Meet Jack.  Tracy has never met Jack.  Jack rolled into work yesterday at about 10 AM, just a couple hours after Tracy’s 8 AM morning run.   When Tracey ran by it was just another house on the street. It wasn’t for sale.  At 9 AM the sign post was delivered and the listing agent was entering the listing into RMLS.  Jack was diligently working (actually he was checking FaceBook) when a new email popped up with the  subject line: “Property Previews for Jack.”  The new listing alert shows  a picture of his dream home.  He drives by every morning on the way to work and there was no sign when he went in this morning.  His HomeFinder Pro has been set up for that specific house and he also receive a Property Investment Profile and a Market Tracker for the neighborhood.  Jack does a little happy dance and calls us.  He’s already been pre-approved for a mortgage, including a credit check and verification of income.  He’s ready to go.

We met at the property at noon and walk through. It is everything and more and is well priced according to the comparable properties in our comparable properties report.  Jack goes back to work and we go write the offer up.  Using DocuSign, Jack digitally signs the paperwork and gets back to us by 2 PM.  The listing agent uses DocuSign too.  The paperwork zips around the Internet and is signed by the husband who is in New York at his new job and the wife who is still at home packing up and eager for their new life on the east coast.  It’s now 4 PM and Jack has an accepted offer.  There’s still 18 hours until Tracy heads out for her run tomorrow and first sees the sign in front of her dream home.  Tracy hates Jack and has never met him.

This is fiction but it could happen.

Every scenario will be different but for this case we used a $300,000 purchase and assumed a 4.25% 30 year principle and interest loan.  Closing costs and other factors are not included.  We added a 6% interest rate column as well.

The first rule change is a reduction in the financed up-front mortgage insurance premium will drop from 2.25% to 1%. That’s a loan reduction of $3,618 in this example. The second change increases the monthly insurance to .09% of the current loan which results in an initial increase of $67 per month even after the principal reduction from the first change.  You must carry mortgage insurance until the loan to value (LTV) reaches 78%.  On average, that takes about 10 years.  Note: as the monthly insurance charge is based on that month’s loan principle the amounts of the one and five year comparisons are somewhat inflated as the monthly payments will drop slightly each month.  This simplified version does not factor that in.

The other affect of the rule change is a reduction in buying power.  Because of the higher monthly payment, the amount the buyer qualifies to borrow drops as well.  A buyer who is purchasing at their max price ($300,000 in this case) has their loan maximum drop  $13,600 which may prevent the purchase altogether.

Curb appeal is one of the most important factors in selling a home. It starts with the ability to take a good picture so that when it is viewed online, the buyer actually wants to make the effort to go out and see it. Once they arrive, they need to get out of the car and walk inside. More and more, buyers are confirming what they have garnered from online sources when they arrive at a home; they are not seeing it for the first time as they step out of the car.

The two pictures above were taken from roughly the same spot 30 hours apart. The clean-up, by a licensed landscaper, cost $500 and removed two trailers full of debris.

You can view the complete listing at the property’s dedicated website: 1623NW28th.com.

I’m not sure what the original source was of this humor video. I first saw it months ago but it was only posted a few days ago where it is now.

Existing-home sales¹, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.

It was grim but expected news.  Sales have slowed and housing inventory in Portland is now over 10 months as reported by RMLS.  The pessimist says that the economy sucks and the market has nowhere to go but down.  The optimist says this is a great time to buy because interest rates are the lowest they’ve been in 50 years and  real estate is a market; it doesn’t just stop in harder times which means there are deals out there to be had.  Both perspectives have an element of reality to them.  In any market the goal may be to buy a the bottom but  only a small portion actually succeed.  Timing is everything but not so much for a long term investment.

Without becoming overtly political here, Oregon’s economy, and therefore real estate market, is going to be tied to the creation of jobs and the building of consumer confidence.  We’ve got until November to determine whether Chris Dudley or John Kitzhaber is going drive that as our new governor.  I’m undecided as of now.  We’re going to hear a lot more about a statewide real estate transfer tax in the future too.

Most of the above doesn’t answer the “what now?” question.  We’re seeing sellers with a much more pragmatic outlook regarding pricing and reacting to feedback.  They want or need to sell for a reason.  This week’s Portland Tribune article has a grim quote that you could probably replace “Lake Oswego” with “Oregon” and not be far from the truth:

“If you paid a half-million for anything in Lake Oswego in 2007, you’re ‘under water,’ ” Stewart says. That’s the term for people who owe more on their mortgage than their home is worth.

Sellers have to counter that sentiment and its element of truth by making their property the one that shines amongst the competition.  Advising on the positioning homes in the market is how we spend a lot of our time these days.  Maximizing curb appeal and overcoming showing objections is as important as pricing itself.  Buyers are more attracted to move-in-ready properties than the appeal of making some money with sweat equity now more than ever.  Sellers that react to the market have the most success.  There is a grim reality that some of those under water sellers can’t wait out the market or don’t have any pricing flexibility.  We just had a short sale go in foreclosure that had an accepted offer and two backups offers.  The two banks were unable to come to terms and now the first mortgage holder is the proud owner of a home and the second got nothing of something.  It won’t be surprising if the first nets less after the foreclosure sale than they would have under the short sale.

Real estate remains dynamic and individual.  Each property and situation is unique.  Deciding how to proceed is something that can only be arrived at looking by looking at the all the available information at a given moment.

The 5990 SQFT home has a covered pool and indoor gym, theater and wet bar.  The kitchen has a built-in coffee center and a large center island with three centimeter slab and a striking six centimeter edging.

At the other end of the spectrum, at least in price, is the Fortino IdeaBox.  This is not your typical double wide.  This was confirmed by Jenny who spent many years in the manufactured home industry before moving into real estate.  The pre-fab home is set up in Arbor Home’s subdivision at NW 95th and NW Cornell as NW Skyline’s trees risked being damaged or damaging the home during delivery.

As mentioned in this morning’s Portland Real Estate Blog’s Facebook update, there was a fire on the deck of Hearth and Home’s Transitions (which is sale pending).  KGW covered the fire.  The damage was isolated to the deck and it was repaired by show opening today.

Total real estate listings in Portland: Active 5835/1158 pending = 19.8%

$0-$199,999: 1542 active/307 pending = 19.9%

$200,000 – $399,000: 2589 active/551 pending = 21.3%

$400,000 – $599,000: active: 887 active/pending 187 = 21.1%

$600,000 – $799,000: active 316/pending 55 = 17.4%

$800,000 – $999,000: active 152 active/pending 20 = 13.2%

$1,000,000 and up: 188 active/pending 16 = 8.5%

It doesn’t show anything revolutionary but is a good reminder that breaking down market segments is important.  We’ve been saying that the $600k-$800k market  had at least picked up for us and this seems to confirm that statistically.

I’ve also started to break down inventory by RMLS area for Portland.  Five areas make up Portland and we can see that they do not mirror the larger metro market other than they are all increasing.  City of Portland inventory, at 9.3, is a month shorter than the Metro but the smaller neighborhood areas lag or lead the city and metro rates.

Median sale prices are down from July 2009 but active sales prices are up.