
In general, however, additions and increasing living space tend to increase an owners’ property taxes. Also, finishing space that the owner already has, such as in the attic, garage, or basement, also tend to increase the property tax bill.
“Anything that increases the square footage of the living space is likely to increase the value of the home, and therefore the assessed value,” says Tom Shaer, deputy assessor for communications with the Cook County Assessor’s Office.
Also, large renovations – such as adding a bathroom – likely will prompt a reassessment of a home too. That’s because an “additional bathroom allows more people to live in the house,” therefore increasing its value, says Pete Sepp, president of the National Taxpayers Union, a pro-taxpayer lobbying group.
Kitchen renovations can be one gray area, says Michael Kapp, public information officer for the Los Angeles County assessor’s office.
“If they’re replacing countertops and not extending them, it would probably not [trigger a reassessment],” Kapp says. “If they add additional cabinets or move a wall, for example, that would trigger reassessment,” even if the square footage does not increase.
Some owners may be surprised at what will trigger a reassessment. For example, adding a garden shed could potentially trigger a reassessment, Sepp says. Also, in-ground pools, a very large deck, or even re-grading the lot to improve its drainage could potentially increase the property tax bill too.
Source: “Home Renovations That Add Value – and a Heftier Tax Bill,”® (Nov. 27, 2015)

Housing’s Failure-to-Launch Buyer Problem

More young adults are living with their parents now than during the recession, according to the latest report from the Commerce Department. 
The number of 18- to 34-year-olds who are living with their parents swelled to 31.5 percent as of March 2015 – that’s up from 31.4 percent last year and up from just 27 percent in 2005.
Many economists have predicted that with an improving economy more young adults would start moving out on their own. In fact, the housing market has been relying on millennials driving new household growth and fueling an upsurge in demand.
Yet, the trend of young adults continuing to live with their parents isn’t likely to change anytime soon, says Jed Kolko, an independent economist and senior fellow at the Terner Center for Housing Innovation at the University of California, Berkeley.
Kolko says the rise in children living with their parents is likely related to the delay among young adults in marrying and having children compared to previous generations – and is not a direct tie to a weak economy or the housing market.
The increase in young adults choosing to live at home has contributed to the lowest share of first-time home buyers in nearly three decades, according to the National Association of REALTORS®.
“The boost to housing from young adults will come more slowly than people expect,” Kolko says. “The long-term demographic shifts suggest this might be the new normal, with young people living with their parents longer and more permanently delaying household formation and home ownership.”
Source: “More Young Adults Live With Their Parents Now Than During the Recession,” The Wall Street Journal (Nov. 23, 2015)

DIY Mortgage Applications

Quicken Loans recently announced a bold new move in the mortgage business: A self-service mortgage application, what some in the media are saying makes applying for a mortgage nearly “as easy as ordering a pizza.”
Its new system, called “Rocket Mortgage,” allows consumers to fill out information online that they would typically give to a salesperson in-person. Prior to this system, Quicken Loans only allowed consumers to do basic calculations and gather loan quotes online. This program goes further, allowing the clients to do all the work themselves.
After consumers fill out their information online, they will be given product options that are “completely personalized based on the way they answer the questions and the data they import” from their bank, Regis Hadiaris, the Rocket Mortgage product lead, told National Mortgage News. Hadiaris says this can speed the underwriting process. After receiving loan options, clients can click a button to see if they are approved contingent on underwriting and, if so, they can lock in the rate themselves.
“Up until now [consumers] had to talk to a mortgage banker to get that personalized information and get their options,” Hadiaris says. “Now they can see all their options online. … All the power and control is in our clients’ hands.”
Quicken Loans is still maintaining its signature call centers for those who prefer in-person. 
Source: “Quicken Loans Introduces Self-Service Application Option,” National Mortgage News (Nov. 24, 2015) and “Applying for a Mortgage Could Be (Almost) as Easy as Ordering a Pizza,”® (Nov. 25, 2015)

New-Home Sales Post Big Rebound

New-home sales for single-family homes zipped ahead 10.7 percent in October, finally a major sign that backs up the sentiment from builders that the sector is on the mend. The Commerce Department reported that newly built, single-family homes rose to a seasonally adjusted annual rate of 495,000 units in October.
“Our builders are reporting continued optimism in the housing market, and are adding inventory in anticipation of future business,” says Tom Woods, chairman of the National Association of Home Builders.
So far, sales are running nearly 16 percent ahead of 2014, according to NAHB’s Chief Economist David Crowe.
“With a firming job market, affordable home prices, and rising pent-up demand, [the latest] report is another indicator that the housing market continues to move on a modest upward trajectory,” Crowe says.
Regionally, new-home sales surged 135.3 percent month-over-month in the Northeast in October, followed by an 8.9 percent gain in the South and 5.3 percent increase in the Midwest. Sales dropped 0.9 percent in the West.
The inventory of new homes for sale was 226,000 units in October, or a 5.5-month supply at the current sales pace.

Wednesday, November 25, 2015

Ways to Renovate a Home for Millennials

The millennial generation is primed and ready to step into home ownership. First-time buyers accounted for 29 percent of sales in September, according to the National Association of REALTORS® latest housing report. Echoing this, a new report from the Commerce Department found that the home ownership rate for those under age 35 increased to 35.8 percent in the third quarter of 2015, representing the largest gain for that population since the second quarter of 2004.
Read more: Millennials Say They Don't Want a Home Like Their Parents'
These stats demonstrate why it's important for baby boomers looking to sell to consider the needs of young buyers when undertaking remodeling projects. The main thing to keep in mind: most young buyers are not looking to take on a fixer-upper.
"For the most part, Millennials are looking for the finished product and will pay for it. They want what they see in magazines — nothing less," says Sabine H. Schoenberg, president of the real estate brokerage firm PrimeSitesCT in Greenwich, Conn. "They don’t seem to view themselves living in any one place for a very long time, so there’s no time for gradually rolled out home improvements."
These are three upgrades that millennial buyers expect:
Open space to congregate. Young buyers are drawn to open floor plans, and in particular they want kitchens and family rooms that are open and connected, with plenty of room for people to hang out. "As a real estate broker, I frequently hear statements from millennial buyers like: “I don’t want to be in separate parts of the house and never see my family," says Schoenberg. Owners may want to consider adding a center island with a few stools to the kitchen, to emphasize the room as a prime entertaining space.
WiFi is key. The lack of a strong wireless internet connection is not just a deal killer in high-rises and condos in urban areas. If your house suffers from spotty wireless service, you may need to install WiFi boosters. However, if the cell signal in your home is strong, you'll definitely want to mention that to young prospects.
Think green. Young buyers generally prefer wood floors to carpet, so focus on upgrading to eco-friendly materials such as bamboo flooring and wood with FSC (Forestry Stewardship Certification). They're also looking for healthy homes with good air quality, energy-efficient heating and cooling systems, and most importantly, no environmental issues like mold and fungus, and non-toxic paint that contains low or zero VOC.
Source: "How Boomers Can Sell Their Homes to Millennials," NextAvenue (Oct. 23, 2015)

Dipping Into Stocks for a Down Payment

To finance a home purchase, some home buyers are reaching deep into their savings.
In 2014, about one-fifth of borrowers sold stocks or bonds or borrowed against their retirement accounts in order to pay for a home purchase, according to the National Association of REALTORS®.
“There are no hard and fast rules regarding if and when to cash in stocks to make a home purchase,” The Wall Street Journal reports. But many financial planners would caution about borrowing from a retirement plan since home owners risk penalties and an income-tax bill if they don’t follow the loan repayment terms.
Read more: What's an Average Down Payment?
As an alternative to selling stocks, some borrowers are instead getting a loan secured against their assets. For example, Bank of America Merrill Lynch offers a “loan-management account” that offers borrowers a line of credit based on their Merrill Lynch taxable brokerage portfolio holdings. The funds can go to several uses, including to come up with a down payment to pay for a home. But there is a risk: If the stock market drops significantly, borrowers may be required to a margin call and be forced to pay the difference between the required collateral amount and its current market value, says Mike McPartland, head of investment finance for Citibank Private Bank North America.
The Wall Street Journal highlights a few items for borrowers to consider:
  • Don’t wait until the last minute to cash in stocks, banking on values to rise. Stocks could drop and affect a borrower’s ability to qualify for a loan. Also, buyers could risk delays on the home closing since the sale and money transfer can take several business days, says Peter Grabel, managing director of Luxury Mortgage Corp., based in Stamford, Conn.
  • Lenders tend to value cash in a bank account as more than stocks or mutual funds when determining whether the applicant qualifies for a mortgage. Lenders usually value a portfolio at 70 percent of its current monetary value, Grabel says.
  • Capital-gains taxes could lurk. Borrowers who have had stocks appreciate significantly likely will face the tax when they sell their holdings, which could then end up adding to the cost of the home.
Source: “Selling Stocks to Buy a Home? How to Do It Right,” The Wall Street Journal (Oct. 21, 2015)

Your Need to Know Guide to Buying a New Home

If you’ve been following along, you know that last time around we covered a lot of the important things you should be thinking about when b...