“Bumping along the bottom” is the latest catch-phrase I’ve heard to describe our current market conditions, but I’m feeling a bit more (cautiously) optimistic for summer ‘09. In the last month I’ve had a number of buyers enter the market and write offers after being on the fence for a couple of years. And I’m hearing the same from other brokers as well. I’ve already seen more activity in the first half of ‘09 than in the entire year of ‘08. Yes, some of this is our normal seasonal trending, but I feel that cautious confidence has returned to the market. Buyers are definitely “over it” for the most part and sellers are quickly falling in step.

Checking various sources like RMLS, Altos Research, and even Zillow, all the data is showing shyly positive month-over-month trends. Days on market and inventory both seem to be shrinking modestly, average price in most areas is either stabilizing or showing some slight increase. We are still double-digit-down (percentages) on most counts when comparing to last year, but this is the necessary “correction” that so many hyper-critical experts have been saying is necessary. To a certain degree, I have to back them up. “Affordable” housing should be described as a detached home in a good neighborhood in good condition, that can be purchased by a police officer married to a school teacher, who have two kids (thank you to Chris Matthews). I’m not sure if we are quite there yet…but we are a lot closer than we were a couple years ago. For our market to really stabilize and see modest, normal growth again, we will definitely have to see a lower rate of unemployment.

And then there are all of those foreclosure homes and short sales. They definitely factor in to all of our trending, and are fractionally responsible for the downward spiral in average pricing, even if not in closed sales but as competition to non-distressed listings. Here in Portland, we do have a fair share of distressed properties, but the bleeding has really been minimal when compared to nationwide numbers and trends. I will also say that most of the banks have got their systems figured out and are able to more quickly process distressed transactions. If you are in a position to buy, are patient and don’t mind investing a little elbow grease, there are some smokin’ hot deals to be had.

Sellers, too, should be feeling a bit more positive. With the decline in pricing slowing down and buyer confidence on the rise, it should be a bit easier to sell a home this summer. Just be realistic about pricing your home and do all that you can to present it as well as possible.

 You may already be wondering where I’m going with this.  Not to worry, I’m not writing the standard “Ten Reasons Why You Need to Sell/Buy RIGHT NOW!”.  Besides, it’s usually life (or life-style) changing events that are the catalyst for a home sale or purchase.  And babies, true love, or job transfers don’t really give a hoot about market conditions.  Of course, if you are anticipating a  life event, it’s always better to make your move before you are in that event.  Moving households can take an emotional toll, which shouldn’t add to the emotions a life-event stir up. 

The Karma of Perfect Timing

I personally believe that timing is always perfect, even if it doesn’t seem so at the time.  No matter what your faith may be, I think we’ve all had the experience of things just falling into place, even in the most  difficult of situations.  If we apply that to real estate, then we can rest easy that the right buyer and/or home  and financing will all fall into place when it’s supposed to. 

 So I will say now, that if you are considering a move  conditions are becoming more favorable for sellers, and are still excellent for buyers.  It’s time to start gearing up for the game and getting your ducks in a row.  Work on getting your home ready, talk to a loan broker about your financing options, start doing your homework in regards to market activity.  When your timing is right, you can jump into the game confidently.

FYI - Stay informed

For buyers  prices are still low, interest rates are still at historic lows, there are tax incentives in place for 1st time buyers, and there is plenty of inventory being sold by motivated sellers.  Banks are even making concessions on bank-owned properties.

 For sellers, inventory shrank 4% since last month, returning us to levels seen last fall.  Price-decrease is also slowing.  We are still down in average price year-over-year, which is being deemed a “market correction” for the bigger economic picture. But if we look at average sales price month-to-month, we’ve gone from nearly -5% (11/08) to +1%(2/09) to a slight -1/2% (03/09), a local market trend.   Days on market has consistently been 3-4 months since last summer.  These are all solid signs of “hitting bottom” and impending stability.   The last piece will be for our unemployment rate to stabilize.  Then we should expect to see trending towards a more level playing field in the real estate market as buyer and lending confidence rises.

A special “Thank You!” to Julie Sandlin of First American Title for sending this along this morning.

Frequently Asked Questions:

First Time Home Buyer Tax Credit of $8,000

1. Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

2. What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

3. How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

4. Are there any income limits for claiming the tax credit?
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

5. What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phase-out limits.

7. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phase out to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous “credit” was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

9. How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

10. What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

11. I read that the tax credit is “refundable.” What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.

13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.

15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.

16. I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519.

17. Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

18. I bought a home in 2008. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.

19. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down payment.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a down payment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.

20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose (”elect”) to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phase-out would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

 Just thought I’d pass along the link to the President’s plan to helping homeowners stay in their home.

FinancialStability.gov

There are lots of fact sheets, press releases, and self-assessment tools.

Personally, I think it’s great that our current administration is making efforts to not only keep people in their homes but to make it more manageable for families in these tough economic times.

If none of these solutions work for your particular situation, there are other options available to avoid foreclosure.  Please feel free to contact me to confidentially discuss your situation.  I would be happy to consult with your friends and family as well, if they are having trouble.

A special thank you to Julie Sandlin, at First American Title for passing this info to me earlier this week.

There’s currently lots of talk about FHA (Federal Housing Administration) home loans. 70% of the transactions Michelle and Sara worked and closed in 2008 and thus far in 2009 were with first time home buyers approved for FHA financing. Throughout this article we will try and provide a clearer understanding on FHA loans as well as address the controversy said to be behind them.

First and foremost, it is important to convey that FHA mortgages of today are not what they used to be. In years past they were laborious, tedious, difficult transactions. They required several inspections and were more rigorous and difficult to pass. That is no longer the case. The only inspection required is the appraisal. Appraisers handle them just as they would with conventional financing. However, FHA does require the property to be in good condition. For example, if the property has chipped paint on the siding and the appraiser notes it in their report, FHA can require it to be fixed before the loan funds, requiring additional documentation from the appraiser to prove the work has been completed.

Another misconception seems to be that sellers are allotted to pay only 3% of closing costs as is the allotment for conventional financing. In fact, sellers are able to pay 6% towards the buyer’s closing costs. Currently, with an FHA mortgage, we counsel buyers to have the required 3.5% down payment, plus an additional $8000-$10,000 to cover closing costs in the event the sellers are not contributing toward closing costs. With more distressed properties on the market, negotiating seller-paid closing costs has been a successful strategy in ensuring that buyers have enough funds to perform needed repairs that a cash-strapped seller may not be in a position to tackle. Additionally, if a bank is involved because of a short sale or foreclosure, they may be more agreeable to a credit instead of performing needed repairs. In fact, in our current buyer’s market, Michelle was able to negotiate at least 3% closing costs in every single transaction in the last year or so.

The general controversy regarding FHA mortgages is that it is the new subprime of today. FHA became widely popular within the financing arena when the actual subprime market started to seize in 2007. The requirements and guidelines for an FHA mortgage are a little looser than current conventional mortgage requirements, but more stringent than the subprime loans, making FHA financing an excellent vehicle for getting first-time-buyers into homes with less risk to the overall market. Current lending practices have tightened up enough that good, realistic loans are being made to stable buyers that are capable of making their payments.

Listed below are the general FHA requirements and guidelines for the borrower(s), as of this writing:

• 3.5% down payment. This amount can be gifted from a family member.
• FHA is not credit score driven, though we are seeing investors changing to a minimum 620 FICO.
• No late payments on your credit report within the last 12 months
• No foreclosures within last 3 years.
• Bankruptcy discharged 2 years, with perfect credit since.
• Two years of steady employment
• Loan amount must not exceed current FHA county limits. This changes periodically and differs for geographic areas. Currently, Portland metro area is capped at $362,250

If you previously thought that you would not be able to qualify for a home purchase, but now think that you might, please get in touch with us and start the pre-approval process. Sara Blanchard and Michelle Berry have worked together to successfully close several FHA financed purchases for buyers in our current market and would love the opportunity to help you into your next home.

A lot has happened since I’ve sent my last newsletter, and the majority has been very good.  Especially since the first of the year there have been some very encouraging signs of recovery.  But the economic hole we are in began being dug 20 years ago, when credit of all types became much more readily available.  There is no silver bullet that is going to turn things around, and we are going to have to scrabble our way out of this hole, a little at a time.  The good news is that this process is well underway.
The most encouraging sign most recently in headlines is the unexpected rise in pending home sales (nationwide) in December.  The majority of these pending home sales are foreclosed properties in California and Florida.  First, it’s vacant, foreclosed homes that are currently glutting our market.  Reducing not only bank-owned inventory, but vacant inventory is essential to turning the tide on our current crisis of high levels of housing inventory.  Second, Portland nearly always trails California in trends, so we can expect to see increase in activity locally in the coming months.
Another very important factor in our recovery is the movement of mortgage-backed securities.  Most people don’t necessarily need to know what mortgage-backed securities are, but you should know that banks need to sell them to be able to make more new loans.  The federal government will be purchasing some of these securities, which is great, but more importantly, they are just starting to be traded again out in the market.  Liken the situation to a person who needs a respirator to survive, but then slowly is able to start to breathe on their own.  Breathing on your own is always preferable!
More subtle signs include slowly decreasing home inventory, real estate professionals adapting to the market and finding new ways to sell homes, and banks finding ways to keep distressed homeowners in their homes through loan modifications and other arrangements.  And believe it or not, home prices coming down to more affordable levels in combination with low interest rates has stimulated the local market significantly since mid-December.
Not even most, but virtually all the economists that I keep tabs on are all in agreement that we are either at bottom, or very near it.  It seems since the recession became “official” we have let out a collective sigh of relief.  Literally everyone is talking about how to save money and what they are doing to lessen their expenses.  Just look at the headlines in line at the grocery store.  A crucial component to our recovery is awareness; an economy built on credit is like a house built on sand….and we will need to re-build our economy on more solid ground.

For anyone who has used a 12 Step program to overcome anything, this will sound familiar.  Being in the throes of an economic crisis, recovery should be on our collective mind.  It seems the media is flailing around, trying to point a finger at one single cause or source of our current crisis, but honestly, let’s take a look in the mirror.  We all had a hand in it to some degree, and only together will we see our way through it.

Step 1:  We admitted we were powerless over our addiction - that our lives had become unmanageable. – For those of you who haven’t hit bottom just yet, you must still have some available credit somewhere.  We have been hopelessly addicted to credit; so much so that we have been building our economy on it since the early ‘80’s.  How does it go? “A house built upon sand…..”

Step 2:  Came to believe that a power greater than ourselves could restore us to sanity –   I was so impressed with the under-spending that took place during the holidays. A step in the right direction might be an economy not so dependent on credit or a population so comfortable living in debt. The temptation to refinance over and over or find the lowest possible payment regardless of the consequences won’t be so irresistible if keeping up with the Joneses isn’t quite as easy as swiping a card.

Step 3:  Made a decision to turn our will and our lives over to the care of our higher power – Do we really have much of a choice?  September 2007 and the events leading up to the subprime crisis pretty much decided it for us.  Now we have to trust that we as well as our elected officials and their appointees will make the right choices in shaping our economic future, which always has a direct effect on the housing market.  No jobs = no money = no house payment = less future economic stability.

Step 4:  Made a searching and fearless moral inventory of ourselves – This is always a tough one.  Okay, okay, people got stupid loans for homes they couldn’t afford and cars they couldn’t afford and got over-extended in credit card debt.  Most families are faced with mountain of debt disproportionate to their income.  We have created a credit monster, that will be tough to tame.

Step 5:  Admitted to our higher power, to ourselves and to another human being the exact nature of our wrongs – Impulsive, greedy, irresponsible, materialistic, uninformed, clueless; pick one and try it on for size.  Mama said don’t do it, and we went ahead and did it anyway.  “Mama” in this case could be your actual Mama, or history, or economists…really we had many fingers wagging under our noses.  I know one person who hasn’t been too terribly affected by the credit crunch…my Great Depression surviving mother-in-law.  Yep, she still hides cash in her pantry.  It’s time for us 40 somethings and younger to take a page from Mama’s book.

Step 6:  Were entirely ready to have our higher power remove all these defects of character – Amen!  Take out the trash!  Raise your hand if you’re all out of equity and your credit cards are maxxed.  Did you learn your lesson?  Credit cards aren’t for grocery getting and houses are not ATM’s and subprime mortgages are not something to make a side bet on (see Step 10 below about credit swaps).  The nice thing about real estate, though, is that if you hold it long enough it will eventually appreciate.  So hang in there, if you can.

Step 7:  Humbly asked our higher power to remove our shortcomings – Help is certainly on the way.  All the pieces are in place to help distressed homeowners, distressed businesses, and slowly heal our economy.  And, I have to say that I am very impressed that the Portland community really seems to be pulling together to help those in need.  We are all going to have to readjust our expectations and appetites, and change a few spending habits.  Might I suggest the “Finish Rich” series of books.

Step 8:  Made a list of all persons we had harmed, and became willing to make amends to them all – Wow, this could take a while.  Let’s start with retirees, teachers, public servants, entire small towns, and industrial communities?  The list will grow as our current crisis continues to ripple through our nation, and the world.  But the willingness to help certainly seems to be there for those truly in need.  This does not mean you, auto industry execs with private jets.  (Favorite quote: “Couldn’t you have jet pooled or something?” from Rep. Gary Ackerman, D-New York.)

Step 9:  Made direct amends to such people wherever possible, except when to do so would injure them or others – It appears we are in process with this one, but the sooner the better for those retirees, teachers, public servants, military families.  There are some interesting new house bills just passed and in the works that will give mortgage banks more flexibility in helping out distressed families, but read the fine print because Uncle Sam covers his hind end, as he should.  Here’s more about “Hope for Homeowners”.

Step 10:  Continued to take personal inventory and when we were wrong promptly admitted it – Only time will tell with this one.  Did you know a form of credit swaps nearly brought our economy to its knees in the early 1900’s, and then were made illegal until 2000, when they were passed without debate on Christmas Eve?  Google “credit swaps”, but caution, it’ll turn your stomach.  There’s a good TIME article dated March, 2008.

Step 11:  Sought through prayer and meditation to improve our conscious contact with our higher power as we understood our higher power, praying only for knowledge of our higher power’s will for us and the power to carry that out – I think we voters sent a pretty clear message November 4^th.  I’m just sayin’.  Regardless of who you voted for, stay involved any way you can.  Whether it’s reading to kids or writing letters to politicians or just going to city meetings and voting, your efforts do make a difference.

Step 12:  Having had a spiritual awakening as the result of these steps, we tried to carry this message to other addicts, and to practice these principles in all our affairs – Please, let’s all try to be a bit more responsible moving forward.  Economic growth and appreciating property values are good, and necessary, but anything in excess is not healthy and eventually will have to be paid for.  This is an event that is shaping this generation.  Our kids and grandkids will read about it in history books.  Let’s make sure they don’t repeat our mistakes.

Fannie Tries Short Sales Over Foreclosures

Fannie Mae has launched pilot projects in Phoenix and Orlando intended to reduce foreclosures by pre-approving short sales, agreeing on a price and the loss it will take prior to a deal even being made. It is hoped the program will improve the popularity of short sales among real estate agents.

Property professionals initially had welcomed short sales but soon found the process to be a frustrating one–due to squabbling about the sale price and slow approval times by the mortgage companies–that often ended with no sale at all.

“Short sales have received such a bad reputation among real-estate agents that, as a portion of the overall mortgage market, they have gone down,” says Tom Popik of the research firm Campbell Communications, whose November survey of realty practitioners found that agents had to wait as long as 8.1 weeks to receive a response from the lender on a short sale. That was nearly double the 4.5 weeks the process took earlier in the year.

Fannie Mae’s pilot will focus on homes that are listed at less than the mortgage balance and carry a Fannie Mae-backed loan serviced by Countrywide Financial Corp.
If it proves successful, the concept could be expanded to other geographical areas and additional lenders. There are concerns, in the meantime, about the program’s success, with real estate agents noting that property prices could decline before the pre-approval is issued.

Source: The Wall Street Journal, Nick Timiraos (01/09/09)

Much needed and long overdue, let’s hope that Countrywide expedites their trial run of this program.  Although I will say that picking through RMLS of late I do occasionally see a short sale listing that is already “pre-approved”.

It’s new policies and procedures like this that will also speed along recovery not just in the local market but in the national market as well.  The sooner we start moving the “difficult” inventory, the sooner we start moving all of the inventory.  If we as a community (and we few remaining brokers) are going to survive this market we are going to have to start coming up with better processes and more creative solutions to this challenging market.

Homeowners, listen up:

If you are concerned about your mortgage payments, or have had a life altering event take place (job loss, pay cut, illness, etc.) and feel that you have to sell your house, don’t wait to take action.  The sooner you start communicating with your bank the more options will be available to you.  Mortgage banks want another short sale or foreclosure like they want another hole in their head right now.  They will work with you as long as you communicate cleary your situation.  They may offer a refinance, or a temporary payment plan. 

Worst comes to worst and you have to sell, there are still options to avoid foreclosure.  You can sell your home for less than you owe.  Obviously, the more notes (mortgages) you have against your property the more complicated it becomes, but not impossible.  If for whatever reason it does not sell, you can do what is called a “deed in lieu of foreclosure”, where you willingly give the keys back to the bank.  But note that your bank will most likely want to have had your home on the market for a designated period of time. 

But let’s stop and think a moment.  Selling your home may not be the wisest move.  In times of crisis, we go after the biggest threat, purely out of instinct.  Maybe bankruptcy is a better solution, that will keep you in your most secure investment until the market turns again (because it always does) and your investment starts appreciating again.

New website…..same great service.

So I can’t say I’m way ahead of the curve on this one… but I’m happy to report that I’m not lagging behind the pack either. Over the last several months, I’ve been completely revamping my web presence. The cherry on top is the scrapping of my old website, and the implementation of my new website, www.fineportlandhomes.com . My focus has always been on my clients, but my web presence did not reflect that. 

The new site is chock full of useful information, and I’m adding more everyday. Information not just on properties and buying and selling, but also the people and services that will help you transition from one home to the next.  With a cleaner design and more functionality, the new site is more user friendly and interactive.  Go ahead and leave comments on the blog, or leave a review of one of our Referral Partners, or leave your favorite charity organization on our Donation Information page.

What’s with the name?

Fine homes attract fine people that like fine things. There will also be a bit of a shift in my blog posts. I will still write about relevant real estate news and goings-on, but I will also start to add reviews to shopping, restaurants and services.

What does the future hold for Fine Homes?

With the new format, I have much more flexibility to recruit other real estate brokers for the different areas of the Portland area. Visitors and potential clients will be working with experts in the communities where they are living. Potential agents will have first hand experience with their particular community’s neighborhoods and resources, as well as price trends and everything you need to know to make the best decisions for your particular circumstances.

As I add experts, we will be adding authors to the blog, and specific pages for each community with useful links to public services, statistical data(if available), schools, utilities, and other services as needed.

Being in the industry and always looking for more data, and more accurate data, I’ve been subjected to an ongoing debate over who has the best, most accurate data.  I think most people are looking for some minor nuance to point conditions in their direction.  Looking for some subtlety to give them a glimmer of hope or more credence to their “theory” or projection.  I tend to look at many sources of data and draw more generalized inferences based on trends.  So I was very amused by this article from the Wall Street Journal, “Only One Person Knows a Home’s Value: It’s Buyer”.  The article engages the great data accuracy debate, even quoting knowledgeable experts, but never gets down to the nitty gritty hinted at in the headline.  Regardless of market conditions, a home is only worth what a buyer is willing to pay for it (and what a lender is willing to lend for it). 

It’s one of the oldest and most basic economic priniciples.  Anything, a car, a house, a doughnut, is only worth what someone is willing to pay for it.  Buyers don’t always make educated price decisions, especially when it’s a very emotional purchase, such as the nest you will raise your children in.  Even some of my own buyers have made a decision to buy based on “a feeling” regardless of my pricing advice. 

But to circle around to the point being made in my headline, you can follow data sources religiously but if you step back and look at the bigger picture, they all indicate the same trends.  I borrowed the following picture from the same article, because it illustrates my point so beautifully. 

So if you need to sell your home, price realistically, based on recent, local sales.  And then be prepared to negotiate, as it is a buyer’s market, and they tend to have the upper hand when it comes to negotiating.

from The Wall Street Journal