It is common knowledge that a large number of homes sell during the spring-buying season. For that reason, many homeowners hold off on putting their homes on the market until then. The question is whether or not that will be a good strategy this year. The other listings that do come out in the spring will represent increased competition to any seller. Do a greater number of homes actually come to the market in the spring, as compared to the rest of the year? The National Association of Realtors (NAR) recently revealed the months in which most people listed their homes for sale in 2016. Here is a graphic showing the results: The three months in the second quarter of the year (represented in red) are consistently the most popular months for sellers to list their homes on the market. Last year, the number of homes available for sale in January was 1,820,000.
That number spiked to 2,140,000 by May!
What does this mean to you?
With the national job situation improving, and mortgage interest rates projected to rise later in the year, buyers are not waiting until the spring; they are out looking for a home right now. If you are looking to sell this year, waiting until the spring to list your home means you will have the greatest competition for a buyer.
It may make sense to beat the rush of housing inventory that will enter the market in the spring and list your home as soon as possible. We would love to come and take a walk through with you to help with items to spiff it up for sale. Call us any time!
In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets, such as Portland’s.
One of the many advantages of working with a local real estate professional is that we have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:
Capacity: Your current and future ability to make your payments
Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
Collateral: The home, or type of home, that you would like to purchase
Credit: Your history of paying bills and other debts on time
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.
NEW IN 2017 – New language in the Residential Real Estate Sale Agreement requires notice of intent to proceed with the loan transaction within 3-10 days (as specified by buyer when writing an offer) and buyer’s agent must formally notify the seller. This new timeline makes it crucial that you understand this is no time to jump ship and decide to try a new lender. There is a short window in which to revise your loan and renegotiate your position with the seller, but the seller is not obligated to agree, and you may find your transaction terminated.
BOTTOM LINE –Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well. And once you’ve written an offer, it may be too late to revise your strategy on lenders and loan programs. So take this process seriously and weigh your options carefully.
You may have heard that the Federal Reserveraised rates last week… But what does that mean if you are looking to buy a home in the near future? Many in the housing industry have predicted that the Federal Open Market Committee (FOMC), the policy-making arm of the Federal Reserve, would vote to raise the federal fund’s target rate at their December meeting. For only the second time in a decade, this is exactly what happened. There were many factors that contributed to the 0.25 point increase (from 0.50 to 0.75), but many are pointing to the latest jobs report and low unemployment rate (4.6%) as the main reason. Tim Manni, Mortgage Expert at Nerd Wallet, had this to say,
“Homebuyers shouldn’t be particularly concerned with [last week’s] Fed move. Even with rates hovering over 4 percent, they’re still historically low. Most market observers are expecting a gradual rise in home loan rates in the near term, anticipating mortgage rates to stay under 5 percent through 2017.”
Only time will tell what the long-term impact of the rate hike will be, but in the short term, there should be no reason for alarm.
The Gypsy bar and restaurant on the corner of NW 21st and Irving closed in 2014, and as of this week the building is officially being torn down to make room for a new 4-story, 57-unit apartment building. In addition to the residential space, there will be 10,000 square feet of commercial space on the ground level and a 62-space underground parking garage.
Here is a look at the demolition, as seen on my walk to coffee recently:
Now it’s just a huge hole in the ground.
And here are the mockups of the new building
It fits in the neighborhood beautifully, though it’s going to put a dent into my commute through the winter!
1) Our River Is About to Get the Most Extreme Makeover Ever.
By the end of 2016, after decades of discussion, plans will take shape for a massive, federally mandated cleanup of the Willamette River. Portland’s waterway is currently awash with industrial PCBs, heavy metals, dioxin, and other contaminants. It’s likely the cleanup (shorthand: Superfund) will take decades, with cost estimates running as high as $2.5 billion. (Figuring out which of about 150 companies and government entities historically responsible for the pollution still exist, and who will pay what to fund the cleanup, is a major challenge.) The mandatory monitoring will continue for … oh, 100 years. At stake in a process that will run beyond 2116? “The river is a major economic engine,” says Michael Jordan (not that one), director of the city’s Bureau of Environmental Services. “To meet our population and employment projections, thousands of jobs need to be produced around the river. Add in risks to the environment and human health, and this is significant.”
2) Portland Is About to Rewrite Its Own Blueprint.
As the Portland City Council readies to vote on a new “Comprehensive Plan” to guide development of the entire city, relish the differences, in specifics and zeitgeist, between the new plan and its predecessor, adopted 36 years ago.
Pages Then: 34
Pages Now: (draft) 270
Then: “Portland is more than a geographic area—it is a way of life.”
Now:“Portland is a prosperous, healthy, equitable and resilient city where everyone has access to opportunity and is engaged in shaping decisions that affect their lives.” (Subtext: Portlandia: it’s really a sequel.)
Now: Population: About 610,000 Projected 20-year growth: 260,000 (Subtext: Squeeze in. The elevator’s going up!)
Then: What glossary?
Now: 152 words or phrases defined, from “mode split” to “Portlander” (Sample: “Continue—Persist in an activity or process.”)
Then:162 words. Sample: “Encourage citizen involvement in land use planning projects by actively coordinating the planning process with relevant community organizations.”
Now:2,554 words Sample: “Maintain partnerships and coordinate land use engagement with: individual community members; communities of color, low income populations, Limited English Proficient (LEP) communities, Native American communities, and other under-served and under-represented communities … ” (It keeps going. And going.)
Then: “Nodes and Noodles”
Now: “Centers and Corridors” (Our old plans were funnier.)
3) Affordable Housing’s secret? Trust.
Searing-hot home and rental markets can look pretty doomy to housing advocates, not to mention low-income Portlanders looking for places to, y’know, live. But some strategies have already proven themselves.
The nonprofit Proud Ground, for example, has used a property structure called a community land trust to make about 260 metro-area homes “permanently affordable.” Typically, the organization—in partnership with governments, other nonprofits, or both—buys an existing home as it comes on the market. After any necessary repairs, the home is sold to a low-income buyer, with as little as $500 down and a fixed mortgage. (Median monthly payment: $1,037.) The trust structure allows the buyer to build equity—$60,000 over 10 years on average, the organization estimates. But Proud Ground also shares the equity, an arrangement which allows the home to be sold at below market rates when the original owner is ready to move on.
“The housing stock is out there,” says Diane Linn, Proud Ground’s executive director. “We’re going to advocate at every level of government and use every tool we can to add properties to our portfolio.” The aspirational goal: 400 homes by 2020.
4) The Edge Will Be the Center.
In Portland’s development boom, former fringe zones will become hotbeds of action.
THE WAY IT WAS The Southeast neighborhood oft derided as “Felony Flats,” long a go-to example of revitalization dreams deferred
CHANGE AGENTS In 2014, the Portland Development Commission jump-started lumbering renewal with a capital-letter-optimized “Five-Year Action Plan.”
THE VISION“I think we’re cementing this as a vibrant neighborhood,” says outgoing PDC director Patrick Quinton. “Now we need to think about how to execute our plans while maintaining the character of the community.”
BIG MOVES Coming to SE 91st and Foster: the 34,200-square-foot Asian Health and Service Center, with design by Holst Architecture; a trio of mixed residential and commercial buildings involving veteran developers Williams/Dame and Palindrome and respected architecture firms Hacker and Ankrom-Moison.
Downtown’s Southern Edge
THE WAY IT WASA sleepy village around Portland State, girdled by a highway, enlivened only by a Cheerful Tortoise (the 64-year-old, just-off-campus sports bar)
CHANGE AGENTS PSU is renovating and building like mad, and MAX, streetcar, and bus lines have made this the city’s busiest transit hub.
THE VISION “Ten years from now,” says Portland State spokesman Scott Gallagher, “it will be hard to distinguish between the core of downtown and the south end.”
BIG MOVES The $60 million renovation of PSU’s business school will turn a bunker-like building into an airy sustainability showcase by 2017. That same fall, the retrofitted Viking Pavilion will reopen as a 5,500-max-capacity arts and sports venue. Buildable lots at PSU’s eastern edge—like SW Fourth and Harrison—will sprout mixed-use density.
The Broadway Corridor
THE WAY IT WAS The Northwest Portland seam between the Pearl District and Old Town, rendered comatose by the hulking, 14-plus-acre US Postal Service headquarters complex
CHANGE AGENTS After years of trying, PDC is finalizing an $88 million deal for the Postal Service site.
THE VISIONA dense neighborhood that knits the Pearl to the Rose Quarter. “You can reweave sites that have been islands in the city,” Quinton says.
BIG MOVESWhile design details are very much TBD, the agency envisions the USPS land as high-rise developments, extended North Park Blocks, and a huge batch of new housing, designed to complement Union Station and kick-start vacant lots on either side of Broadway.
5) OneTemple’s Doom Signals a Battle Over History.
Late last year, the circa-1892 Ancient Order of United Workmen Temple—an imposing brick hulk in the Richardsonian Romanesque style at SW Third and Taylor—became the latest in a string of historic local icons (including Centennial Mills, the Portland Building, and Veterans Memorial Coliseum) threatened with demolition. The tipoff came when the temple’s new owner, development firm T&T, had the building removed from the city’s Historic Resource Inventory—a list of buildings that, in theory, can’t be demolished until after a stipulated 120-day waiting period.
After an appeal by the preservationist group Restore Oregon, developers agreed to wait out the 120 days before dismantling the building to clear the way for a hotel and offices. According to T&T’s Jeff Arthur, salvation just won’t pencil out. “It’s one of the tallest unreinforced masonry buildings in the city. ‘Seismic’ wasn’t a word when they built this,” Arthur says. “We’re still continuing to evaluate, but we’re definitely leaning at this point toward taking it down.”
For preservationists, Workmen Temple’s demolition may be a call to action. Jillian Detweiler, a spokeswoman for Mayor Charlie Hales, says the city intends to close the loophole that allows owners to remove buildings from the Historic Resource Inventory. And Restore Oregon’s Peggy Moretti argues the state needs “more carrots and more sticks” to make historic preservation feasible. “In every other state, local jurisdictions have a say in designating what’s historic,” she says. “And other states would have more financial incentives at their disposal.” But moves to constrain developers could be a tough sell: legislation backed by Restore Oregon, which would have provided incentives to renovate historic commercial buildings, failed last year. Meanwhile, it’s likely that by this summer, the onetime fraternal clubhouse will literally become history.
This article appeared in the April 2016 issue of Portland Monthly.
Every year at this time, many homeowners decide to wait until after the holidays to put their home on the market for the first time. Others who already have their home on the market decide to take it off the market until after the holidays. Here are six great reasons not to wait: 1. Relocation buyers are out there. Companies are not concerned with holiday time and if the buyers have kids, they want them to get into school after the holidays. 2. Purchasers that are looking for a home during the holidays are serious buyers and are ready to buy. 3. You can restrict the showings on your home to the times you want it shown. You will remain in control. 4. Homes show better when decorated for the holidays. 5. There is less competition for you as a seller right now. Let’s take a look at listing inventory as compared to the same time last year:
6. The supply of listings increases substantially after the holidays. Also, in many parts of the country, new construction will make a comeback in 2016. This will lessen the demand for your house.
Waiting until after the holidays to sell your home may cause you to miss a very good selling opportunity!
Please call me if you'd like me to walk through your home with suggestions on how to position it in the marketplace for top dollar!
Thinking about waiting till Spring to sell? Capitalizing on the shortage of homes for sale in the market now, will translate into a better pricing situation than waiting until Spring.
In school we all learned the Theory of Supply and Demand. When the demand for an item is greater than the supply of that item, the price will rise.
The National Association of Realtors (NAR) recently reported that the inventory of homes for sale stands at a 4.8-month supply. (it's more like 3 months in the Portland region) This is significantly lower than the 6 months inventory necessary for a normal market. We are currently experienceing a seller's market.
Every month NAR reports on the amount of buyers that are actually out in the market looking for homes, or foot traffic. As seen in the graph below, buyer demand this year has significantly surpassed the levels reached in 2014.
Many buyers are being confronted with a very competitive market in which they must compete with other buyers for their dream home (if they even are able to find a home they wish to purchase).
Listing your house for sale now will allow you to capitalize on the shortage of homes for sale in the market, which will translate into a better pricing situation.
Many homeowners underestimate the amount of equity they currently have in their home. According to a recent Fannie Mae study, 37% of homeowners believe that they have more than 20% equity in their home. In reality69% of homeowners actually do!
Many homeowners who are undervaluing their home equity may feel trapped in their current home, which may be contributing to the lack of inventory in the market.
If you are debating selling your home this year, let's get together to evaluate the equity you have in your home and the opportunities available in our market. Buyers are lining up for homes in Portland.
Today at lunch with clients we talked about the big earthquake scare that's been all over the news lately. Is the "Big One" hitting Oregon in the near future? In our lifetime? How can we protect ourselves and be prepared?
Mega earthquakes (8.7–9.2) occur regularly in the Pacific Northwest. The last mega quake that shook Portland occurred on January 26, 1700. For the past 10,000 years, the average time between mega quakes has been 300 years. Is it time?
The next mega quake may shake the foundations from Vancouver, BC to northern California. It could be the largest natural disaster in U.S. history, dwarfing Hurricane Katrina in damage, suffering and costs. In Portland, thousands of people could die and tens of thousands might be injured. Thousands and thousands of Portlander’s could end up homeless, as homes built before 1980 slip off their foundations, crumple and collapse. (Note: Older houses were not attached to the foundations – only gravity keeps them in place.)
Not all damage will be physical. The equity in the house they live in is where the wealth is stored for most middle class Americans. For unprepared homeowners, an earthquake could not only destroy their homes, if they survive, it could also leave them with nothing except a mortgage payment for a house that no longer exists. Bankruptcy may be final aftershock.
We cannot prevent earthquakes. We can, however, be prepared. Minimal preparation includes:
Attaching your house to the foundation (also called seismic retrofitting). The city estimates that there are 105,000 Portland homes that were built before 1970 and therefore were probably not initially bolted to their foundations. That makes them highly vulnerable during a major quake; they could be knocked off their foundations and damaged to the point that they are uninhabitable. Of course, some homeowners have bolted their houses down in the years since they were built, but we don't know how many. The city's best estimate is that at least 50,000 homes are still not bolted down. Fortunately, in most cases, it is not insanely expensive to bolt a house down. A local contractor that does a lot of seismic strengthening says the average cost is $3,400. For some people, that's a lot of money. But for people who can afford to spend $20,000 remodeling their kitchen, it's feasible. That's why the Bureau of Development Services, supported by Commissioner Dan Saltzman, is developing a strategy to make sure that whenever Portlanders apply for building/remodeling permits, they get information about the importance and relative ease of quake-proofing their homes.
When it's time to sell your home, I start by preparing a seller's "net sheet," which outlines the sale price less your outstanding mortgage, pro-rated property taxes, etc. Often people are worried about how much tax they're going to have to pay on that big (hopefully) number on the bottom line that says "Net to Seller."
Most times the answer is ZERO taxes! When you sell your principal residence and make a profit, you get to exclude $250,000 of that profit from your taxable income. And that's just the exclusion for single owners. Married couples can exclude up to $500,000 (if both spouses each meet the ownership and use tests below). So, depending on how much of a profit you make on the sale, you and your partner could potentially have no capital gains tax bill at all.
Here's the fine print: in order to claim the maximum exclusion, you have to pass the IRS ownership and use tests. The test questions are:
Have you owned the house for two years?
Have you lived in the house as your principal residence for two out of the last five years, ending on the date of the sale?
There are a few exceptions to these rules–for example, if you had to move before owning the home for two years because of a job change or due to "unforeseen circumstance," such as a divorce or natural disaster. In these situations the IRS may allow you to prorate the exclusion.
And here's more fine print that is ususally helpful: the two years residency doesn't have to be consecutive–you just have to have lived in your home for a total of 24 months out of the five years prior to the sale.
How to Calculate your cost basis
To determine capital gains on the sale of your home, you subtract your 'cost basis' from the selling price. Your cost basis is not just the purchase price. It also includes some settlement fees, closing costs and commissions paid with the purchase and the sale. Add to this the cost of significant capital improvements (not repairs) you've made for renovations, additions, roofing, landscaping, and other upgrades. All of these improvements increase your cost basis, and will lower your potential tax liability. (Another good reason to keep records of all your home improvements)
You can also reduce your tax basis (and owe more taxes) for a few reasons – if you have a home office and have claimed depreciation over time, you now have to subtract those deductions from your cost basis. Or any tax credits for energy-related improvements have to be subtracted as well.
Estimate sale price and capital gains
Now estimate your sale price and subtract your cost basis. If you bought your house for $350,000, did $50,000 worth of improvements and had other closing fees and costs of $15,000, your cost basis is $415,000. Now let's say you expect to sell the house for $850,000. Your potential capital gain would be $435,000.
Factor in exclusion
In the above example, if you and your married partner met the ownership and use tests, you could exclude the entire gain from your taxable income. You wouldn't even have to report the sale on your tax return. However,if your capital gain turned out to be $525,000, you'd have to report the sale and pay long-term capital gains on $25,000.
As always, I recommend you speak with your accountant for the rules that apply to your personal tax situation. But if you want to talk about selling your home, please call.