My clients will sometimes say, "I've got a stupid question for you…. what does <insert odd real estate term> mean?
Of course I always respond that there is no stupid question in this process. This is a big deal, buying and selling a house, and one should never feel that they don't full understand every little bit of what is going on. That's why you work with a Realtor who you trust.
Still, it's nice to have a reference for all those terms that come up during your transaction.
Below is a link to the Federal Trade Commission's Real Estate marketplace glossary.
NOW is a wonderful time to sell your house!
Time to Reality Check the Real Estate Market
by OB Jacobi
Rarely does a day go by that I don’t get asked if this is a good time to buy and/or sell a home. Some people might think that my response is always an emphatic “YES!” because I work in real estate. But in truth, there is no right or wrong answer. Every person’s circumstances are unique, so in some cases the answer might be yes, but for others it might make more sense to wait. Allow me to explain.
The good news is that we’re finally coming out of the housing slump of the past five-plus years. Housing is a major driving factor of the U.S. economy, so regardless of whether or not one owns a home, a stronger housing market is good for everyone. For some would-be home sellers, this positive momentum, combined with a rise in home prices and buyer activity, is enough to compel them to list their home. And right now the statistics appear to be on their side.
According to the most recent findings from the National Association of REALTORS®, total housing inventory has fallen for the past several months, settling at just under two million existing homes on the market that are available to buyers. This represents about a four-month-supply of homes throughout the U.S. This is the lowest housing supply the nation has seen since May of 2005 – during the peak of the housing boom.
“Months supply” basically means that if existing homes were to continue selling at the current rate, the inventory of homes would be sold by that many months. A “normal” market usually has around six months of supply; therefore lower numbers mean a shortage of inventory. If demand is greater than supply, this often leads to competition amongst buyers – and rising prices – as we’ve seen in many markets throughout the Western U.S.
Here are the current inventory levels in key markets along the West Coast, all of which fall below six months of supply and report strong competition among buyers.
· Seattle: 1.4 months
· Portland: 4.2 months
· San Francisco: 1.8 months
· Las Vegas: 3.8 months
· Palm Springs: 2.5 months
The following graph demonstrates the downward trend in the overall U.S. month’s supply of homes which is currently at about 4.4 months:
So what does this mean for buyers and sellers? It means as long as inventory levels remain low, competition amongst buyers will remain high, and home prices should continue to steadily rise – albeit at a healthy rate – not like what we saw during the housing boom. As evidence of this, in the recent Home Price Expectation Survey, 105 leading housing analysts called for a 3.1 percent increase in home values by the end of 2013. And in a recent report by the National Association of REALTORS®, median home prices last quarter showed the strongest year-over-year increase in seven years.
Another thing that buyers and sellers need to keep their eye on is interest rates and their impact on affordability. Interest rates have been at such historical lows for so long that it’s easy to take them for granted. But the truth is that several lending institutions, including Freddie Mac and the Mortgage Bankers Association, project that interest rates will rise from 3.4 to 4.4 percent by the end of 2013. A full point increase can have a significant impact on the amount of your mortgage over the long term.
Assuming a 30-year-mortgage at a 3.4 percent interest rate, a home valued at $360,000 in today’s market would have a monthly payment of $1,596.53. If prices rise by 3.1 percent and interest rates rise to 4.4 percent, as both have been predicted to do in the coming year, that same home would be worth $371,160 and have a monthly payment of $1,858.62 (see chart below). This is a difference of $262.09 per month – $3,145.08 annually – and $94,352.40 over the life of the loan. That’s not chump change.
With these types of projections, one might wonder why there isn’t a flood of homes coming on the market. The biggest concern I hear from many would-be sellers is that they’re going to lose money because their home is worth less today than when they bought it. A valid concern, to be sure, but not necessarily the case for many folks. Remember, you’re buying and selling in the same market conditions, so if your home has lost value in recent years, it is highly likely that the next home you buy has as well.
I recently spoke to a friend of mine who wanted to sell but was afraid of losing money. He bought his Seattle-area home back in 2002 for $275,000. Over the next five years the market boomed and by 2007 his home was worth about $430,000. During that time, homes in many areas around Seattle appreciated by over 55 percent. Then the housing market crashed – and with it so did home prices. In my friend’s mind he lost $155,000 and now he thinks he should wait to sell until he can gain all that loss back.
Today, my friend’s home is worth about $327,000 – a gain of $52,000 over what he paid in 2002. If experts are right about an annual gain of three percent in the coming years, he will have to wait 10 years before his home is worth what it was during the peak of the market in 2007. My advice to him? If it’s the right time to move and you can afford to do it, go for it, but don’t base your decision on numbers that were the result of an artificially inflated market.
It goes without saying that nobody wants to sell at the bottom of the market, yet at the same time, everybody wants to buy at the bottom. Obviously these two scenarios can’t exist at the same time, but I hope the information in this blog shows there are definitely opportunities to be had by both buyers and sellers that are worth considering.
Sometimes there is no perfect solution to providing access to the outdoors for your little furry friend. Leaving them home alone all day while you're at work can lead to accidents. Doggy day care can be expensive if you need to use it every day. But some properties just don't have perfect access – a door that leads to a fenced yard, or a spot for a doggy door that is concealed from view in your everyday spaces.
This homeowner turned an ordinary closet into a warm spot for their dog to be indoors, while giving it access to the outside as well. You can leave the door ajar when you're home, and close it when you're away. I love that this closes it off from view and everybody is happy.
photo courtesy of Houzz. Designed and built by Aloha Home Builders.
All this talk of the Fiscal Cliff has finally subsided, but what does the bill do to your bottom line? Here's how it pertains to Real Estate.
The legislation was passed on January 1, 2013, and signed into law by President Obama on January 2, 2013.
Real Estate Tax Extenders
Mortgage Cancellation Relief is extended for one year to Jan. 1, 2014 (for those who had to short sell their house – they won't have to pay tax on the forgiven debt)
Deduction for Mortgage Insurance Premiums (PMI) for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012. See this page for more info.
15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012 (talk to your commercial broker for more info)
10 percent tax credit (up to $500 maximum) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012
Permanent Repeal of Pease Limitations for 99% of Taxpayers
Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.
These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.
Capital Gains rate stays at 15 percent for those in the top rate of $400,000 (individual) and $450,000 (joint) return. After that, any gains above those amounts will be taxed at 20 percent. The $250,000/$500,000 exclusion for sale of principal residence remains in place.
The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.
As always, I recommend you speak to your accountant or financial planner to see how these affect your bottom line. Please call me if you'd like a recommended professional in these fields.
cute graphic courtesy of ABC news
I've been waiting for something wonderful to open in the Ladd Building, which was scheduled to be demolished to make way for the Ladd Tower, but was saved, moved, and then moved back again into the shadow of the tower. Very dramatic. But then it sat empty for a long time, and so I'm just thrilled that it's now getting the happy ending it deserves! See the Oregonian article about the new restaurant, Raven and Rose, that is set to open there next week.
Portland Oregon Real Estate
"My number one goal was to create a space that looked like it belonged in this building," said owner Lisa Mygrant during a walk-through of the two-story gastropub on Wednesday. "It has a timeless feel. It could have belonged to that era or now."
Turning the restored 1880s building, which is listed on the National Registry of Historic Places, into a restaurant took just over 14 months, Mygrant said. Much of that time was spent creating the physical infrastructure for the restaurant, since the carriage house was basically a hollow shell with no pipes, duct work or wiring.
The main floor features an exposed kitchen with a wood-fired oven made out of bricks reclaimed from the carriage house's original fireplace and chimney. Gas lanterns are suspended over booths, as well as two-person tables along a long, cushioned banquette. In the center of the dining room is a custom-made bar with a hand-hammered zinc top, complete with four wines and nine beers on draft, including one cask-conditioned ale.
Steps to the second floor lead to a waiting area outside of the restaurant's pastry kitchen, as well as what may be the restaurant's crown jewel, the "rookery" bar, located where the carriage house's hay loft originally was. The space features another custom-made bar, a library nook that can be used as a private meeting space, and leather couches in front of a gas fireplace. The space also will contain a pool table.
Raven & Rose is aiming for LEED gold-certified status, and reuse of materials has been emphasized throughout the restaurant's design. Bar tables have been constructed out of old walnut shipping crates, and the upstairs floor is made of reclaimed and refinished horse fencing. Over the restaurant's entryway is a ceiling that was part of the carriage house's original living quarters.
The initial menu from longtime Portland chef David Padberg (Wildwood, Clarklewis, Park Kitchen) will feature rustic, wood-fired dishes, like a recent braised short ribs, Yorkshire pudding, roasted root vegetables and beet-kidney sauce that was served at a thank-you dinner for the restaurant's construction crew. Behind the bar is Dave Shenaut, (formerly of Beaker & Flask and Riffle NW), who has designed a menu of historic cocktails designed to evoke the building's history.
The restaurant is just the latest chapter in the building's long history. It went up in the 1880s to house Portland business leader William Ladd's carriages, horses and coachmen. In the 1920s, it was converted into shops and offices, and was remodeled as a law firm in 1972. But in the middle of the last decade, as plans got underway to build the Ladd Tower, a 23-story apartment building on the same block, the carriage house was tapped for demolition. Preservationists rallied to save the building.
In 2007, the building was placed on blocks and moved several blocks west on Southwest Columbia Avenue, where it sat in a parking lot as construction progressed on the tower. It was moved back the next year, then underwent extensive restoration to its exterior, outside walls and roof. Construction on Raven & Rose began in late 2011.
Raven & Rose will officially open for happy hour and dinner Tuesdays through Saturdays beginning Friday, Jan. 4. The restaurant plans to add full daily lunch and dinner service by early March.
Raven & Rose is at
1331 S.W. Broadway
adapted from an article that appeared in The Oregonian on December 28, 2012 titled Restaurant first-look: Inside downtown Portland's Raven & Rose in the historic Ladd Carriage House / oregonlive.com
It can sometimes be difficult helping people through the emotional decisions and proceedings as they buy and sell their houses. Certain people rise to the occasion, and others try to drag you downwhen they get tired, grouchy or worried. I've experienced both lately.
Years ago I was told that I'd meet "givers" and "takers," and to try to stick with the "givers." (I don't mean material gifts – I'm talking about their spirits.) Below are little notes from two "givers" who I have had the pleasure of working with recently. They both arrived yesterday, and they absolutely made my day, especially after wrestling with my feelings after a "taker" got super grouchy last week. It's no surprise that these "giver" clients were referred from other clients and friends who are also "givers."
" Dear Cary,
You are amazing! I can't thank you enough for working so hard for us through this entire process. We knew from the get-go you were a stellar realtor, but honestly, you are such a good friend too. We are so blessed to be working with you! You really are our Care Bear "
Nghi & Aaron
For everything, over and over. You are such a gem. Pure sunshine.
It was so lovely to see you today, as always.
Have a great week and weekend.
I don't have words for how much I appreciate you.
Best to you always
I'm giving thanks for having the opportunity to work with such lovely people!!
Giving Thanks for Love is the name of the Linda Cote print at the top of this post. This beautiful print is available on greeting cards for $5 here, at Linda Cote Studio Printmaking. I'm going to order some today!
According to CNN's 25 Best Places to Retire, Portland is number two!
Whether you dream of retiring to a big city, small town, resort area or college town, these 25 cities offer reasonably priced homes, low crime and tax rates, quality health care, and more.
Famous for its food and bike cultures, Portland is a thriving but manageable city that gives retirees easy access to just about anything.
To see a revolving door of art exhibits, performing arts, and festivals, look no further than downtown and the nearby Pearl District.
No need to leave the city for outdoor adventures; Portland has one of the largest urban forests in the country (wine country and beaches are just a short drive away). It's also home to several award-winning hospitals, including the Oregon Health & Sciences University, whose research center attracts experts and patients from around the country.
I have helped many retirees find their dream home in the Pearl District, Lake Oswego, suburban Portland, and outlying small towns like Canby, Sherwood and Hillsboro. I've also helped a number of seniors sell their homes and find great accommodations in Senior Centers and Assisted Living. Please let me know if I can help you retire in Portland!