Real estate seems to be a hot topic these days. Everytime I turn on the TV I see CNN's ticker offering up some new tidbit. "New home starts down!" "Real estate inventory at an all-time high!" "Sub-prime lending crisis worsens!" I'm sure you've all seen many of the same news bites.
Guess what...we ARE in a changing market. That's not, necessarily, an entirely bad thing. The national real estate market burned white hot for the last couple of years, but anytime anything burns white hot, it necessarily burns itself out. As a real estate investor, when I see 25% appreciation (much higher in some areas) I'm thrilled and, more importantly, I'm motivated to buy. As a Realtor, though, 25%-plus appreciation makes me sit back and really think about the market; both for the present and for the future. What such high appreciation figures told me, personally, was that the market would slowly shift from a sellers' market to a buyers' market. I'm not some genius that picked up on a trend that everyone else missed. No, I'm just a realist. Any rational mind would see that homes cannot possibly continue to appreciate at 25%. Home prices cannot out-pace inflation and wage increases that drastically forever. Most importantly, if there's one hard and fast rule to economics, it is that everything is cyclical. Just like the stock market and the economy as a whole, the real estate market goes up and it comes back down. Guess what, though, it will also go back up. The cyclical nature of economics is at the very heart of all market theory.
Now understanding that we expect markets to rise and fall, why then, do we consider real estate to be such a safe investment? One simple reason is that, while the real estate market does go up and down, the down market is not a negative market. That's very important to understand. It is extremely rare for the real estate market to actually go truly down, as in backwards. Right now most people would consider this to be a down market in Portland. However, the MLS reports 8% appreciation for Portland Metro. It's higher in some areas and lower in others. That's way down from the 20% figure of a few years ago, but if that's a down market, I'll take it! While the stock market is extremely volatile, the real estate market is considered to be very stable...all things considered. There's a very real possibility that Portland's appreciation rate will drop, probably down to 5% or so, but that's not such a bad thing. For the past fifty-plus years the average home appreciation nationally was 5%. 50 years proves a pretty reliable trend. Portland is doing much, much better than most of the rest of the nation.
Even more importantly, though, is that appreciation is NOT the sole reason to buy real estate. There are many good reasons to buy, which I won't get into here. So back to the original question, is it a good time to buy OR is it a good time to sell? The answer to both is yes!
Clearly it is a buyers' market. We have a ton of inventory right now. Interest rates are near 6.25%, which is incredibly low. Properties are taking longer to sell, which gives the buyer more flexibility and, obviously, with so much inventory, there's less direct competition. Is it a good time to be a buyer? It's a great time!
How can it be both a good time to buy and a good time to sell? Simple. Well-priced homes will sell! With the current market conditions, especially due to the low interest rates, there are a ton of eager buyers. These buyers are smart, though. They've done their homework and won't be pushed around. They want a fair price. Fair is the key word. Buyers, for the most part, aren't looking to "steal" properties. They understand that a sale, in order to actually happen, must also be beneficial to the seller. We need two willing parties to get a real estate deal done. Buyers want a fair price. Sellers, if you price your home well, it will sell. It's really as simple as that.
Why is now a good time to sell? Not only is there a healthy supply of buyers, but interest rates are extremely low. Maybe this isn't the classic "cash out" market, but this is a great time to "re-allocate equity" or "trade-up". Again, with so many available properties (inventory), this is a perfect time to trade-up. If you have a growing family and need more space, what better time to buy a larger home than a time where prices are fair and interest rates are low? The opposite holds true, as well. If you're looking to down size, what an amazing opportunity you have. Sell your current home at a fair price and get a great deal on your new purchase.
Sellers must realize that if interest rates rise substantially, the "value" of their homes will decline. Not so much in actual dollars, but in available buyers. If interest rates rise to 8%, buyers will be able to afford "less house".
The most important thing for both buyers and sellers to understand is that this market is all about being fair. Buyers, take advantage of the incredibly low interest rates and the amount of choice you currently have. Realize, though, that so-called "low balling" will rarely win you the property you really want. Sellers, understand that if you price your home fairly, buyers will come.
We all need to take a step back, take a deep breath and look at the grand view. Real estate does not exist in a vacuum. Also, real estate should really be viewed over the long term. With the cyclical nature of economics we know that, over the long term, the market will rise again...not that it's bad now.
In any case, if you are thinking about buying or selling and are looking for an agent, I would love to apply for the job. There's nobody who cares more or will work harder.
As always, my Home Buying 101 workshop is going strong. If you or anyone you know would like to attend, just give me a call or email.
Thursday, September 6, 2007
Wednesday, August 22, 2007
July - What's going on in the Portland market?
Between everything you've probably been hearing on the news and reading in the newspapers regarding "falling home values" and the demise of the mortgage lending industry, many of you must be terrified of what is happening in the Portland market.
For the moment, I'm not going to touch upon the finance fiasco, as my business partner, Vince Kingston of Ridge Mortgage Services, is much more qualified to handle that topic. Suffice to say, interest rates are volatile. The sub-prime market has taken a major hit and the ripples have certainly effected the rest of the industry. The good news is that a well qualified borrower (someone with decent credit, a job, a few assets) can still secure virtually any type of financing they want (0 Down, 100% one-loan, 80/20, conventional downpayments, etc.). To make things even better, interest rates are still very low. People with questionable credit and/or employment records will have a much more difficult time finding suitable financing, but my major point is all is not lost. If you'd like specific finance information, please contact Vince at vincek@rmscompany.com.
I know that national real estate news has been equally gloomy. In many markets, new home starts are down and the average sales price of new homes are not doing as well as last year. First, I do not believe "new home starts" to be an accurate indicator of the Portland market. We're just a very unique market. Also, I do realize that many cities across the nation are having "housing slumps" with low to no growth in appreciation. Yes, some markets have even had price corrections.
Having said that, the Portland market continues to do well. While we're not enjoying the nearly 20% appreciation we had a few years back, we are still growing at a very reasonable rate. For July, the average appreciation across Portland Metor was 8.1%. That's still some very good growth, especially when you consider that most homes are financed. So in investment terms, that's an 8.1% increase on borrowed money. That doesn't even take into account your tax savings, which represent a large portion of what makes real estate such an attractive investment.
Appreciation rates in specific parts of Portland are even better:
SE Portland - 10.2%
Gresham - 12.7%
Hillsboro - 10.8%
Lake Oswego/West Linn - 9.3%
As you can see, appreciation is holding firm.
So why all the negative stories...even locally? What HAS happened is a slow down. Our market is turning at a slower rate than we've become accustomed. Average days on market has risen to 58 days for the year vs. 42 for last year at the same time. This is due, in large part, to the glut of new listings. As our new listings increase and our older listings are taking longer to sale, we have a large supply of inventory. Is this a bad thing? Depends on what side of the fence you're standing.
Admittedly, this is not the best time to be a seller in Portland. However, this is an excellent time to be a buyer. Low interest rates coupled with a ton of inventory, means buyers are getting great deals. Just look at real estate investors, they're snatching up investment properties as quickly as they can. Why? Buy low, sell high. Basic economics. Supply and demand dictates market price. At the moment, we have a fairly large supply (at least compared to recent years), so prices are fair. Prices have not dropped, but they're not soaring to the wild heights they were just a couple of years ago. Now Portland Metro as a whole, compared with the rest of the nation, has a supply and demand shortage. Our population continues to climb at an extraordinary rate, while the urban growth boundary and other factors keeps our supply relatively low. This should equate to continued appreciation in the coming years.
Basically, if you've thought about buying but are nervous due to the "news", give me a call. It really might be a great time for you to make a move.
As always, my business is built on giving outstanding customer service. I do almost no marketing and rely on word of mouth and referals from my past clients. I very much appreciate any referals you send my way.
Also, Home Buying 101 - Demystifying the Home Buying Process is going strong entering its second year. Our bi-weekly first time home buyer workshop has helped hundred of people become new home owners. The next one is this coming Monday evening. If you or anyone you know would like to attend, please contact me.
Thanks,
Jesse
Jesse Knight
Principal Broker
The Realty Network GMAC Real Estate
1505 NW 23rd Ave.
Portland, OR 97210
Office Phone: 503-595-5100 x1445
Direct Phone: 971-219-4939
Fax: 503-595-5262
Email: jesse@therealtynetwork.net
www.jesseknight.net
For the moment, I'm not going to touch upon the finance fiasco, as my business partner, Vince Kingston of Ridge Mortgage Services, is much more qualified to handle that topic. Suffice to say, interest rates are volatile. The sub-prime market has taken a major hit and the ripples have certainly effected the rest of the industry. The good news is that a well qualified borrower (someone with decent credit, a job, a few assets) can still secure virtually any type of financing they want (0 Down, 100% one-loan, 80/20, conventional downpayments, etc.). To make things even better, interest rates are still very low. People with questionable credit and/or employment records will have a much more difficult time finding suitable financing, but my major point is all is not lost. If you'd like specific finance information, please contact Vince at vincek@rmscompany.com.
I know that national real estate news has been equally gloomy. In many markets, new home starts are down and the average sales price of new homes are not doing as well as last year. First, I do not believe "new home starts" to be an accurate indicator of the Portland market. We're just a very unique market. Also, I do realize that many cities across the nation are having "housing slumps" with low to no growth in appreciation. Yes, some markets have even had price corrections.
Having said that, the Portland market continues to do well. While we're not enjoying the nearly 20% appreciation we had a few years back, we are still growing at a very reasonable rate. For July, the average appreciation across Portland Metor was 8.1%. That's still some very good growth, especially when you consider that most homes are financed. So in investment terms, that's an 8.1% increase on borrowed money. That doesn't even take into account your tax savings, which represent a large portion of what makes real estate such an attractive investment.
Appreciation rates in specific parts of Portland are even better:
SE Portland - 10.2%
Gresham - 12.7%
Hillsboro - 10.8%
Lake Oswego/West Linn - 9.3%
As you can see, appreciation is holding firm.
So why all the negative stories...even locally? What HAS happened is a slow down. Our market is turning at a slower rate than we've become accustomed. Average days on market has risen to 58 days for the year vs. 42 for last year at the same time. This is due, in large part, to the glut of new listings. As our new listings increase and our older listings are taking longer to sale, we have a large supply of inventory. Is this a bad thing? Depends on what side of the fence you're standing.
Admittedly, this is not the best time to be a seller in Portland. However, this is an excellent time to be a buyer. Low interest rates coupled with a ton of inventory, means buyers are getting great deals. Just look at real estate investors, they're snatching up investment properties as quickly as they can. Why? Buy low, sell high. Basic economics. Supply and demand dictates market price. At the moment, we have a fairly large supply (at least compared to recent years), so prices are fair. Prices have not dropped, but they're not soaring to the wild heights they were just a couple of years ago. Now Portland Metro as a whole, compared with the rest of the nation, has a supply and demand shortage. Our population continues to climb at an extraordinary rate, while the urban growth boundary and other factors keeps our supply relatively low. This should equate to continued appreciation in the coming years.
Basically, if you've thought about buying but are nervous due to the "news", give me a call. It really might be a great time for you to make a move.
As always, my business is built on giving outstanding customer service. I do almost no marketing and rely on word of mouth and referals from my past clients. I very much appreciate any referals you send my way.
Also, Home Buying 101 - Demystifying the Home Buying Process is going strong entering its second year. Our bi-weekly first time home buyer workshop has helped hundred of people become new home owners. The next one is this coming Monday evening. If you or anyone you know would like to attend, please contact me.
Thanks,
Jesse
Jesse Knight
Principal Broker
The Realty Network GMAC Real Estate
1505 NW 23rd Ave.
Portland, OR 97210
Office Phone: 503-595-5100 x1445
Direct Phone: 971-219-4939
Fax: 503-595-5262
Email: jesse@therealtynetwork.net
www.jesseknight.net
Wednesday, July 25, 2007
Finance News!
Courtesy of Vince Kingston, Ridge Mortgage Services (contact info at end of blog)
Last Week in Review
EASY COME, EASY GO...Last week, Stocks surged to cross the 14,000 mark on the Dow for the first time ever. But just as the party hats came out, so did a disappointing earnings report from Wall Street darling Google. Suddenly, the Stock that could do no wrong was showing chinks in the armor, and led to fears that other Stocks might follow suit, which caused an across the board sell-off. But every cloud has a silver lining - the money coming out of Stocks was parked over into Bonds. This helped home loan rates improve from levels hit earlier in the week, and end up about .125% better for the week overall.
And as if that weren't exciting enough, Fed Chairman Ben Bernanke took center stage last week, speaking to Congress about inflation, housing, and the economic outlook. He stated that although the recent inflation numbers have been moderating, the Fed remains very concerned about inflation. He underscored that they are staying very alert to economic changes and indicators, but based on their continuing concerns over inflation, it certainly appears that there will not be a cut to the Fed Funds Rate in the near future.
Very interesting note about the press: one line of Bernanke's prepared speech that the media focused on and headlined was "the ongoing housing correction might prove larger than anticipated". While this was indeed pulled directly from the text, the full text reads very differently, as Bernanke is saying that while one risk to the outlook is that the housing correction might prove larger than anticipated and impact consumer spending, he goes on to say that consumers have been spending at a very healthy pace of late. Be very cautious about believing the scare tactics that the press uses, as they often take words out of context.
AND THE MEDIA AREN'T THE ONLY ONES WHO TAKE THINGS OUT OF CONTEXT - REPRESENTATIONS MADE BY SOME CHARITABLE ORGANIZATIONS COULD REROUTE YOUR WELL-INTENDED DONATIONS. TO ENSURE YOUR GIFT DOESN'T WIND UP GOING TOWARDS SOME ADMINISTRATORS NEW BMW...READ THIS WEEK'S MORTGAGE MARKET VIEW.
Forecast for the Week
So what's coming around the bend for Bonds and home loan rates this week? The economic calendar will be slimmer than last week's, but will include a look at the housing market with Existing and New Home Sales being reported on Wednesday and Thursday. Stocks may also continue to drive the action in Bonds, as investors will again be closely watching Stock earnings reports this week, and making decisions on where their dollars are best invested - in Stocks or in Bonds.
And of great importance is the technical battle being fought at the 25-day Moving Average. The chart below shows how this line has acted as a tough technical ceiling of resistance, preventing Bond prices from moving higher and helping home loan rates improve. But just last Friday, Bonds managed to muscle higher, and close above the tough technical ceiling which has kept a lid on improvement in home loan rates for the past several months. But will the move above the ceiling be convincing...or is this just a head fake, like we experienced a few weeks ago, before Bonds were forced back lower and home loan rates moved higher?
Bottom line: Bonds are trying to make a move and help home loan rates improve, but their success will depend largely on the flow of money between Stocks and Bonds. If Stock earnings come in strong in the coming week, it's likely that money may flow into Stocks and out of Bonds, and home loan rates will worsen. If Stock earnings are weak, investor money may flow back into Bonds, and help home loan rates improve.
The Mortgage Market View...
THEY SAY IT'S BETTER TO GIVE THAN TO RECEIVE...SO MAKE SURE YOU DO IT RIGHT!
Most everyone has received requests from various organizations and charities asking you to donate to their causes. And it sure sounds like a good idea to help disadvantaged children, the local police officers, or help find a cure for cancer. But a call for a donation from the ASPCJ - American Society for the Protection of Cat Juggling - might warrant some further investigation. So how can you tell if the charity that you are considering supporting is legit?
First stop... the web:
Check to see that their website is full of information about their programs, history and goals. Look into the various programs they support, as much of the time you are unable to specify exactly where your contribution will be used. Be extra cautious of organizations with websites that are skimpy or out of date.
Next stop... the IRS:
The IRS maintains a list of all organizations that are classified as charities for purposes of tax deductions. You can search for information on the IRS website by hitting this link: IRS Charitable List.
Avoid a nasty surprise by understanding the type of organization you are contributing to. For example, the Sierra Club is not considered a charity, but rather a lobbying group, and as such, donations to the Sierra Club are not tax deductible. However, donations to the Sierra Club Foundation are tax deductible, as it is the charitable organization arm of the Sierra Club.
Important note - if you plan to make a donation other than money (clothing, household goods, car, etc), you will need to keep careful records of exactly what you donated and its value, as the IRS is cracking down on over-inflated valuations of donated goods. This is especially important if the value exceeds $5000, in which case an actual appraisal is required.
Final Stop... the report card:
The Better Business Bureau operates a website (www.give.org) that tracks many charitable organizations and grades them on twenty standards. These standards range from the makeup and compensation of the board to the percentages of their donations that are used for programs vs. administrative and fundraising costs. A charity that you can feel confident in will hit all twenty of the goals, or if they miss one or two benchmarks, will have provided reasonable explanations for this shortcoming.
Some charities - now using the term loosely - hit very few of the goals, or choose not to respond to the BBB's request for information. Reconsider a donation to an organization whose fundraising and administrative expenses will consume the majority of your contributions. In a random sampling, there were several organizations whose actual pass-through to their programs was under ten percent of the total money contributed. It's important that your donations make their way to help those who need it.
The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.
Vince Kingston
Ridge Mortgage Company
10230 SW Hall Blvd.
Portland, OR 97232
The Mortgage Market Guide, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. The Mortgage Market Guide, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.
Last Week in Review
EASY COME, EASY GO...Last week, Stocks surged to cross the 14,000 mark on the Dow for the first time ever. But just as the party hats came out, so did a disappointing earnings report from Wall Street darling Google. Suddenly, the Stock that could do no wrong was showing chinks in the armor, and led to fears that other Stocks might follow suit, which caused an across the board sell-off. But every cloud has a silver lining - the money coming out of Stocks was parked over into Bonds. This helped home loan rates improve from levels hit earlier in the week, and end up about .125% better for the week overall.
And as if that weren't exciting enough, Fed Chairman Ben Bernanke took center stage last week, speaking to Congress about inflation, housing, and the economic outlook. He stated that although the recent inflation numbers have been moderating, the Fed remains very concerned about inflation. He underscored that they are staying very alert to economic changes and indicators, but based on their continuing concerns over inflation, it certainly appears that there will not be a cut to the Fed Funds Rate in the near future.
Very interesting note about the press: one line of Bernanke's prepared speech that the media focused on and headlined was "the ongoing housing correction might prove larger than anticipated". While this was indeed pulled directly from the text, the full text reads very differently, as Bernanke is saying that while one risk to the outlook is that the housing correction might prove larger than anticipated and impact consumer spending, he goes on to say that consumers have been spending at a very healthy pace of late. Be very cautious about believing the scare tactics that the press uses, as they often take words out of context.
AND THE MEDIA AREN'T THE ONLY ONES WHO TAKE THINGS OUT OF CONTEXT - REPRESENTATIONS MADE BY SOME CHARITABLE ORGANIZATIONS COULD REROUTE YOUR WELL-INTENDED DONATIONS. TO ENSURE YOUR GIFT DOESN'T WIND UP GOING TOWARDS SOME ADMINISTRATORS NEW BMW...READ THIS WEEK'S MORTGAGE MARKET VIEW.
Forecast for the Week
So what's coming around the bend for Bonds and home loan rates this week? The economic calendar will be slimmer than last week's, but will include a look at the housing market with Existing and New Home Sales being reported on Wednesday and Thursday. Stocks may also continue to drive the action in Bonds, as investors will again be closely watching Stock earnings reports this week, and making decisions on where their dollars are best invested - in Stocks or in Bonds.
And of great importance is the technical battle being fought at the 25-day Moving Average. The chart below shows how this line has acted as a tough technical ceiling of resistance, preventing Bond prices from moving higher and helping home loan rates improve. But just last Friday, Bonds managed to muscle higher, and close above the tough technical ceiling which has kept a lid on improvement in home loan rates for the past several months. But will the move above the ceiling be convincing...or is this just a head fake, like we experienced a few weeks ago, before Bonds were forced back lower and home loan rates moved higher?
Bottom line: Bonds are trying to make a move and help home loan rates improve, but their success will depend largely on the flow of money between Stocks and Bonds. If Stock earnings come in strong in the coming week, it's likely that money may flow into Stocks and out of Bonds, and home loan rates will worsen. If Stock earnings are weak, investor money may flow back into Bonds, and help home loan rates improve.
The Mortgage Market View...
THEY SAY IT'S BETTER TO GIVE THAN TO RECEIVE...SO MAKE SURE YOU DO IT RIGHT!
Most everyone has received requests from various organizations and charities asking you to donate to their causes. And it sure sounds like a good idea to help disadvantaged children, the local police officers, or help find a cure for cancer. But a call for a donation from the ASPCJ - American Society for the Protection of Cat Juggling - might warrant some further investigation. So how can you tell if the charity that you are considering supporting is legit?
First stop... the web:
Check to see that their website is full of information about their programs, history and goals. Look into the various programs they support, as much of the time you are unable to specify exactly where your contribution will be used. Be extra cautious of organizations with websites that are skimpy or out of date.
Next stop... the IRS:
The IRS maintains a list of all organizations that are classified as charities for purposes of tax deductions. You can search for information on the IRS website by hitting this link: IRS Charitable List.
Avoid a nasty surprise by understanding the type of organization you are contributing to. For example, the Sierra Club is not considered a charity, but rather a lobbying group, and as such, donations to the Sierra Club are not tax deductible. However, donations to the Sierra Club Foundation are tax deductible, as it is the charitable organization arm of the Sierra Club.
Important note - if you plan to make a donation other than money (clothing, household goods, car, etc), you will need to keep careful records of exactly what you donated and its value, as the IRS is cracking down on over-inflated valuations of donated goods. This is especially important if the value exceeds $5000, in which case an actual appraisal is required.
Final Stop... the report card:
The Better Business Bureau operates a website (www.give.org) that tracks many charitable organizations and grades them on twenty standards. These standards range from the makeup and compensation of the board to the percentages of their donations that are used for programs vs. administrative and fundraising costs. A charity that you can feel confident in will hit all twenty of the goals, or if they miss one or two benchmarks, will have provided reasonable explanations for this shortcoming.
Some charities - now using the term loosely - hit very few of the goals, or choose not to respond to the BBB's request for information. Reconsider a donation to an organization whose fundraising and administrative expenses will consume the majority of your contributions. In a random sampling, there were several organizations whose actual pass-through to their programs was under ten percent of the total money contributed. It's important that your donations make their way to help those who need it.
The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.
Vince Kingston
Ridge Mortgage Company
10230 SW Hall Blvd.
Portland, OR 97232
The Mortgage Market Guide, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. The Mortgage Market Guide, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.
Monday, July 16, 2007
Latest News for June - Real Estate in Portland
The latest real estate Market Action report, courtesy of RMLS, has just come out with stats and figures for Portland Metro's real estate activity in June. Clearly the market has cooled, as has the market in most of the nation, however, there are bright spots, as well. Unlike many parts of the country, Portland is still enjoying rather strong appreciation. Just under 9% for June 2007 vs. June 2006 for the entirety of the Metro area, it's clear that things have slowed, but that we're still holding strong. Afterall, a 9% appreciation rate still gives you a great return on investment, especially when you consider the tax benefits and personal benefits of owning a home. When you look at more localized numbers, we're doing even better. For example:
N Portland - 104% appreciation - 34 average days on market (dom)
NE Portland - 7.7% - 44 dom
SE Portland - 10.6% - 45 dom
Lake Oswego/West Linn - 12.6% - 79 dom
One sector seeming to buck the trend of a slow down is, surprisngly, the condo market. Condos have appreciated an average of 14% vs the same time last year. That's actually up 2% from 2006. It's definitely a mixed bag with the market right now.
The rest of summer should be very interesting, as Portland historically starts slow and picks up steam during the summer months. With the interesting weather cycles we've had, it will be enjoyable to see the changes in market trends.
Probably the biggest factor affecting the market, at the moment, is the glut of inventory. As the rate of sale has decreased, we've actually had an increase of new listings. The extra listings are giving buyers a lot of choice, which is wonderful, but it is driving up the average days on market...which, in turn, slows the turning of the market.
In any case, if you'd like to hear more, just give me a call or email.
As always, I appreciate all your help with referals, as it is what keeps my business going. In addition, my bi-weekly Home Buying 101 workshop is going strong into its second year. Our next class is actually tonight at 7:00 PM at my office, 1505 NW 23rd, Portland. If anyone you know might be interested, send them along. We'll have another one two weeks from today. Same time, same place.
Here's a link to the June Market Action:
http://www.rmlsweb.com/temp%2Fdocuments%2F1500-1699%20Market%20Action%20and%20Statistics%20Menu%2F1506%20Market%20Action%20-%20June%202007.pdf
N Portland - 104% appreciation - 34 average days on market (dom)
NE Portland - 7.7% - 44 dom
SE Portland - 10.6% - 45 dom
Lake Oswego/West Linn - 12.6% - 79 dom
One sector seeming to buck the trend of a slow down is, surprisngly, the condo market. Condos have appreciated an average of 14% vs the same time last year. That's actually up 2% from 2006. It's definitely a mixed bag with the market right now.
The rest of summer should be very interesting, as Portland historically starts slow and picks up steam during the summer months. With the interesting weather cycles we've had, it will be enjoyable to see the changes in market trends.
Probably the biggest factor affecting the market, at the moment, is the glut of inventory. As the rate of sale has decreased, we've actually had an increase of new listings. The extra listings are giving buyers a lot of choice, which is wonderful, but it is driving up the average days on market...which, in turn, slows the turning of the market.
In any case, if you'd like to hear more, just give me a call or email.
As always, I appreciate all your help with referals, as it is what keeps my business going. In addition, my bi-weekly Home Buying 101 workshop is going strong into its second year. Our next class is actually tonight at 7:00 PM at my office, 1505 NW 23rd, Portland. If anyone you know might be interested, send them along. We'll have another one two weeks from today. Same time, same place.
Here's a link to the June Market Action:
http://www.rmlsweb.com/temp%2Fdocuments%2F1500-1699%20Market%20Action%20and%20Statistics%20Menu%2F1506%20Market%20Action%20-%20June%202007.pdf
Friday, July 13, 2007
Creating Wealth via Home Ownership
Vince’s Finance 101-Creating Wealth via Home Ownership (courtesy of Vince Kingston, Ridge Mortgage Services)
At least for homeowners, the reward is less taxes. As mentioned in previous newsletters, Uncle Sam provides generous tax subsidies to homeowners by way of their mortgage interest deduction. But wait, it gets even better. The IRS literally fawns over homeowners by providing the largest single capital gain exemption available on the sale of their primary residence. This is called the Primary Residence Exclusion.
What does this mean to you, the homeowner? The primary residence exclusion allows you to sell your home and receive all of your gain on the home 100% tax free up to certain limits and after a specific time of ownership. For example, if you sell your $400K home after owning it for more than three years and you only owe $300K, then you will have a $100K gain after you pay off your existing mortgage. Per IRS guidelines, as long as the property qualifies, you will receive this $100K tax free! That is you will pay zero capital gains tax, zero income tax, and have no additional tax liability on this gain!
Consider that it could take you ten years or more to save $100K in your typical retirement fund and then you must pay ordinary income taxes when you withdraw those same funds years later.
What are the requirements to qualify for this most significant exclusion? The capital gain exemption on the sale of your home is limited to $250K for individuals and $500K for married couples. There are no rollover or reinvestment requirements, no minimum age requirements, and the exclusion can be used as many times as you like, but not more frequently than once in every two years. For the property to qualify as your primary residence, you must have owned the home for at least two years of the last five years and lived in the home as your primary residence for at least two years of the last five years.
Many ambitious homeowners have used this exclusion as their primary wealth creation strategy, particularly if you live in an appreciating area such as the west coast. If you sell your home every two years and realize a gain, you could continue to do this every two years indefinitely.
Here are some conservative numbers to consider: Your $350K home appreciates at a very reasonable 5% per year meaning after two years it is worth approximately $387K. Subtract out a 5% Realtor commission to sell the property, and you are left with an $18K tax free gain every two years. Do this every year two years for ten years and you have an additional $90K. Looking at this another way, increase your income by $9,000 per year every year for ten years by simply maximizing your primary residence exclusion.
You are always welcome to contact me to determine how to best incorporate your mortgage financing into your most advantageous financial strategy.
*The content of this newsletter is not to be construed as tax advice and will vary based on your unique circumstance, please consult your licensed tax preparer.
You can contact Jesse Knight, Principal Broker of the Realty Network/GMAC Realty at 971-219-4939 or jknight@therealtynetwork.net.
At least for homeowners, the reward is less taxes. As mentioned in previous newsletters, Uncle Sam provides generous tax subsidies to homeowners by way of their mortgage interest deduction. But wait, it gets even better. The IRS literally fawns over homeowners by providing the largest single capital gain exemption available on the sale of their primary residence. This is called the Primary Residence Exclusion.
What does this mean to you, the homeowner? The primary residence exclusion allows you to sell your home and receive all of your gain on the home 100% tax free up to certain limits and after a specific time of ownership. For example, if you sell your $400K home after owning it for more than three years and you only owe $300K, then you will have a $100K gain after you pay off your existing mortgage. Per IRS guidelines, as long as the property qualifies, you will receive this $100K tax free! That is you will pay zero capital gains tax, zero income tax, and have no additional tax liability on this gain!
Consider that it could take you ten years or more to save $100K in your typical retirement fund and then you must pay ordinary income taxes when you withdraw those same funds years later.
What are the requirements to qualify for this most significant exclusion? The capital gain exemption on the sale of your home is limited to $250K for individuals and $500K for married couples. There are no rollover or reinvestment requirements, no minimum age requirements, and the exclusion can be used as many times as you like, but not more frequently than once in every two years. For the property to qualify as your primary residence, you must have owned the home for at least two years of the last five years and lived in the home as your primary residence for at least two years of the last five years.
Many ambitious homeowners have used this exclusion as their primary wealth creation strategy, particularly if you live in an appreciating area such as the west coast. If you sell your home every two years and realize a gain, you could continue to do this every two years indefinitely.
Here are some conservative numbers to consider: Your $350K home appreciates at a very reasonable 5% per year meaning after two years it is worth approximately $387K. Subtract out a 5% Realtor commission to sell the property, and you are left with an $18K tax free gain every two years. Do this every year two years for ten years and you have an additional $90K. Looking at this another way, increase your income by $9,000 per year every year for ten years by simply maximizing your primary residence exclusion.
You are always welcome to contact me to determine how to best incorporate your mortgage financing into your most advantageous financial strategy.
*The content of this newsletter is not to be construed as tax advice and will vary based on your unique circumstance, please consult your licensed tax preparer.
You can contact Jesse Knight, Principal Broker of the Realty Network/GMAC Realty at 971-219-4939 or jknight@therealtynetwork.net.
Thursday, June 28, 2007
What's Really Going On in the Portland Market?
The Market Report – What’s Really Happening in the Portland Metro Housing Market?
The May 2007 Market Action report, courtesy of the RMLS, recently came out with some interesting facts and tidbits. As most of you have heard, suspected or simply guessed, the market has cooled. I know, I know, ground breaking stuff, right? We all know the market has cooled, but it had to. The Portland market ran so hot for so long it simply had to slow down and catch its breath. I, personally, don’t think this is such a bad thing. While home owners clearly enjoyed the nearly 20% appreciation rates we saw for the past couple years, it was obvious that those numbers could not sustain.
However, while much of the nation is suffering through a depressed real estate market, the Portland market continues to chug along with double digit appreciation rates. Granted, the 20% days are gone…for now, but most savvy investors are thrilled to get a 10% return on their borrowed money. Where else are you going to get somebody, much less a bank, to lend you a few hundred thousand dollars to make a 10% return on investment? I guarantee nobody’s lining up to lend you money to play the stocks with.
In any case, the following are the facts and my supporting opinions. The number of new listings is way up. That, coupled with the fact that it’s taking longer for properties to sell, means that our inventory is also up. At the current rate of sale, we would run out of available listings in 4.5 months, assuming no new listings went on the market in that time. Compare that to the 2.3 months and 1.6 months of inventory Portland Metro had in the prior two years, and it is easy to deduce that the market has turned. While 2005 and much of 2006 were true sellers’ markets, 2007 has fluctuated in and out of being a buyers’ market and a balanced market. If I was to simply look at inventory, I would tell you we’re enjoying a balanced market. However, when I take into account the fact that average days on market, or how long it takes for a listing to sell, has gone way up and the number of new listings, I do believe we’re in a classic buyers’ market. Now this isn’t as strong of a buyers’ market as it was a sellers’ market two years ago, but it is, in my opinion, a very good time to be a buyer.
Look at the facts, inventory is up, interest rates are still very low (though they have risen), days on market is up and add that to the number of stale listings (properties that have been on the market for a long time) and an uneasy feeling sweeping through the minds of sellers, and it all equates to a great time to be a buyer. I know I’m working with some very happy buyers.
Of course, nothing exists in a vacuum, so there are sections of the market, be it location or price point, that are much more competitive. As you know, I work with quite a few first time home buyers who generally want to live in close-in SE/NE Portland and, for the most part, are in the 250K to 300K price range. Well, it’s still pretty competitive within those parameters. I’ve actually seen multiple offer situations at times. Having said that, my clients have all found wonderful and affordable homes within their price ranges and in their locations of choice. So a good Realtor will still secure you an excellent property.
In many cases, we’re finding buyers’ incentives, such as “free” home warranties. So if you’ve been scared off by The Oregonian’s “the sky is falling attitude”, don’t be. Portland Metro, including the suburbs, is doing just fine.
With everything going on in the lending/finance industry right now, please find a good mortgage broker. I work with an amazing one in Vince Kingston, but I do have other referrals if you need them. Please stay away from any out-of-state or online lenders that you don’t have a personal relationship with. The decision and purchase is just too important to be handled by a stranger that you can’t physically meet.
APPRECIATION RATES:
Portland Metro (as a whole) – 10.1%
N Portland – 11.5%
NE Portland – 9.4%
SE Portland – 11.5%
Lake Oswego/West Linn - 13.3%
Gresham – 16.15
Milwaukie/Clackamas – 11.2%
Home Buying 101 – Demystifying the Home Buying Process is still going strong. Vince and I have been doing it every other Monday evening for just over two years. We’ve probably met a couple hundred people and have helped many dozen people realize their home ownership dreams. If you know anyone who might benefit from the informal workshop, please have them contact me. Also, we’re branching out and heading for the big time. After a long conversation with a corporate HR manager, who will go unnamed, we were convinced that Buyer 101 would be a great value added service for HR managers to provide their employees. So we’re moving up in the world and offering to hold the class, for free, for small and mid-sized companies all over town. We’re happy to hold them at the lunch hour or we’ll work around any schedule you need. If any of you would be willing to introduce me, via email, phone, however, to your HR manager, president, company owner, operations manager, etc., I would greatly appreciate it. The numbers show that employees who own homes are much more likely to stay with their current company and work their way up the ladder. We see our services as something a company can provide their employees…at no cost. So please let me know if you can help.
Also, outside of the home buying workshop, I survive 100% on referrals. I believe in giving my all to every client and I hope in so doing, that they will, in turn, refer me to their friends, family and colleagues. If you can give my name and info to three people, I would forever be in your debt. I am not a part-time Realtor; this is what I do for a living. I take it very seriously and have put a lot of time into learning and growing. As many of you know, I am now a principal broker and I hire, train and mentor new agents. I’m currently working on getting my “green” designation, as well as my “technology expert” designation. I continue to grow as a Realtor in the hopes that I can better serve you and your referrals in the future.
Thank you in advance.
Market Action report: http://www.rmlsweb.com/temp%2Fdocuments%2F1500-1699%20Market%20Action%20and%20Statistics%20Menu%2F1505%20Market%20Action%20-%20May%202007.pdf
Cheers!
Jesse
All-Blogs.net directory
The May 2007 Market Action report, courtesy of the RMLS, recently came out with some interesting facts and tidbits. As most of you have heard, suspected or simply guessed, the market has cooled. I know, I know, ground breaking stuff, right? We all know the market has cooled, but it had to. The Portland market ran so hot for so long it simply had to slow down and catch its breath. I, personally, don’t think this is such a bad thing. While home owners clearly enjoyed the nearly 20% appreciation rates we saw for the past couple years, it was obvious that those numbers could not sustain.
However, while much of the nation is suffering through a depressed real estate market, the Portland market continues to chug along with double digit appreciation rates. Granted, the 20% days are gone…for now, but most savvy investors are thrilled to get a 10% return on their borrowed money. Where else are you going to get somebody, much less a bank, to lend you a few hundred thousand dollars to make a 10% return on investment? I guarantee nobody’s lining up to lend you money to play the stocks with.
In any case, the following are the facts and my supporting opinions. The number of new listings is way up. That, coupled with the fact that it’s taking longer for properties to sell, means that our inventory is also up. At the current rate of sale, we would run out of available listings in 4.5 months, assuming no new listings went on the market in that time. Compare that to the 2.3 months and 1.6 months of inventory Portland Metro had in the prior two years, and it is easy to deduce that the market has turned. While 2005 and much of 2006 were true sellers’ markets, 2007 has fluctuated in and out of being a buyers’ market and a balanced market. If I was to simply look at inventory, I would tell you we’re enjoying a balanced market. However, when I take into account the fact that average days on market, or how long it takes for a listing to sell, has gone way up and the number of new listings, I do believe we’re in a classic buyers’ market. Now this isn’t as strong of a buyers’ market as it was a sellers’ market two years ago, but it is, in my opinion, a very good time to be a buyer.
Look at the facts, inventory is up, interest rates are still very low (though they have risen), days on market is up and add that to the number of stale listings (properties that have been on the market for a long time) and an uneasy feeling sweeping through the minds of sellers, and it all equates to a great time to be a buyer. I know I’m working with some very happy buyers.
Of course, nothing exists in a vacuum, so there are sections of the market, be it location or price point, that are much more competitive. As you know, I work with quite a few first time home buyers who generally want to live in close-in SE/NE Portland and, for the most part, are in the 250K to 300K price range. Well, it’s still pretty competitive within those parameters. I’ve actually seen multiple offer situations at times. Having said that, my clients have all found wonderful and affordable homes within their price ranges and in their locations of choice. So a good Realtor will still secure you an excellent property.
In many cases, we’re finding buyers’ incentives, such as “free” home warranties. So if you’ve been scared off by The Oregonian’s “the sky is falling attitude”, don’t be. Portland Metro, including the suburbs, is doing just fine.
With everything going on in the lending/finance industry right now, please find a good mortgage broker. I work with an amazing one in Vince Kingston, but I do have other referrals if you need them. Please stay away from any out-of-state or online lenders that you don’t have a personal relationship with. The decision and purchase is just too important to be handled by a stranger that you can’t physically meet.
APPRECIATION RATES:
Portland Metro (as a whole) – 10.1%
N Portland – 11.5%
NE Portland – 9.4%
SE Portland – 11.5%
Lake Oswego/West Linn - 13.3%
Gresham – 16.15
Milwaukie/Clackamas – 11.2%
Home Buying 101 – Demystifying the Home Buying Process is still going strong. Vince and I have been doing it every other Monday evening for just over two years. We’ve probably met a couple hundred people and have helped many dozen people realize their home ownership dreams. If you know anyone who might benefit from the informal workshop, please have them contact me. Also, we’re branching out and heading for the big time. After a long conversation with a corporate HR manager, who will go unnamed, we were convinced that Buyer 101 would be a great value added service for HR managers to provide their employees. So we’re moving up in the world and offering to hold the class, for free, for small and mid-sized companies all over town. We’re happy to hold them at the lunch hour or we’ll work around any schedule you need. If any of you would be willing to introduce me, via email, phone, however, to your HR manager, president, company owner, operations manager, etc., I would greatly appreciate it. The numbers show that employees who own homes are much more likely to stay with their current company and work their way up the ladder. We see our services as something a company can provide their employees…at no cost. So please let me know if you can help.
Also, outside of the home buying workshop, I survive 100% on referrals. I believe in giving my all to every client and I hope in so doing, that they will, in turn, refer me to their friends, family and colleagues. If you can give my name and info to three people, I would forever be in your debt. I am not a part-time Realtor; this is what I do for a living. I take it very seriously and have put a lot of time into learning and growing. As many of you know, I am now a principal broker and I hire, train and mentor new agents. I’m currently working on getting my “green” designation, as well as my “technology expert” designation. I continue to grow as a Realtor in the hopes that I can better serve you and your referrals in the future.
Thank you in advance.
Market Action report: http://www.rmlsweb.com/temp%2Fdocuments%2F1500-1699%20Market%20Action%20and%20Statistics%20Menu%2F1505%20Market%20Action%20-%20May%202007.pdf
Cheers!
Jesse
All-Blogs.net directory
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