From fine dining to food carts, Portland is known for funky, unique, and delicious fare…but with so much grub to choose from, sometimes you gotta bring it back to the basics: a tried and true favorite, the good old fashioned hamburger.Read More
We had a great turnout at our Home Buying 101 presentation for the employees at the Portland Wieden + Kennedy office last week! We covered various topics including, the process involved in buying a home, and how to get a mortgage and when? We also received some great insight by local realtor, Rene Gillette, on the current housing market trends in Portland. We had a great time at the W+K office and hope to return soon for another presentation!
This is for informational purposes only and is not a commitment to lend. The views and/or opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Mortgage Trust, Inc.
Mortgage Trust, Inc. is an Equal Housing Lender. NMLS 3250
Home prices in Portland's metro area are close to approaching peak prices seen at the height of the housing bubble---according to average prices cited by the Regional Multiple Listing Service. A report in The Oregonian, however, tells a slightly different story, and shows that "median prices don't paint a complete picture".
An examination of sales and listing prices in various ZIP codes revealed an uneven market and different rates of recovery in Portland's neighborhoods. Their findings show that:
• Close-in neighborhood prices didn’t fall as far during the downturn thanks to a stable—and limited—supply of housing. • These neighborhoods have also experienced a new level of investment and increasing amenities. • More distant neighborhoods—once seen as affordable—now seem potentially risky to discerning buyers, contributing to an unequal level of growth. • Neighborhoods that now show higher-than-peak prices tend to be those that had lower home prices during the housing run-up in the first place. • Prices should also be considered in light of inflation and income growth. • The diverging recovery is fairly typical of metro areas nationwide.
Following national trends, Portland home-prices continued to rise in May, but the Regional Multiple Listing Service reports a significant increase in new homes for sale. Good news for homebuyers in a stretched inventory market.
With 4,192 new listings in May, RMLS reported a 9.4 percent increase from this time last year, and the strongest May for new listings since 2008.
Sellers retain the advantage, however. “The market remains tight,” says the Portland Business Journal, “with enough inventory to answer demand for 2.8 months.”
Though national home prices are still 14.3 percent below peak 2006 levels, home prices are up in every state. National home prices increased by 10.5 percent in April, according to data from a CoreLogic report released in June. This marks the 26th consecutive month of year-over-year increases in the CoreLogic Home Price Index (HPI).
California leads the way with a 15.6 percent increase from April 2013, and Oregon shows a 10.3 percent increase. This includes figures from distressed sales where property is sold in an urgent manner, often at a loss. Figures released by CoreLogic, show that some of the fastest growing states also fell the farthest in the housing crisis.
The NHF Platinum™ homebuyer assistance program provides eligible families and individuals with a grant that does not need to be repaid. The grant can be used towards down payment or closing costs—an assistance that allows people to purchase a home much sooner than they thought possible. Mortgage Trust, Inc. is an NHF Platinum™ participating lender. Contact us today for assistance with qualification.
The National Homebuyers Fund® (NHF) is a non-profit public benefit corporation that supports affordable, responsible homeownership. NHF manages several Down Payment Assistant programs that help people purchase a home with less out-of-pocket costs. DPA programs adhere to standard mortgage loan underwriting guidelines to ensure borrowers have the ability to afford their mortgage.
The NHF Platinum™ program is designed to provide down payment assistance on the purchase of a primary residence in various states including Oregon, Washington, and Idaho.
NHF Platinum™ Program Highlights
• Non-repayable grant, up to 5% of Loan* • No first-time homebuyer requirement • Conventional, FHA, VA and USDA Mortgages • Fico scores as low as 640
*Certain restrictions apply on all programs. Contact Mike Popnoe NMLS 116627 to learn more about Borrower Eligibility, Rates, Terms, and Guidelines.
Foreclosure is a multi-stage legal process whereby a borrower’s rights to a property are forfeited because of failure to make mortgage payments. Consequentially, the lender initiates attempts to recover the balance of the loan via short sale or foreclosure auction. If the asset does not sell, it becomes the property of the lending institution or what is known as bank-owned property or REO (real estate owned). Each state follows its own judicial and non-judicial foreclosure laws and procedures. Approximately 4.9 million foreclosures have been completed since the financial crisis began in 2008. Foreclosures have increasingly declined in the past 28 months as the housing market continues to heal. As of last quarter, U.S. foreclosure inventory is down 35% nationally from a year ago; the number of completed foreclosures declined by 15%; and less than 5% of mortgages are in serious delinquency.
“Although there is good news that completed foreclosures are trending lower, the bigger news is the impressive decline in the foreclosure and shadow inventories.” – Dr. Mark Fleming, chief economist for Corelogic.
Shadow Inventory refers to real estate properties that are either in the process of foreclosure and have not yet been sold or homes that owners are delaying putting on the market until prices improve. Shadow Inventory can create uncertainty about market recovery and fears for home owners. As banks keep properties off the market for fear that over-saturation will cause house prices to plummet, sellers are unsure about the best time to sell.
Shadow Inventory has decreased 22% nationally since last year and are at the lowest levels seen since 2008 according to Corelogic. From 2.2 million homes in January 2013 to 1.7 million in January 2014, shadow inventory has been decreasing at an average monthly rate of 41,000 units. With the lack of looming shadow inventory, home owners and buyers alike can feel more confident in a stable, healthy real estate market moving forward.
The number of homeowners who are ‘underwater’ on their mortgage is substantially lower in Portland than the rest of the country. Out of 100 national metro areas, Portland has the 24th lowest percentage of homeowners in negative equity—that is, people whose homes have a loan balance that is higher than the free-market value of the home. The recent global recession and housing crisis saw home prices plummet, resulting in negative equity for many homeowners. Negative equity significantly increases the risk of foreclosure. That trend is now reversing with rising home prices resulting in more homeowners with positive equity.
This is according to RealtyTrac, the nation’s leading source for comprehensive housing data, whose first quarter report for 2014 shows 17% of U.S. properties seriously underwater compared to 26% a year ago.
The Portland market is even healthier than that, says RealtyTrac spokesman, Daren Blomquist, with only 9% of homes underwater.
“The majority of that nine percent is people who bought near the top of the market in Portland, which is around August 2007,” he said to OPB in April. “Either bought or refinanced their homes and are still sticking it out because they now see the light at the end of the tunnel.”
As I talk to prospective home buyers; ranging from those looking at buying their very first home to move-up buyers, the question posed revolves around “is it still a great time to buy, as rates and home prices have both increased?” What a great question to be asking. In the Portland market, we have experienced a 13% appreciation rate (13-15% depending on whether median or average prices were used) in 2013. In addition, mortgage rates have increased by about 1% from their low point in 2013. Considering those two factors, does buying make as much sense as it did 12+ months ago? Well, what do you think about it? My humble opinion is to always lean into the data, not my emotions, to answer that. The best measure I know for determining this is the Affordability Index. The short explanation to this index is that we are measuring the cost of various things relative to a person’s household income. Image courtesy of Gary Keller vision speach.
The historical housing expense has revolved around 21-22% of a family’s income. When we look at 2012, we find that this housing cost came in far lower, falling just under 13%! That is a significant savings and yes, this was sparked by 1) low home prices and 2) low interest rates. How does 2013 and early 2014 look? As you can see, affordability has lost some ground and now the housing expense is 1.5% more at 14.2% of household income. This tells me that, yes, the cost of home ownership has increased – but is still FAR below historic levels. As home prices and rates increase over time, the affordability will slowly diminish and return closer to the historic levels.
Is buying a home as affordable as it was in 2012? No. Is real estate still very affordable, yes.
Mortgage insurance is deductible as qualified interest. This tax provision which has been given a 2nd chance after expiring after 2011, allows taxpayers to deduct mortgage insurance premiums as qualified residence interest. If you have paid or accrued mortgage insurance before January 1st of this year, make sure you are taking this deduction. There is a phase-out provision based on your AGI, or Adjusted Gross Income – so be sure to contact your accounting professional for advice. I believe this deduction was made retroactive to 2012 as well.
According to the survey conducted by Fannie Mae, 49% of Americans polled expect to see home appreciation levels of 3.2% for 2014. Now, keep in mind this same survey reported a prediction of 2.6% appreciation for 2013 – and the national average was around 13%! Consumers grossly under-predicted how well the US housing market would perform. Home values are on the rise. A healthy demand for housing has been sparked by new household formations, low inventory levels and low mortgage rates. Although rates are still very low, they have increased by about 1.25% from their low point in mid-2013. We predict mortgage rates to increase to the low 5% range by the beginning of 2015. What does this mean? Well, with rents at all-time highs and on the rise, buying a home while rates and prices are still low is a wise financial decision.