Getting too close for comfort

I’m sure everyone is now aware that the First time home-buyer tax credit is about to expire.  And I am sure that there are going to be thousands of people who will give you the blank incredulous stare when you tell them it’s too late to submit an offer and actually get it closed in time.  Since, in our area, closings are taking approximately 37 days, this Friday (Oct 23) will be the drop dead date to submit offers to escrow in order to actually get them to record on time.  We have to remember that we are going to lose 4 days for the Thanksgiving holiday! 

I know that there are efforts in Congress to get the tax credit extended, but I am not planning on that happening.  Remember – we are dealing with government which does not usually act quickly.  I’m sure once March rolls around and the staggering lack of Real Estate sales for December, January and February are revealed, there may be another effort to re-instate the incentive.  I just hope it is not too little too late.  The sad part is that by the time the drop in Real Estate activity is analyzed and a decision is made to do something, interest rates will be to a point where the bulk of the buyers that this incentive was created to attract will not be able to qualify.

As a veteran Realtor, I know that the market will rebound and we will all look back on the late “2000’s” as a rough time in the market – but a needed adjustment and just part of the cycle of Real Estate.

$8000 TAX CREDIT FOR DOWNPAYMENT – OOPS…JUST KIDDING….

As we expected – this morning FHA rescinded the notion that the $8000 tax credit for 1st time home buyers could be used as down payment on a home. As my prior blog indicated – it was an idea that sounded good, but just not enough thought was put into the mechanics of implementation. The media grabbed a hold of the “idea” and made it sound like it was fact (very irresponsible in these times, but it sells readership and ratings and that is what is most important to that industry).

That being said, there are some states and non-profit organizations that are seriously looking into offering short term “bridge” loans to possibly accommodate the idea of using the credit for down payments. The success of this will depend largely upon how deep the pockets are of the non-profits and/or state budgets. You still have the issue of whether the buyer’s lender will allow and underwrite this loan.

In any event, be sure to consult with your professional Realtor who can keep you informed on what is REAL and what programs are available in your local market area.  Each market is different.

Been a While…

It’s been far too long since I posted something new on my blog.  The “economic crisis” is the biggest thing in the news and is the topic of almost every conversation.  Yes, it’s hit me hard also, but I have to believe that things will gradually get better and I will have learned some valuable lessons from it.

Lesson 1)     I still need to keep in contact with my past clients and all of the business partners that I have established over the years.  These have always proven to be my best source of business and they never fail to do their best to give me referrals.  Letting them know that I am still in business and there for them is crucial.

Lesson 2)   Short sales and Foreclosures are here to stay for the next couple of years – so learn the process, know the players and understand how to counsel both Buyers and Sellers.  It can be a new source of leads and it’s on the mind of most  Buyers when they start looking for a home.

Lesson 3)  Don’t be offended and counsel your Seller’s not to be offended by low offers.  It’s an offer and a place to start.  In our area (Portland, OR) the final sales price is running about 90-93% of last listed price and that does vary by neighborhood.  Yes, its more work to get the parties to a meeting of the minds, but it will be worth it for our clients.

Lesson 4)  Take a good look at your business and your personal life to determine what is most important. You may have to make some hard decisions about where changes have to be made and how you are going to approach new challenges.  Be flexible and willing to accept change – its very refreshing.

Lesson 5)  Save more – Spend less     DAH!

Candy Corn – Love or Hate it?

It’s just not Halloween without Candy Corn.  Whether you are a fan or not, like jack-o-lanterns, the over-sweet confection just says Halloween.  Don’t get me wrong, bite-size Snickers, Baby Ruth’s, Butterfingers, Dots, Mike & Ike’s, Reeses PB cups, Almond Joy, Mounds, Tootsie Roll Pops, Smarties, Carmel Apples, Popcorn balls, gummy worms, gummy bats and wax teeth are what we are really hoping for as we dump out our trick-or treat bags……And FULL size representatives of any of these is a major score …..BUT without Candy Corn it’s just not right.  As a kid I loved them and I can still make myself sick on them to this day.  

                    Good luck tonight and may all your spooky wishes materialize…….

YOU CAN’T GET A HOME LOAN!

BALONEY…….!  The headlines may say that the banks are not loaning any money, but that was primarily for Commercial business – not Residential home purchases.  Mortgages are a long term, income generating product that the banks want.  In fact, if you are sitting on the fence and not thinking about buying – be warned…interest rates just went up and are expected to increase steadily to help repay the “bail-out” debt.  Here’s an update:

Estimated rates for the week of 10/13  

30 yr conforming                              6.25-6.50

30 yr jumbo                                       6.125 to $600k

7/1 ARM                                           5.625 – 5.75  for jumbo too

OR State Bond                                  5.750  Conventional or FHA

OR VA                                              5.50 but we hear it could increase very soon

 

 

As you can see by the above, rates have moved up. We have two competing themes for the rate markets. The first is the slowing U.S. and world economies. That should be helping to ease rates down. The opposing side is that the U.S. Treasury needs to borrow a lot of money to fund the recent legislative bills. Treasury has to come up with around a trillion dollars. Using those basic Economic 101 principles of supply and demand and that interest rates determine the price of money, rates have to go up. So far, the latter is what we are seeing. It’s still extremely volatile out there but it does look like we have turned the corner on the panic in the financial world. There is still much work that needs to be done but at least the light is back on at the end of the tunnel.

 

Let me assure everyone who reads my Update that we are still able to close loans. Although underwriting guidelines have gone back to the old days, we  haven’t had any issues on getting the money to close transactions. None. The mortgage business is still fully operating  and “business as usual’ is what we see. With the events that occurred over the weekend, many pundits are thinking that the worse is behind. Still too early to call but it definitely appears that way. It looks like all of the developed countries (and many of the less-developed countries) are all on the same page now.  There is no question that the events of the last few weeks are destined for the history books and that there will be significant changes as to how the business world will operate. With that said, I for one am done dealing with all of the stress that this has brought on. It’s time to go back to business and do what we all do best! I think it’s also time for us all to take a refresher class on the basics. Regardless of what business we are in, we all need to focus on those basic business princilples that we first learned….good customer service, personal discipline, and hard work.

 

Enough of the pep talk speech. Have a great week.

               

 

Bob Chiodo, CFP

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

 

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates.  Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee

Smilin’ & Dialin’

I know this is the age of text messaging, e-mailing, blogging etc., but I recently had an eye-opening and reassuring experience.  I am co-listing an upper end home with another agent in my office.  We put the house on Broker tour for the usual Tuesday morning which is advertised through our Multiple Listing Service.  This tour is a process by which the house that is newly listed is open and accessible to licensed brokers for a limited time so that the brokers can preview several houses without making appointments.  This process is designed to showcase the house and promote showings by the brokers who visit the homes who might have clients for that house.  I have noticed over the last several years that the attendance at these Broker opens has fallen off drastically in part because of the extensive use of photos and virtual tours posted on the internet and the fact that the Realtors are “too busy” to come by and take a look.   During the Broker open we had the usual light turn out and chalked it up as being normal.  We then decided to promote the house via a “Twighlight Open House” (complete with a little wine tasting & appetizers) which was advertized in the local community news, special postcards were sent to 200 surrounding homes, and advertised on the MLS system along with both of our personal websites.  What more could we do???

I decided to physically call all of the Brokers that I know who work in the price range of this house and personally invite them to come by have a glass of wine. I asked if they would give me their honest opinion of the home and how it stacks up against it’s competition.  I spent about 4-5 hours calling and making that personal connection.  Result – a light public turn-out – a great Broker turn-out, some great feedback and 2 showings that might not have happened without the agent seeing this house.

I believe in the old skool concept of physically talking to people and your fellow professionals – it reminds you that there is still that human element that likes the sound of a familiar voice and the eye-to eye contact that only comes in person.

Half Empty or Half Full?

 

Is your cup half full or half empty?  Do you believe everything you see or hear that the TV/Newspaper/Radio spews out?  Do you know the facts?  Only BAD news sells so the national news will take the headlines while the local news gets hidden on page 6. The news media would have you believe that we are in the middle of a modern day “Great Depression” when it comes to the housing market.    I say NAY-NAY!……and here’s why….

 

Granted, there are areas of the nation that are experiencing very high inventory levels and a stagnant sales market (Las Vegas, Southern California, Florida to name a few) but these are areas that also experienced record new construction starts, speculative investing, skyrocketing home pricing, questionable lending programs and have had radical market swings in the past.  Oregon, on average, has experienced a much more gradual growth over the last 10 years and still remains a very good investment environment.  Whether you are a proponent of the Urban Growth Boundary or not—it has had an impact on containing the explosive growth that other parts of the nation get caught up in.  Instead of being able to develop a 20 acre area of home sites in a Portland Metro area, Phoenix or Las Vegas would develop a 200 acre area.  That’s a huge amount of inventory to be absorbed by a fluctuating and sometimes seasonal population growth. 

 

As of the last RMLS statistics, our inventory is standing at 10.3 months which is up from 9.1months for March.  This is not an uncommon upswing, as the inventory for the Spring/Summer buying season usually starts building in late March.  A “normal” market would show 6-8 months of supply.  One factor may be the large number of homes listed over $1million which is at an all time high.  These homes typically take longer to sell due to the limited pool of buyers at this price point.  Pocketed areas where there is a large supply of unsold new construction will also affect the overall inventory count.

 

Interest rates are still very low (at this writing, under 6%) and there are many opportunities to buy properties for a reasonable price with Sellers that are willing to sell.  It’s time to review your financial portfolio and look at a well rounded long term plan.

 

One thing to remember, Real Estate is cyclical and has always been a good long term investment.  Only in the last few years has it been treated as a short term commodity to be traded as some high risk stocks for a fast profit.  Remember what you paid for a home 10 years ago and what it is worth today.  Let’s treat our homes as Blue Chip stocks that grow steadily, are predictable, reliable and safe.

Comments?  Call Ruth @ 503-495-5204 or e-mail @ ruth@ruthcanutt.com