Real Estate Information Archive

Being an attractive home buyer is especially important in the seller’s market we have today. Many sellers receive multiple bids for a property, and when those bids are extremely competitive, they may have to choose a buyer based upon criteria other than price. Before hitting the streets with a real estate agent, consumers should take a few practical steps that will pay off by helping others see them in a more positive light.

The first step toward being an attractive home buyer is to check one’s credit report in order to find out just how healthy it really is. Checking the report four to six months before buying will allow consumers time to clean up any negative data or clear up discrepancies that could affect their ability to obtain a mortgage.

Individuals should also begin doing diligent research on local housing markets, mortgage interest rates and the types of loans that are available. That way, they will have a better idea of what might be required in the way of closing costs and loan requirements before making an application with a lender. It will also give buyers a better idea of the fair market value of property so they will be in a better position to make a respectable offer once they locate the home they’re looking for.

Many real estate agents recommend that buyers obtain pre-approval for a mortgage before they begin viewing properties. This has numerous benefits for everyone: buyer, seller and real estate agent. Buyers will not be tempted to look at properties they cannot afford, and real estate agents can be sure they aren’t wasting anybody’s time showing homes to clients who are unable to obtain a mortgage for that property. During the bidding process, sellers can take comfort in knowing that the likelihood of bank approval is high. This relieves the anxiety of wondering whether banks will reject a buyer’s application, thereby requiring them to place the property up for open bid again.

Part of being an attractive home buyer involves knowing what type of property is attractive in the current market. Some considerations for buying should include location, size, and type of structure. Buyers who determine their wants ahead of time can better spot the home that’s best for them right away. Buyers will also be able to realize when they have found that special piece of real estate and won’t make untimely delays in placing an offer.

Being an attractive home buyer doesn’t mean failing to stand up for one’s rights, however. A home is a major investment, which means consumers should be prepared to pay for a home inspection and title search in order to make sure everything is in order. Taking the time to carefully check all these details can often mean the difference between realizing a dream and buyer’s remorse.

On April 1st, the Federal Housing Administration (FHA) raised the annual mortgage insurance premium rates, with its primary goal being to bolster the Mutual Mortgage Insurance Fund (MMI Fund). And there are more substantial changes coming our way this summer, starting June 3rd when the administration increases the required duration time for the entire life of its mortgage insurance.

The yearly premium on the majority of the FHA mortgage loans impacted by the April Fool's Day changes jumped up about 0.10 of a percentage point, which translates into an approximately $100 annual increase for every $100,000 in the amount of the loan.

If the loan is $625,000 or more, and has a term length of 15 years or more, the amount of the loan will increase by only 0.05 of a percentage point, or $50 annually for each $100,000. The premium varies for each loan, depending on the loan's overall amount, length of term and loan-to-value ratio.

FHA-backed mortgage loans have been a popular financing option, especially for folks with relatively low credit scores, and lower down payment amounts.

Beginning on June 3rd, borrowers with a 78 percent loan-to-value ratio will no longer be able to terminate their mortgage insurance payments, leaving open a small window of opportunity for those with a 20 percent or less down payment to take advantage of FHA's current policy.

What this new policy essentially means for borrowers who take out a loan after June 3rd, is that their mortgage insurance will run all the way to the end of the loan's term. Even those who take out a 15-year loan carrying a starting loan-to-value ratio of 78 percent or more can expect to pay mortgage insurance for at least 11 years.

Home buyers planning on living in their new residence for less than 10 years may not feel much of a financial impact from these new mortgage loan changes. Those expecting to plant their family roots at their recently purchased property can consider refinancing options, such as a conventional, mortgage-insurance-free loan, when the equity has risen because of appreciation and amortization.

For all of the details straight from the horses mouth, so to speak, go to HUD.gov, the U.S. Department of Housing and Urban Development's (HUD's) website.

What a difference a year makes! Housing prices in the Rose City are on the rise according to a major housing industry data source.

Portland – like a number of other major U.S. cities – saw home prices rise in February according to the Standard & Poor's/Case-Shiller home price index. In fact, the home-price index witnessed its biggest annual gain since 2006, recording a boost of 9.3 percent in February in the 20 major U.S. metro areas that were surveyed. This is the largest yearly change rate since May 2006.

From 2012 to 2013, Portland prices increased 9.4 percent, and from January to February of this year, home prices in Portland measured an increase of 0.7 percent.

David M. Blitzer, chairman of S&P's index committee noted that, "Home prices continue to show solid increases across all 20 cities."  The fastest home price growth rate occurred in Phoenix where home prices rose 23 percent from 2012 to 2013. San Francisco had an 18.9 percent gain, while Las Vegas registered a rise of 17.6 percent during the same time period. Ten of the 20 cities showed double-digit increases compared to last year.

Back in February 2012, Case-Shiller reported an overall post-recession low, with home prices down at that point just over 35 percent from their high mark. Locally, Portland’s low-price moment came in March of 2012, with home prices down 28.7 percent from their peak.

Now, just over a year later, home prices have recovered at an impressive rate, in part because home inventories are low. The inventory situation stems from the fact that many homeowners are still carrying mortgage debt that prevents them from selling; at the same time, new construction has slowed significantly. A goodly number of homes continue to work their way through the foreclosure process, or are simply sitting in lenders' portfolios.

What is the impact of small home inventories? Well, for one thing, limited inventories have propelled buyers who want to take advantage of low interest rates and prices into bidding wars – and this in turn has pushed prices upwards. As traditional home sales have increased, the percentage of foreclosures in terms of overall transaction volume has declined, and this also plays a role in rising home prices.

Of course, talking about “the housing market in Portland” is too broad, and like all larger cities, the market is comprised of sub-markets. Homes in the lowest price ranges have recorded the biggest gains. The Rose City’s least expensive one-third of residential properties have gained 15 percent in price over 2012. Homes in the middle price range have risen by 11 percent, and the most expensive one-third of homes have increased by only 7 percent. Homes in the highest-priced segment really struggled through the recession and failed to recover as much ground compared with other segments.

A recent article in the Oregonian turned to Portland real estate veteran Rob Levy for insight. "The exciting thing we're seeing is that some of the most expensive homes are starting to sell. The starter homes are selling, and the homeowners are buying the middle homes, and they're buying the luxury homes. That's the piece that was missing until now."

The rapid rate of home price increases have left certain economists and real estate professionals concerned that bubble conditions could be starting again. However, there are conditions that may keep home prices from increasing too quickly. For instance, the Federal Reserve is expected to keep interest rates low until the national employment numbers improve measurably – but when rates rise, demand is likely to decrease. Also, as prices rise, more homeowners will realize equity gains that will allow them to sell, so homebuilding activity should gather steam.

Many housing economists anticipate that home-price gains will begin to cool in coming months. The Oregonian article once again turned to Rob Levy, who said appreciation settled at an annual rate of 4 percent would be a welcome change. "Four percent is a good number, a good, steady, stable number," he said. That's always been the safe number. It's not nuts."

All in all, the news is good for the Portland home market. Fears of a new bubble appear unfounded, and a reasonable rate of increase in home prices indicates, hopefully, a fairly healthy housing market overall for Portland.