Real Estate Information

Once, I was optimistic.  While others saw the real estate crash coming, I was a happy believer that this was not a probability.

Now, some of those same investors that made billions betting SHORT on the real estate market by buying  credit default swaps, are now betting LONG!   How do I know that? Because Monday of this week,  a new product is being offered by a company that is hedging its bet that a RISE IN HOUSING PRICES is soon to come!  And the product they are promoting is a home price protection against a drop in prices.

Here's how it works:  in the Portland market, for  a $10,000 premium, you get a price protection contract that covers the first 20% of price reduction (as long as you haven't caused the value to decrease by harming your home). Say you are considering buying a home today that appraises at  $400,000, but you are worried that the market will drop even further, so you stall your purchase looking for positive signs.

This company is willing to bet that this same house won't reduce in value and they are willing to contract with you that if it does go down 20% they will pay the differencial between the guaranteed price and the new market price up to a 20% drop! Incredible. Can you imagine if that product existed in 2007? And if it had, imagine the cost.

$10,000 is nothing considering that they insure $80,000 in market price drop of the example house.

I'm not suggesting you buy this insurance if you agree with me that it shows a sign that the market may have stopped sliding.

Here's what I'm really saying:  if there is a new product in the marketplace that is betting prices won't go any lower, and that product is backed by insurance companies backed by wall street and it's investors, then that tells me we have a good chance of being either at or very near the bottom of housing prices now!

And, of course, this is only my opinion, and certainly not advice.  And what is important is that if you don't agree with me, and you really do think we have more reductions coming, then by all means, buy the policy and sleep at night like a baby!

Peggy's passion is food and wine and sharing those with her real estate clients and friends.. Watch this series of videos with Jerry and Peggy canning tomatoes.

Property Taxes for 2011-2012 have just been Certified and you can now officially learn your 2011-2012 property value and property tax amount..

The on-line tax statements are not yet available but if you would like updated certified tax information now, just download this form compliments of Dana Eller of First American Title Insurance. You can fill in the form and email it back to the email address provided to receive your copy of your tax statement.

If you have purchased or built new construction this year, you now have access to your property tax amount.  In new construction, only the land has a taxable value prior to construction. When you build or purchase a new home, lenders must guess at what the improved value will be. You now will have this information so that you can ask your lender to adjust your escrow account to reflect the accurate amount.

If you have made payments on your property tax account and would like to know the balance due, please contact the tax collections office at (503) 846-8801. The office hours are Monday – Friday; 8:30 am – 5:00 pm. You can e-mail your request to: at@co.washington.or.us.

Credit Scoring has been an elusive practice that affects anyone interested in buying real estate, getting car loans and getting the best rates on all sorts of things like insurance and credit cards

I often wondered what is driving the scores and what I've learned is that the scores can be explained by the the FICO Reason Codes.

Every time your FICO score is calculated, a set of codes is generated and delivered with the actual 3 digit number that you are used to seeing, usually from 500-860, depending on the person and their credit.  These codes are the FICO Reason Codes (also known as Score Factors or Adverse Action codes). 

These codes explain why your credit didn't receive the maximum score.  You will normally see 4 of these reasons accompany a score.

The reason codes are two digits with a short definition for display purposes on credit reports. An example of a reason code is “too many accounts with balances” which is code ‘05’.

Here is an example of the reason codes and how to read the score:

FICO Score: 500  38  21  18  05

(38) Serious delinquency and derogatory public record or collection filed

(21) Amount past due on accounts

(18) Number of accounts with delinquency

(05) Too many accounts with balances

The first number is the FICO score and the next four are the reason codes.

In the above example, the credit score was 500 and the reasons for this score are (38) poor payment history with an account with late payments of 90 days late or worse and a public record or collection, (21) an amount that hasn't been paid on time, (18) too many accounts with late payments and (05) too many accounts with amounts owed.

Remember, that no matter what your score is, there will always be reason codes – These reason codes explain why the score is lower than it might otherwise have been.

Homeowners, beware the Money Trap from those remodeling projects you have dreamed of and saved for.

Upgrades like Street of Dreams kitchens, fancy home offices and state of the art theater rooms may have been a good investment in the past when prices were still going up.

However, in today's sluggish market, you should not look at any home improvements from the  point of view of getting a return on your money.

The remedy: Only do those improvements that will provide you with a higher quality of life over the next 7-10 years, because that's how long it will take you to pay for the upgrade.

Look at improvements like your car purchase and know that after the money is spent, your home improvement dollars will be worth about 1/2 of what you paid for them.  Unlike the car, however, your home should start escalating in value,  and if you stay in your home long enough, you should eventually get your investment back.

If you are looking for a home to purchase, find one where the sellers have already spent the money to upgrade. Let the sellers loose that 50%. Unless you can buy a home for 30-50% below market value, don't buy a fixer. Buy a home that the sellers have spent a lot of money in remodeling and upgrading and then enjoy their hard earned dollars on your quality of life!

Everyone wants to know if it's OVER.

The real estate crash, is, of course, what I'm talking about.

The general consensus (and, at least according to Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley), is that, although it may be over, we are still hovering near the bottom and until we get job growth, we will more than likely see little up and down blips in home prices for at least the near term.

Sellers who have waited for the market to bottom out need to think like a buyer. Buyers in today's market are worried that the prices may fall even further. This is just a reality and seller's need to accept this and be realistic in pricing their home.

Those buyers that are qualified and have the down payment should have their opinions respected. Why? Because it's difficult to pass the tougher qualification standards and the higher down payment requirements.

So now is not the time to list your house to test the market and plan on a  series of downward price adjustments. If you are listing your home today, think like a buyer and know that buyer's have a great variety of neighborhoods and homes to choose from. Make your home the best choice for the buyers that are actually in your neighborhood and price range.

So, advice from a seasoned veteran. Don't price your home for what you wish you could get or what it used to be worth and whatever you do, don't get caught chasing the market down further. Price it so that the buyers that are out there ready to buy will find your house is the best option for them.

Remember to think like a buyer and ask, 'what would you pay for your home today compared to all the other homes on the market?'

Peggy has been a Portland realtor for the past 20 years and is a 5th generation Portlanite. Click here To see Peggy's listings.

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.