Opportunities in the Corvallis Real Estate Market (and possibly in many other markets)

I replied to a face book post and was so inspired I may have gotten carried away. I wrote a lot about my opinions about the current market, the past market and hopefully will lead some to think about future markets. Corvallis and the mid-Willamette Valley has not been unscathed by the recent real estate downturn. However, all is not doom and gloom. This is what I wrote, for what it’s worth:

Every market has its opportunities; it’s how you position to take advantage and where you are in terms of need…

The insane market of the mid-2000s was not normal, it was an anomaly. So expecting or even wishing for a return to that type of craziness just doesn’t make sense. Labeling a market as hot or cold doesn’t make sense either. It depends on for whom it’s “hot” or “cold” and the perspective of the parties involved. We had situations here where buyers were so priced out they couldn’t move quick enough to buy. Yet, sellers made “killer” returns.

Now, it’s a better time for that buyer and for long term investors, they have more choices and can make intelligent decisions instead of jumping in because everyone else is. Those that have held their real estate long term have still made a return on their investment (think of the down payment and closing costs when you think of the investment). And, all the while have had a roof over their heads (for the most part).

There was a huge shift in the attitudes of buyers/sellers in the mid-2000s where the public seemed to think that real estate could be a short term investment (evidenced by a lack of good judgement eg. buy high, hold short, flip, use consumer credit to finance purchases and so forth). That attitude created a driven market that was out of whack with reality. For real estate to be considered an investment it needs to be a long term proposition. An important shift occurred, at the root was the loss of jobs, confidence in the financial markets and in particular housing crumbled and the market turned.

Owner occupied real estate really is an investment in life-style and has some “investment” benefits that renting does not provide (forced savings in the form of principle reduction; tax benefits and over the long haul the potential to appreciate), while still providing the all important shelter. With long term interest rates somewhere in the mid 4′s, those that can buy, who want to be homeowners, and who believe they have the financial fortitude to buy, may be well served to consider a purchase. Home prices are more affordable in many market; inventory is available in many markets, those factors coupled with record low interest rates create opportunity in today’s markets.

This is a market place where buyers and sellers can benefit from the long term knowledge of an experienced agent. What we do is not as easy as it may appear. As in every industry there are those that have a strong commitment to their craft and those that do not… Buyers and Sellers would be well served to seek out and agent that approaches their business as a business.

Money Matters

• Federal Housing Administration (FHA) is rolling out new guidelines soon (April) for their loan programs, increasing the up-front Mortgage Insurance Premium (MIP) to 2.25% (currently at 1.75%).  For every $10,000 in loan amount, this translates to a cost of $50.00 extra in closing costs.  For example, if you were to borrow $200,000 the additional cost would be $1,000.
• FHA is also reducing the amount that a seller can contribute toward closing costs from up to 6% of the purchase price to 3%.
• The first time homebuyer credit is expiring soon as well.  April 30th is the deadline for a written contract to be in place; June 30th is the last date for that contract to close.
• Attention existing homeowners; you too may be entitled to a tax credit.  There are many out there that are unaware that if you purchase a replacement primary residence (in contract by April 30th, Closed by June 30th) you may qualify for a $6,500 tax credit.

(Certain conditions apply for transactions to be eligible for tax credits—check this web site: http://www.homebuyertaxcredit.com/  and get advice from your professional tax advisor)

Important Items to Look for In a Home Inspection

For Buyers and Sellers

Home inspections can vary from simple one page check lists to extensive multi-page documents.  When evaluating written reports and/or selecting an inspector based on the report produced, there are several
important factors to consider:

1. What is the scope of the inspection; what systems, fixtures, and components are inspected? Does the report include general information to improve the reader’s overall knowledge about the property in addition to reporting problems? How much of the property is inspected? Is there a systematic approach to the inspection?  Knowing what is included in the inspection report is key to knowing if the inspection is thorough. Obtaining information about the status of all components (those in good condition as well as those needing attention) provides you with a benchmark of condition for ongoing maintenance.
2. Is the report easy to read? Is the layout straightforward and is redundancy avoided? Is there a summary that supports the details? Are the items numbered and in categories that are easy to follow? A report that’s easy to read and identifies items by category and/or room as well as numbers makes communication with others regarding the findings easier.
3. How detailed is the report? Does it include photographs of the findings? A picture paints a thousand words. Photographs make it easier to understand items included in the report.
4. Is an electronic version of the report provided? Frequently the report needs to be distributed to others in order to work through negotiations and contractor evaluations. A report that’s easy to forward on to others streamlines those processes.
5. How quickly will the report be provided? Often times there are tight time lines associated with negotiation of inspection related items. Prompt delivery of the inspection is an essential element of the inspection process.
6. Does the report “package” include items of added value? Some inspectors provide coupons, home
   maintenance checklists and simple home repair guides as added value to their reports.
7. Is the inspector available to answer questions after the fact? Being able to communicate with the inspector about the specifics of the report and clarification of findings helps simplify the corrective action process.

Recent Changes In Laws That Affect Oregon Real Estate

There have been a number of recent changes to Oregon laws that affect real estate transactions and real estate in general. The following are a few highlights of those changes. What’s important to know is that when it comes to your transaction, I take care of making sure you know what to do.

Residential Rental Smoking Policies and Rental Agreements HB 2135):  Requires a rental agreement for a dwelling unit regulated under ORS chapter 90 to include disclosure of the smoking policy for the premises on which the dwelling unit is located. Must state whether smoking is prohibited, allowed on the entire premises or allowed in limited areas. Owner occupied mobile homes and house boats are exempt from the rental agreement requirement. Effective 1/1/2010.

Read the bill: http://www.leg.state.or.us/09reg/measpdf/hb2100.dir/hb2135.en.pdf

Disclosure of 100-Year Floodplain to Tenant (HB 2614): The law requires a landlord of a dwelling located in a 100-year flood plain to notify a tenant that the dwelling is in the flood plain. Allows the tenant who did not receive notification and then later experiences a loss to recover from the landlord the lesser of the actual loss or two months rent. Effective 1/1/2010

Read the bill: http://www.leg.state.or.us/09reg/measpdf/hb2600.dir/hb2614.en.pdf

Landlord May not Charge Tenant More than Landlord is Charged for Utilities (HB 2613): Amends the residential Landlord Tenant Act. Prohibits a landlord from billing or collecting more money from tenants for utilities or services than the utility or service provider charges the landlord. Effective 06/17/2009

Read the bill: http://www.leg.state.or.us/09reg/measpdf/sb0700.dir/sb0772.en.pdf

Additional Well Testing for Arsenic (SB 739): Requires a seller of real estate that includes a well that supplies ground water for domestic purposes have the well tested for arsenic upon acceptance of an offer to purchase. This is in addition to tests for nitrates and coliform bacteria (already required). Test results must be submitted to both the Drinking Water Program of DHS and the buyer within 90 days of receipt of the results. Effective 1/1/2010

Read the bill: http://www.leg.state.or.us/09reg/measpdf/sb0700.dir/sb0739.en.pdf

Oregon Homeowner Facing Foreclosure (SB 628): Foreclosure notices must now include new information about how to meet with their lender and how to request a loan modification. If so requested, the lender must meet with the borrower and evaluate the borrower for a loan modification before foreclosing on the home. The meeting can be by phone and it must be with a person who has or can get authority to do the modification. Effective 06/30/2009.

Read the bill: http://www.leg.state.or.us/09reg/measpdf/sb0600.dir/sb0628.en.pdf

Tenants Living in Property Subject to Foreclosure Sale (SB 952):  Includes provisions to: require that tenants in good standing receive advance notice of foreclosure proceedings with specific information regarding tenants’ rights; allow tenants with fixed-term leases to stay after the foreclosure sale for the earlier of 60 days or until the lease expires, except when the purchaser intends to live on the property in which case only 30 days’ notice is required; provide tenants with weekly or monthly agreements with notice of the intent to evict 30 days after the date of the foreclosure sale; allow tenants receiving notice of foreclosure to apply pre-paid security deposits toward ongoing rent obligations (and relieves purchase of any obligations to return security deposits); and clarify that purchasers do not become “landlords” unless they accept rent from the tenants, enter into a new rental agreement, or fail to terminate the tenancy as provided by this bill. Effective 8/23/2009

Read the bill: http://www.leg.state.or.us/09reg/measpdf/sb0900.dir/sb0952.en.pdf

Carbon Monoxide Detectors (HB 3450) Includes provision to: prohibit title transfer of single family dwelling or multifamily housing containing carbon monoxide source unless there are properly functioning carbon monoxide detectors at locations that provide carbon monoxide detection for all sleeping area; allow for civil action to recover damages, attorney fees and costs for violation; allow State Fire Marshall to adopt rules establishing standards for carbon monoxide detectors and requires adoption of rules for alarms in existing housing; require landlords in multi-family housing to maintain carbon monoxide detectors in units; prohibit tampering with installed detectors; and require all rental housing to have alarms in place by April 1, 2011. Pending rule making, Effective 6/25/2009.

Read the bill: http://www.leg.state.or.us/09reg/measpdf/hb3400.dir/hb3450.en.pdf

Transfers of Real Property Interests(HB 2481): The law prohibits conveyance of an agreement for transfer of real property that imposes fees or other consideration upon actual or purported future transfer of the property. Certain exceptions are allowed. Effective 06/17/2009

Read the bill: http://www.leg.state.or.us/09reg/measpdf/hb2400.dir/hb2481.en.pdf

Document Recording Fees (HB 2436):  Adds a new $15 fee to the existing fees pertaining to deeds and mortgage records filed with county clerks (with same exclusions). The fee imposed by this measure will be collected by counties and deposited into specified accounts within the Housing and Community Services Department for affordable housing-related programs. Effective 09/28/2009

Read the bill: http://www.leg.state.or.us/09reg/measpdf/hb2400.dir/hb2436.en.pdf

Includes all single-family residential properties on less than two acres
as reported by WVMLS.
Data taken from WVMLS 12/9/2009

Includes all single-family residential properties on less than two acres
as reported by WVMLS.
Data taken from WVMLS 11/10/2009

Includes all single-family residential properties on less than two acres
as reported by WVMLS.
Data taken from WVMLS 10/13/2009