Why all the giddiness?  Fannie and Freddy’s takeover has brought stability to the reeling mortgage markets.  The Fed has essentially guaranteed that there will be funds available for qualifying home buyers, as well as stabilizing the secondary market.  What does this mean to you the home buyer?  Lower rates!  Rates dropped nearly three-quarters of a point today to somewhere between 5.25% and 5.5% depending on the product and the advertised rate.  That’s low.  Historically low.

In addition, Congress recently enacted legislation providing a $7500 tax credit to first time home buyers.  That tax break will only be available for a limited time, however.  

Add both of those financial incentives to the current Portland market with its glut of housing inventory and you’ll understand why it’s such an “auspicious” time for home buyers.  

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 July 2008 vs June 2008 - nearly a mirror image

July 2008 vs July 2007 - Sales down 30%.  Prices down 3.5%.

Inventory at 10 months supply.

Average market time - 72 days.

As usual, specific locations are doing much better than others.  Close-in neighborhoods are holding strong and actually enjoying decent rates of appreciation.  North Portland, for example, had a market time of 51 days with 5.1% appreciation rate.  Northeast Portland was at 56 days and 4.7%. 

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Good-bye Palm Treo, hello Blackberry!  I was one of the original Palm Treo Realtors.  When it first came out, it completely changed how I did business.  It allowed me to be a truly mobile agent.  Everything from emails to listings, my Palm Treo could do it all.  Unfortunately, all that mobility ability came at a heavy price.  The Treo is notorious for crashing…freezing…or otherwise frustrating the user to no end.  Model after model came out and model after model had bugs…kinks…issues.  Just six weeks ago I bought the latest model; the Palm Treo 755p.  It was brilliant.  Slighly smaller than the original.  No annoying antenna poking out.  Nice touch screen.  The 755p finally allowed me to surf the web at acceptable speeds.  All my problems were solved. 

Well, accept that they weren’t.  After only the third week, my 755p went into what I lovingly call a Death Spiral.  It would freeze and when I attempted a reboot it would simply go to the initial boot screen, then the second one and then spiral through the two screens continuously.  It was awful.  The only “cure” was a hard reset which, unfortunately, erased EVERYTHING and set it back to the factory default.  What a nuisance.  But hey, at least I could just sync it with my laptop and I’d get everything back.  Well, not really everything.  What was amazing was that I’d grown so used to Palm hiccups, I was ready to just accept this issue and keep re-syncing it every week.  Two days ago, though, the Death Spiral became a true Death Spiral.  There was no fix.  No hard reset.  Nothing.  What was I to do?

My friendly neighborhood Verizon store was all too happy to replace my Treo, but the warranty replacement would take a few days.  I’m in real estate, I can’t be without my phone for three days…sad as that sounds.  The man helping me was wearing a really cool looking Blackberry on his belt.  I asked about it.  One thing led to another and next thing I know, I’ve exchanged my now dormant Treo for a sparkling new Blackberry Pearl.  Wow!  What a difference.

Yeah, there’s a learning curve and there are a few features I miss, but overall the Blackberry is far superior.  My understanding is that it simply will not crash.  No wonder the term Crackberry exists.  You won’t find many people so addicted to the Treo. 

So I’ve left the hustle and bustle of Treo-land and have entered the calm, tranquil waters of the Blackberry.

Exit frustration.

Enter mobile nirvana.

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For most home buyers, the three most important aspects of the legislation are the $7500 tax credit for first-time buyers, the elimination of down payment assistance programs (as of October 1, 2008), and the ability to get larger loans at lower rates than previously available.  There are some very important provisions for current home owners who are upside down on their mortgages, but I’ll let your mortgage broker or financial planner discuss that with you.

1) $7500 Tax Credit:  First-time homebuyers who purchase their primary residence on or after April 9, 2008 and before July 1, 2009 are eligible for up to $7,500 in tax credit, provided they haven’t owned a home in the last three years and fit certain income parameters. The credit is generous, but it is actually an interest free loan, paid back over 15 years at $500 per year when taxes are filed.

2) Down Payment Assistance: Some types of seller-paid down payment assistance programs are being eliminated as of October 1st as well - so purchasing a home before then may gain you a double benefit of tax credits AND seller-paid down payment assistance while it is still available.  However, after October 1st 100% financing will essentially cease to exist.  So if you are in need of 100% financing, now’s the time to act.

3) Larger Loans/Lower Rates: There have recently been provisions in place that have allowed loans larger than $417,000 to qualify for better financing rates than normally would be available for “jumbo” loan amounts of that size, thanks to Fannie Mae and Freddie Mac. Although these provisions were set to expire, they are being extended…however, the top end of the loan size that will be allowed under these programs will be dropping down from $729,750 to $625,500 as of January 1, 2009.

The actual legislation is well over 100 pages, so I cannot possibly comment on every point.  There are a number of other points that directly effect the housing a lending industries. 

Bottom line, it is still a buyers’ market with reasonable home prices, low interest rates and new buyer incentives.  If you have contemplated buying a home, you owe it to yourself to learn more about the housing bill…and the market itself.

Good luck!

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Where’s my flying car?  Where’s my teleportation booth?  Sure, I have a nifty little iPhone.  It’s cool, I suppose.  I can make phone calls…much like we’ve been able to do since early in the 1900s.  I can take pictures…much like we’ve been able to do sine the 1800s, maybe earlier.  I can surf the internet…like we’ve been able to do since the 1990s.  Yeah, it’s slick and it’s handy, but revolutionary?  Not so much. 

Right now it actually feels like we’re going backwards.  Not only do I not own a flying car, but I’m thinking about trading in the car I do own for a Vespa or something else that doesn’t take $100 to fill up.  Perhaps a horse and buggy?  Teleport?  Not likely.  In fact, it’s getting much more difficult to even fly.  Airlines are contracting and cutting routes everyday.  I don’t think I’ll be catching a direct flight from Portland to Bali anytime soon, much less instantly arriving there with the push of a button. 

The future might end up looking a lot like the past.  What would that mean?  It might mean that instead of intense globalization, we might end up focusing on being local.  Crazy, isn’t it?  Real estate is showing a similar trend.  Close-in homes in most areas (homes with short commutes to the city centers) are appreciating and selling like hot cakes, while homes falling further outside the city bounds are sitting and sitting.  One study noted that a house is worth $4700 for every minute it saves in commute time.  Wow. 

In any case, things are changing…maybe just not the way we thought they were.

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June Market Action

• Glass Half Full - For the second straight month there was a slight increase in sales. (0.8% increase vs May 2008)
• Glass Half Empty - Closed sales are still down over 31% from the same time last year.

• Glass Half Full - The rate on inventory has remained virtually the same vs May 2008 (9.5 months vs 9.1 months in May)
• Glass Half Empty - There were only 5 months of inventory in June 2007.

• Glass Half Full - The average sales price is up 4.1% from last month.
• Glass Half Empty - It’s down 1% from last year.

What I’m seeing is a market finding its balance.  It seems to have settled into itself and I expect the rest of the summer to follow a similar trend of slight month-to-month increases that will be about 30% lower than the previous year.  The good news is the Portland market is not trending down month-to-month.  Many national markets are still following each and every month.  The local stability is very positive when compared to the national scene. 

For the optimists out there, many Portland neighborhoods are still appreciating well.  N Portland say a 5.7% increase from last year.  NE Portland had even higher appreciation at 6.7% compared to this time last year.  Lake Oswego and West Linn, despite slow market times, saw a 4.9% increase in home prices.   The news isn’t quite as rosy in other areas, though, as Milwaukie/Clackmas dropped 8%. 

The upshot of all this, of course, is that Portland is obviously in a very strong buyers’ market.  Interest rates remain relatively low and while financing is harder to come by, there are plenty of loan packages available for qualified buyers.  Sellers need to remember the simple rule that the homes that sell in a buyers’ market are the ones that are immaculate and/or priced the best.  Where once it was location, location, location, now it is much more price, price, price.  If you want to sell your home and not just “try to sell your home”, you need to price it right.

Click here to view the complete Market Action report.

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The FDIC says that despite their takeover of IndyMac bank, customers’ money is safe as it ever was.   That’s the rosy picture, anyway.  Traditional accounts are federally insured up to $100,000 while some other types of accounts, mutual funds, annuities and the like, are possibly not insured at all.  In my opinion, it will take a little time before we know for sure just how this takeover affects the finanical world.  We will not see all the ripples for some time.  I’m certainly hoping that one of the rippes is that my own personal second mortgage is forgotten, uh, I mean forgiven, but somehow I tend to doubt that’s about to happen.

In any case, the article is well worth reading…especially if you bank with IndyMac.

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http://money.cnn.com/2008/07/13/news/economy/fannie_freddie_sunday/index.htm?postversion=2008071318

NEW YORK (CNNMoney.com) — The Treasury Department and Federal Reserve on Sunday outlined a comprehensive government plan to prop up Fannie Mae and Freddie Mac - the two mortgage finance giants that play a crucial role in the U.S. economy.

Treasury Secretary Henry Paulson said the Bush administration plans to ask Congress to enact legislation to temporarily increase the line of credit that the companies have with the Treasury. It would also allow the Treasury to buy stock in the companies.

Paulson also said the Federal Reserve should be given a greater role supervising the finances of Fannie and Freddie.

In addition, the Federal Reserve announced Sunday that the mortgage finance companies can turn to the Federal Reserve Bank of New York for funds. The move gives Fannie and Freddie the same access to the funds as commercial banks and Wall Street firms. The agency granted investment banks such access earlier this year in the wake of a similar crisis of confidence when investors lost faith in Bear Stearns.

The decision by the government to step in comes at a tumultuous time for the two shareholder-owned companies, which own or back $5 trillion in home mortgages and are counted on to play a central role in the recovery of the battered housing market.

At issue is the companies’ financial condition and whether their balance sheets are strong enough to continue their business of buying and guaranteeing home mortgages. The plan by the Treasury and the Fed would provide Fannie and Freddie with needed capital. Beyond that, even the promise of government support could be sufficient to calm investors.

Last week, investor concern sent shares of Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) plummeting. The selloff left shares of both firms down more than 45% for the week and about 75% for the year.

“Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies,” Paulson said. “Their support for the housing market is particularly important as we work through the current housing correction,” he added.

FOLLOW THE ABOVE LINK TO READ THE COMPLETE STORY.

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Rates on 30-year fixed mortgages have climbed to their highest levels in nine months.   Fearing inflation, the Fed has reversed it’s recent trend of cutting the interest rate.  While it has not raised rates yet, the recent shift in policy has financial markets guessing as to what will come next.  Indecision and a bit of confusion led to a 30-year fixed rate of 6.45%.  The good news is that’s still historically low.  The bad news is that it looks to be on the rise.  If you’re waiting for housing prices to further deteriorate, keep in mind that even a small rise in the interest rate can lead to much higher monthly payments.  Generally, it makes more sense to take advantage of the lower interest rate, rather than wait for the market to “hit bottom”, which is a guessing game at best. (http://www.oregonlive.com/newsflash/business/index.ssf?/base/business-83/121450014479870.xml&storylist=business)

Also, congress is contemplating legislation to curtail or eliminate charitable down payment assistance programs.  These programs are often used with FHA financing to create pseudo-100% financing.  At the moment, this is the only way I know of to do 100% financing.  I won’t go into the nuts and bolts of the charitable down payment assistance programs, but understand if they go away, 100% financing will essentially cease to exist.  (http://www.oregonlive.com/newsflash/business/index.ssf?/base/business-83/1214504104242530.xml&storylist=business)

What’s the upshot?  If you’re thinking about buying, now’s the time.  Take advantage of the current low interest rates before it’s too late.  If you plan on using 100% financing, you better get moving!

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Well I’m THRILLED to tell you that we held our first workshop again tonight. Vince texted me last week that, gasp, we had a CONFIRMED sign-up. Two days later we had a second sign up. By the end of the week we had a full group. How do we go from zero to full that quickly? I have absolutely no idea…but I couldn’t be happier. You have to understand, while the market is down a bit, it’s just an amazing time to be a buyer. Yes, it’s more difficult to get financing. You have to actually have a job, if you can believe it? Lenders would like to see a decent credit score, though we can help you improve that easily enough. Sure, there might be a few more hoops to jump through, but it’s worth it. Interest rates are still strikingly low. There are a ton of houses on the market, so the choices are unbelievable. For the first time in many years, the buyers have a bit of control and a steady foundation to negotiate from. Sounds like a killer first time buyer market to me.

If you’re interested in finding out more about the home buying workshop, give me a shout at jesse@realtynetwork.net or call or text to 971-219-4939.

In the meantime, enjoy the beautiful summer weather…uh, hmmm, huhhh…sorry.

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