December 2013 Portland Metro Real Estate Highlights

DECEMBER HIGHLIGHTS

Metro Portland’s real estate activity cooled more compared to November, but numbers are still up compared to last December and for the year overall. Closed sales (1,782) fell 2.1% compared to November but are 1.3% ahead of December 2012. The number of active residential listings dropped to 5,707 in December, and total market time increased by a week to 87 days. Inventory decreased slightly in December to 3.2 months.

YEAR TO DATE SUMMARY

There have been 26,782 closed sales to date in 2013, up 14.3% from 23,438 closed sales in the same period last year.

AVERAGE SALE PRICE

The average sale price in 2013 was $310,600, up 12,9% from the same period in 2012.

The information above is from the monthly market action report produced by RMLS and used by permission from RMLS. This information is copyrighted by RMLS, All Rights Reserved

Short Sale Incentives

So it sounds like banks are finally starting to figure out that putting some time and effort into accepting some of these many short sales is worth their while because they get far less from a foreclosure.  Which is great timing for them because the government is about to start giving money to everyone to encourage these short sales to go through.

I have personal experience with Bank of America short sales going nowhere simply because they did not have the man power, nor seemed to care.  Suddenly they’ve gotten more organized and more efficient and deals are much more likely to go through.  It’s not smooth sailing yet but at least things are starting to improve.

Having a second mortgage on the property made things even more complicated because the first mortgage holder would want to be repaid in full before the second would get anything.  The second lien holder would end up killing the deal because they would not agree to get paid nothing.  Starting in April, lenders and mortgage investors will be given incentives for agreeing to short sales and avoiding foreclosure.

The home owners will get $3,000 in order to relocate and the mortgage holders will get $1,500 incentive.  A mortgage investor who owns the actual note will get $2,000 for sharing the proceeds of the sale with a second-lien holder and the second-lien holder will get $6,000 for not killing the deal.

Lenders participating in the program must also determine the market values of properties early on and inform the owners of just what price they’re willing to accept. Then, if owners come back to the lenders with bonafide offers, they have to be accepted within 10 days.

Now the problem will be handling all the new short sales.  Which in fact could be a big problem because they’re already are having trouble keeping up.  But now there is incentive to accept and accept quickly!  This could improve the housing market faster and help a lot of people take less of a hit on their credit score.

http://money.cnn.com/2010/03/29/real_estate/short_sale_explosion/index.htm

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Loan Servicers Under the Microscope

The Obama administration has decided to pressure loan servicers to do what they said they would do, which is help homeowners long term.

Many, many borrowers are stuck in trial adjustments when we really need to get them into permanent modifications. The government will be sending teams to the various institutions to evaluate what is taking so long.  Banks will have to submit progress reports twice a day during December.

$75 billion has been spent to help home owners but so far only 1,711 of those in the trial modifications have been moved to a permanent loan modification.

The financial institutions have claimed that home owners are simply not turning in their paperwork.  Home owners are saying that their paperwork keeps getting lost by the bank.  Personally I have had to spend many hours on the phone with a bank or two on behalf of clients and I have a really hard time believing that very many of these are the fault of the home owners.  I believe that, that is what the government will discover as well, if they really dig deep while visiting those financial institutions.

For example, the Obama Administration has had to do this before.  The Treasury and Housing department officials brought bank executives to Washington, D.C. to get them to increase their trial modifications.  Then a report was published to display the efforts of each institution.  This brought up numbers dramatically.  That just shows that they were not doing all they could on the honor system.  Hopefully this new plan will again get financial institutions to ramp up their efforts.  It’s just sad that these measures are necessary.

http://money.cnn.com/2009/11/30/news/economy/permanent_modifications/index.htm

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Bringing Predators to Justice

As we all know by now, the current state of the economy was created by mortgage lenders who were giving out money to people who did not previously qualify.

In the aftermath, many are now taking these banks to court for unfair and predatory practices.  Banks have been going through these lawsuits for years but recently the number has jumped.  Some have already settled out of court for millions of dollars.  Banks like Wells Fargo and Countrywide have been sued by homeowners in an effort to keep their homes.

Some are seeking money for damages because they’ve already lost their house or paid off their mortgage.  Others are looking for a loan modification, they just want their mortgage to be affordable.

Many have joined in on class action lawsuits because they do not agree with practices like high interest rates, misleading introductory rates and lack of income verification.  These practices are called predatory because these loans are pretty much unaffordable, and given to people who do not understand what they are signing.

An example of these unaffordable loans is the originated payment option adjustable-rate mortgage. This type of loan allows borrowers to make very low monthly payments, and the unpaid interest is then added to the principal.

Even the NAACP is suing claiming discrimination against minority borrowers.

The largest predatory lending settlement was with Bank of America.  They agreed to spend $8.4 billion to lower the interest rates or loan balances of nearly 400,000 Countrywide customers with subprime loans or payment option ARMs.  This made the number one mortgage lender in the country accountable for putting borrowers in loans they didn’t understand, couldn’t afford and could not get out of.

http://money.cnn.com/2009/10/08/news/economy/Predatory_lending_lawsuits_increase/index.htm?postversion=2009100907

PLEASE CHECK OUT OUR WEBSITE http//:www.TonyandLibby.com

Historic Interest Rates & National Portland Exposure

This is a great story about how a bank passed on some of the federal bank bailout money to clients in the form of lower interest rates for home purchases.  The Great Northwest Home Rush was sponsored by Community Financial Corp. and Banner Bank.  The homes included, in what turned out to be one the biggest home shows in the area, were offered a 30 year fixed interest rate of 3.875% by Banner.  The show ran for most of March.  Half of this National CBS story was filmed in Portland.

Negotiate Your Rent

It seems that economic crisis has caused an opportunity for some. (besides buying up cheap properties) Apartment vacancies are on the rise putting people in a mighty good bargaining position.

Managers are starting to get desperate to get and keep people in their buildings all across the country. The Portland OR area is one of the biggest rent drops of-3.2%. So if your lease is up, now is the time to talk to your landlord about a new longer and cheaper lease.

http://finance.yahoo.com/real-estate/article/106480/Rents-Drop-Nationwide-as-Vacancies-Spike

PLEASE CHECK OUT OUR NEW PODCAST ON THE HOMEPAGE OF OUR WEBSITE http//:www.TonyandLibby.com

Taking Matters Into Their Own Hands

Toll Brothers Inc. is a luxury homebuilder who is tired of watching buyers sit on the sidelines waiting for mortgage rates to hit bottom. They are now offering on their new-home inventory a 30-year, fixed-rate mortgage at an interest rate of 3.99% with no points paid up-front. The idea is to get those teetering on the fence to finally jump off and buy.

This is a brilliant idea on their part and the phone has been ringing off the hook. Now they are even locking that rate in for nine months for those who want to buy a new, built-to-suit home.

http://money.cnn.com/2009/01/22/real_estate/builder_slashes_loan_rates/index.htm?postversion=2009012217

PLEASE CHECK OUT OUR NEW PODCAST ON THE HOMEPAGE OF OUR WEBSITE http//:www.TonyandLibby.com

Refinancing Frenzy

Interest rates have fallen recently, as most people are aware, and naturally people are rushing to refinance in order to reduce their housing payments.

The average rate for a 30-year, fixed mortgage dropped to 5.08% last week, according to the Mortgage Bankers Association, more than a full point lower than just a month ago.

Mortgage applications were up 48% last week, and by far, the majority of those were from homeowners looking to lower housing costs.

Refinancing is not for everyone however. If you currently have an adjustable rate, you could lower your rate by a percentage point or more, you do not plan on selling soon and/or you have significant equity then you should certainly look into getting a new home loan.

Those with an adjustable rate can save themselves a lot of trouble by turning it into a fixed rate while it is low so that future rate increases won’t jeopardized their lifestyle.

Getting a lower rate is a really good idea but because of the fees and costs associated with a new loan, it really is only worth it if you are lowering your rate by a whole percentage point or more.

The balance of your loan will increase when you refinance and paying off the new extra will take a year or two, so it won’t be so helpful if you plan on selling before then.

Some people lost much or all of their equity when home values fell. If your equity has fallen below 20% of the total appraised home value, the borrower will likely have to purchase private mortgage insurance. The insurance adds a point or two to the monthly mortgage costs erasing any advantage of refinancing.

http://money.cnn.com/2008/12/24/real_estate/when_to_refi/index.htm?postversion=2008122608

PLEASE CHECK OUT OUR NEW PODCAST ON THE HOMEPAGE OF OUR WEBSITE http//:www.TonyandLibby.com

$1 – $750 mil

I just thought these two articles were more interesting when put together.

There are some areas of Detroit that are going into forclosure where the banks are just giving up and selling for $300, $100 even $1! The closing costs and broker’s fees add up to much more than that! Even the property taxes are around $3,000! If they are lucky those areas will turn around someday in the future and it will be a worth while investment. Otherwise, at least it didn’t cost much.

http://www.foreclosure-support.com/wp/article-0820131.html

A home in the French Riviera was just sold for $750 million dollars. It has broken a world record (it better have!) and just the commission alone could set someone up for life. The amount of the property taxes would have a family living very comfortably. I cannot even figure out how many foreclosures you could buy in Detroit with the downpayment!

http://www.huffingtonpost.com/2008/08/11/villa-leopolda-sold-for-7_n_118112.html

PLEASE CHECK OUT OUR NEW PODCAST ON THE HOMEPAGE OF OUR WEBSITE http//:www.TonyandLibby.com

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