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Spring 2008 Portland Report is now available. We’ll be throwing a party soon to celebrate so stay tuned

Spring 2008 Portland Report

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I am often asked the question, “What are the next hot neighborhoods in Portland.” I like answering this question because I feel I have a good take on what makes a great neighborhood. Also, as a Broker that handles commercial real estate, I know many of the developers in town and where they are planning new projects.

What makes a great neighborhood? In one word: Lifestyle = Parks, Transit, Restaurants, Bars, Entertainment

North Portland: Kenton
I love this place. Close it I-5 and Interstate MAX line. Denver has new cafes and shops openning up and Kenton Park is great all summer.

NE Portland: Hollywood
When you’re competing with Alameda and Irvington it’s hard to stand out but for buyers looking to walk their neighborhood this is the place. Close to Sandy which is changing to a more upscale corridor and more affordable than it’s surrounding neighborhoods.

SE Portland: Clinton
Two blocks south of the rapidly changed Division St. you can walk to all Division has to offer with a much quieter feel. Home of one of the best new sushi places [Bara], a theater, and great bars. Centered around 26th Ave to 21st Ave.

SW Portland: Multnomah Village
This is not a secret but I think this area will continue to build as the quaint small town center of SW Portland.

NW Portland: Downtown North of NW Thurman St.
Just above the Pearl District this area has a ton of new development slated for the next few years. A great place to buy an old warehouse and make some real lofts or try to find a rare old house in amongst the industrial neighbors.

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For you reading pleasure I am sharing Portland State University’s Center for Real Estate’s Quarterly Report.

There is very good news for certain close-in home owners - skip to page 62

Report Here

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I was forwarded a wonderful graphic by a friend that shows where all the subprime messes really are:
Map with Subprime Graph

You can see by looking at this graph that it looks like most of the problem areas are centered around metro areas where the increase of buyers from the availability of subprime mortgages fueled a huge rush of new construction. Once the speculation and overbuilding collided with the start of foreclosures it snowballed into actual problems where people couldn’t hold on through the downturn.

There was also a fundamental shift in thinking about real estate from a long term conservative investment into a short term - get rich quick with no money down scheme. If everyone was theoretically able to hold out in the long run I don’t think we’d be having nearly the problems we are. The panic has made this worse and I’m betting that late this year or at the latest in 2009 things will start to look better.

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Winter finally let go of Portland for an entire weekend with a record high 85 degrees! I got out and played some tennis, got a little color, and BBQ’ed with friends. The sunny weekend was a great reminder of what we all love about living in Portland; ski and/or hibernate all winter, and stay outdoors all summer. Time to oil up the chain on your bicycle and put away the chains for your car!

Another favorite pastime for Portlanders is touring homes. I’ve been out looking a lot more lately than I was in January and February; March and April have been shopping season to put it mildly. So if you’re thinking of buying here are some tips:

Open Houses: These happen Saturday and Sunday - You can drive around looking for signs or you can call or email me and I can give you a list of opens.
Brokers Tour: These are Tuesday from 11-1pm and at many of these you get a free lunch! If you’d like to join me for the brokers tour let me know.
Scheduled Home Tours: This is when you’ve narrowed down the list of possible homes to your favorites and I schedule time to show you homes personally - I love looking at homes with clients and have seen many of the homes on the market.

So if you’re thinking of buying give me a call! Spring and Summer won’t last forever…

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Tax time is right around the corner and you know what that means… Time to file that first extension! [Extension Form]

I also wanted to give you a heads up on a few things in relation to taxes and your home or investment property - Owning a home gives you access to all kinds of great deductions, deferrals, and exemptions. Please see a CPA to learn how these concepts apply to your situation as I am not giving any tax advice in this article.

The first big deduction is your home mortgage interest deduction - this is one of the big reasons given to own over renting. Also, recently they made a change and MI (Mortgage Insurance) is sometime deductable as well. [Home Mortgage Interest Deduction Form]

One of my favorites is depreciation of investment property, this means you get to tell the government that you are losing money due to a building getting older when in most cases its actually getting more valuable. This one can be particularly tricky and if you’re have trouble sleeping you can read all about it here: [Depreciation Info]

Probably the biggest tax break you will ever get is the exemption of capital gains on the sale of your primary residence. Basically, if you lived in your home for 2 of the last five years you get off the hook for capital gains up to $250k if single or $500k if married. Learn more in 36 riveting pages: [Selling Your Home Tax Info]

And last but not least are tax deffered exchanges of business and investment property know as a 1031 exchange. This allows you to sell an investment property and then put all the money and debt (or more) into another like-kind property (real estate in the USA used for investment or buisness) and defer the capital gains until a later date. Interesting factoid: the 1031, also know as a Starker Exchange was changed from a simultaneous event to one in which you have time to find replacement property by an Oregonian named TJ Starker[IRS Section 1031]

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A month ago when the numbers showed that Portland Metro had almost 13 months of inventory I broke it down to the close-in neighborhoods and showed that we still have a balanced market. A couple days ago news came out that inventory has Dropped back to 10.4 months and the number of closed sales are way up over January - 28% more to be exact.

A couple more surprises… Median price is up 5.5% over last February …. Interest rates are going up very rapidly … Stated income loans are about to disappear in the next two weeks. Economists are starting to say buy now and that we might be at, or very close to the bottom. I don’t have a crystal ball but there are some amazing deals out there and they won’t last forever.

Here’s an example of the cost of waiting: Let’s say that you were able to make the payment on a $400,000 loan at 5.2% which = $1733/mo in interest [rates were at this point a month or so ago] Rates are at 6.2% and rising right now. That means the same monthly payment of $1733/mo in interest now only buys you $335,000 - that means you just might have lost $65,000 in buying power. Prices aren’t falling in Portland and even in areas where they are you still lose by waiting if interest rates go up. Here is the best explanation of how this works.

A great article about over-priced / under-priced markets and why to buy now.

Now - Don’t give up just yet. I think it is a great time to buy and you should feel good about getting in the game. The strength of the market will hopefully mean you will do well by buying and holding your home or investment property. Another thing is that rising interest rates signal a healthier econmony which means we’ll be making more and have better job security.

Popularity: 24% [?]

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If you’ve met me in person I’ve likely told you the story about my first sale ever in real estate. With my license freshly in hand I went out and bought a home for myself as my first transaction. I remember how excited and scared I was in making the offer, negotiating, and signing the papers to close the deal. I remember waking up a couple days after moving in and how elated I was to own my own home!

Last week I refi’d to take advantage of the low rates and was reminded of what it’s like to go through a transaction personally. I had questions about different charges, I was nervous about the appraisal, I wanted to know when the money would show up and when the credits for pre-paids would come back to me.

I think that buying my home first made me more aware of the excitement and fears all buyers have when they are buying a home. Recently, going through a refi I was able to experience first hand again all the excitement of making money by owning property but also the fear that something might go wrong.

So if you’re thinking of buying or selling you know that I’m aware of how you’re feeling and I’m here to make the process go as smoothly as possible.

Popularity: 24% [?]

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With the National market in flux and certain segments of our local market slowing, buyers are looking for ways to save money and sellers are looking for a way to get out of trouble. Those two goals sometimes intersect with something called a short sale. A short sale is where a Lender agrees to let a seller sell their home for less than what is owed on the property. That is the basic idea but the reality is more complicated and the process often times takes quite a bit longer than a traditional 30 day close.

I have spoken with quite a few agents who handle short sales and bank owned properties and the consensus has been that in Portland you don’t really get a great deal and it takes in many cases 5 months to close. This is because Oregon is very under-represented when compared to the rest of the country in foreclosures and other distressed types of sales and this means that those properties often sell for close to market value. On the flip side I have clients that have bought properties for much less than market value. I think it has much more to do with the amount of inventory that bank currently holds versus the specific market.

The bottom line is that you need to talk with a Real Estate Attorney, a CPA, and an experience Realtor before you decide to enter into a short sale.

For more detailed info check out these two articles:
Selling a Short Sale
Buying a Short Sale

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You might have heard the news - it will be on the TV tonight and I wanted to point out the small print that will likely be overlooked by much of the media.

For 20 years the Case/Shiller index has tracked the rise and fall of the housing market nationally. Of the 20 areas they look at all were down except 3 - some like Miami are down as much as 17%. Three areas went up: Charlotte, N.C., 2.3%; Portland, Ore., 1.2%; and Seattle, at 0.5%.

Read the entire article here: CNN/Money

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