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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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So I thought I’d share my excitement about buying a new home on SE Clinton. I just finished inspections and will be picking a loan program this week. I was reminded of what a big deal it is to buy a house. I was nervous writing the offer, The home is in great shape but it was built in 1905 so I was happy when I got the thumbs up with my inspector. Now I get to wait while we do the appraisal and start packing up my stuff for the move.

It’s such an exciting process and it’s such a great time to buy. You should buy a home too!

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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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Last week the monthly Market report was released by the RMLS and the news is good. Portland continues to have a solid market and inventory is actually going down again for the second month in a row. Based on the huge increase in pending sales last month I’m betting that this trend will continue into April. Another factor affecting the market is the long winter we’re having, once the weather finally breaks watch for another run up in pending sales. Appreciation is still a solid 5% and with many multiple offer situations this trend will hopefully continue as well.

The Inventory numbers:
January - 12.8 months
February - 10.4 months
March - 9.1 months

My prediction for April - 7.5 months
Once we hit 6 months of inventory we’re headed back into a Seller’s market so if you’ve been waiting for the right time to buy I’d say that time is Now!

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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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Many people have been calling this for a while now but it became official on March 28th, 2008 that PMI [Private Mortgage Insurance] on Zero percent down loans is now gone. So what does this mean?…. It means that the days of buying a house with no cash at all are gone… at least for the time being. Coming up to fill the void is FHA loans which have become less restrictive and allow a purchase with just 3% down. You can learn more about FHA loans Here. PMI is generally required on loans with less than 20% down.

Click here to see James Adair’s commentary on the same subject.

In other news, this week has seen a big increase in buyers getting out there and buying; for two reasons: seasonal increases due to Spring and also buyers trying to make it under the wire with 0% down loans. This will be taking alot of inventory off the market in April and bodes well for a strong Summer to come.

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There is a definite sense that things are picking up right now in Portland. I took a look at the numbers and, Wow! Pending sales of detached homes are up 107% in March over February. Buyers are coming out of the woodworks and multiple offers are becoming common again.

Here is a Breakdown of Pending sales of Detached homes in March [actual numbers exceeded projections!]

NE: Feb 79 - Mar 158
SE: Feb 102 - Mar 215
N: Feb 38 - Mar 89
W: Feb 45 - Mar 104

Totals:
Feb 264 - Mar 566

Percent increase = 114%

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I was interviewed by a cool new website called www.portlandonfire.com that profiles one Portlander every day.

See the interview here

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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.

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