buyers • January 7, 2021

The Importance of Home Equity in Building Wealth

by Bene Foley

Homeownership has always been the first rung on the ladder leading to household wealth. As Freddie Mac recently posted:

“Homeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This ‘wealth’ is built, in large part, through the creation of equity…Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”

Home equity is the difference between the current market value of your house and the amount you currently owe on your mortgage. To estimate your equity, subtract your mortgage balance from the market value of your home.

You can find what you owe on your mortgage by looking at your last monthly statement or by contacting your lender. If you need help determining the current market value of your home, contact me or any real estate professional.

Is homeownership truly a better path to wealth than renting?

Some argue that renting eliminates the cost of property taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs (property taxes, repairs, insurance, etc.) are already baked into the rent payment – along with a profit margin. You don’t save money by renting.

As proof of this, First American broke down the net worth of homeowners and renters by income categories. Here are their findings:Only one income category ($127-192K) has a higher net worth for renters over homeowners. Every other category shows that being a homeowner leads to greater accumulated wealth.

According to the latest Homeowner Equity Insights Report from CoreLogic, the average homeowner gained $17,000 in equity in just the last year. Here’s a breakdown of the year-over-year equity gain by state. Check out Oregon:

When can you cash in on your housing wealth?

Your home equity is part of your total wealth as a homeowner. The two most common ways homeowners can leverage their wealth are:

Selling
Refinancing

Selling: When you decide to sell your home, the equity you’ve built over time will come back to you in the sale. For example, if you paid off your $200,000 mortgage and sold your home for $350,000, you would receive $150,000 after closing.

Refinancing: You can refinance your current mortgage and take out some of the equity you have accumulated. With today’s historically low mortgage rates, you may be able to take out substantial cash and keep your monthly payment the same. Thankfully, homeowners today are doing this responsibly and not repeating the same mistakes made in 2006-2008 when some cashed out their entire equity to purchase luxury items like new cars, lavish vacations, etc.

How can these options help homeowners?

During these difficult times, many households are struggling with their housing expenses. Homeowners, because of their equity, have better alternatives. Odeta Kushi, Deputy Chief Economist at First American, recently explained that homeowners financially impacted by the pandemic will not necessarily be faced with foreclosure:

“The foreclosure process is based on two steps. First, the homeowner suffers an adverse economic shock…leading to the homeowner becoming delinquent on their mortgage. However, delinquency by itself is not enough to send a mortgage into foreclosure. With enough equity, a homeowner has the option of selling their home, or tapping into their equity through a refinance, to help weather the economic shock.”

What might the future bring?

Most experts are calling for home prices to continue appreciating going forward. The Home Price Expectation Survey, a survey of a national panel of over one hundred economists, real estate experts, and investment & market strategists, indicates appreciation will continue for at least the next five years. Using their annual projections, the graph below shows the equity build-up a purchaser would potentially earn by buying a $300,000 home this January:

Bottom Line

Home equity, for most Americans, is the quickest way to build household wealth. That wealth gives homeowners more options during good times and in difficult situations.

Things to do in Portland • December 22, 2020

Nature Walks in the City

by Bene Foley

Photo of views from Mt. Tabor by Sarah Ardin

If you have followed my blog, you know that I love to walk in my neighborhood—or really in any Portland neighborhood. But occasionally I will drive to walk elsewhere. There are a couple of urban walks I like to do, but often if I am going to drive to get somewhere, I want a little more nature. This blog post is not meant to be a complete walking guide for Portland. In fact, there are so many great places to walk in this city that I would need an entire book to catalogue them. I won’t be writing that one, but I am sure you can find a great book at Powell’s. So for now, here are a few of my most common walks:

Powell Butte

Powell Butte is a bit on the outskirts heading toward Gresham. But it is worth the distance. The walk takes you up to a high grassy hilltop with few trees and excellent views on a clear day. A stone structure points to each of the mountains that can be seen in the distance. But what I love about Powell Butte is that you can also go down from the barren hilltop to a forested area where you can cool off in the summer or shelter from the rain in the winter. Mountain bikers come here too, so watch for them tearing down the paths in the forest area. Powell Butte Nature Park

Mt. Tabor

Mt. Tabor sits right in the center of East Portland. You can take public transit to get there or ride a bike from anywhere on the east side. Mt. Tabor, an extinct volcano, has several reservoirs and beautiful views of the city. There are wide paved paths as well as sets of steep stairs and many side dirt paths. It even hosts a huge dog park that is out of the way enough that some people do not even know it exists there! Mt. Tabor has playgrounds in the shade and sunny grassy areas that are great places to throw down a blanket and stay awhile—after you walk. Mt. Tabor Park

Oaks Bottom

Oaks Bottom Wildlife Refuge is a 163-acre piece of land that borders the Willamette River. I like to access it on Milwaukie Avenue, just north of Westmoreland. The small parking lot leads onto a paved path that takes you into the refuge. The paths are mostly heavily wooded, though beautiful wetlands and meadows make up a large portion of this park. There are a few different directions to take here and you may end up on the Spring Water Corridor. That is not a bad place to be, but if you want to avoid bikes, search out the dirt paths that go along the river. As much as I love this park, I don’t often walk here alone. Parts of it are rather secluded and being female, I feel a little vulnerable—though maybe I just listen to too many crime podcasts and read too many murder mysteries! I particularly love this walk on a rainy day. Oaks Bottom Wildlife Refuge

River View Cemetery

I am not a particularly morbid person and I think cemeteries in general are a waste of space. This, however, is a beautiful spot that is popular with walkers and bikers alike. I am assuming that bikers are on a longer ride that cuts through the cemetery, but the grounds are sufficient for an hour or so of walking. This is not your typical cemetery. It is anything but flat and barren. It is steeply sloped with large trees that shade the paved paths. Cars are allowed, but on most walks, I only encounter one or two. At the top of this steep climb, there are brilliant views of the eastside of Portland and on a clear day, you can see Mt. Hood.

There are so many more fabulous walks in Portland and you may have noticed that all of mine (except for the River View Cemetery, which is just across the Sellwood bridge) are in Southeast. To which I say, of course that is where I go to walk, that is where I live. Southeast has so much to offer, I just never really feel the need to leave! But if you live in other parts of town and love to venture out, write to me about your favorite walks and I will include them in another blog.

market news • December 12, 2020

Why It Makes Sense to Sell Your House This Holiday Season

by Bene Foley

If you’re one of the many homeowners thinking about taking your house off the market for the holidays, hang on. You definitely don’t want to miss the great selling opportunity you have right now. Here’s why this month is the optimal time to make sure your house is available for holiday buyers.

The latest Existing Home Sales Report from The National Association of Realtors (NAR) shows the inventory of houses for sale has dropped to an astonishing all-time low. It now sits at a 2.5-month supply at the current sales pace. Portland’s east side show the inventory at 1.3 month supply!

Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market, in which there are enough homes available for active buyers (See graph below):When the supply of houses for sale is as low as it is today, it’s much harder for buyers to find homes to purchase. This means competition among purchasers rises and more bidding wars take place, making it essential for buyers to submit very attractive offers.

As this happens, prices rise and sellers are in the best position to negotiate deals that meet their ideal terms. So, if your neighbors decide to remove their listings this season, your house may quickly rise to the top of a holiday buyer’s wish list if you stay on the market.

Today, there are many buyers who are ready, willing, and able to purchase. Record-low mortgage rates and a year filled with unique changes have prompted buyers to think differently about where they live and to take action. The supply of homes for sale is not keeping up with this high demand, making now the optimal time to sell your house.

Bottom Line

Home prices are appreciating in today’s sellers’ market. Making your home available over the next few weeks will give you the most exposure to buyers who will be actively competing against each other to purchase it. Get in touch if you want to start that process.

market news • October 28, 2020

September 2020 Real Estate Statistics

by Bene Foley

If you are a numbers person, this post is for you. The following link provides an in depth look at the real estate data in Portland, Oregon for September 2020. The report includes available inventory, average list price, average days on market, sold vs. list price, and months of inventory broken down by areas and zip codes.

For example, in Southeast Portland in zip code 97202, there were 88 houses on the market in September. That is a change of -46% from last September. The average list price was $790,000, up 7.2% from last year. Houses were on the market an average of 31 days. To be clear, days on the market statistics including all the days that it is pending and well as for sale. Which means most of the houses on the market had only 3-5 days before an offer was accepted!

Houses in 97202 were sold, on average, at 100.4% of the list price. In other areas of Portland this was as high as 104%. These are the numbers, but anecdotally, every agent in Portland has a story similar to mine: My clients just put an offer on a house in Sellwood. They offered $50,000 over asking price. They lost the house to someone whose offer was around $60,000 over asking.

There were 1.6 months of inventory in 97202, down 63.6% from last September. The simplest way to explain “months of inventory” is that at our current rate of home sales, if no new properties came on the market, we would be out of inventory in X # of months.

For information on other areas–including Clackamas County you can go to the link below:

A – By the Numbers – September 2020 (1)

If you have any questions or want to become one of the statistics for next month, give me a call.

Bene's Blog • neighborhoods • October 20, 2020

Sellwood and Westmoreland Neighborhood

by Bene Foley

The Sellwood/Moreland neighborhood in Portland is one of the most desirable on the east side. We love Portland’s east side because every neighborhood has its amenities close enough to walk or bike to—and not just grocery stores: coffee shops, restaurants, bakeries, wine stores, etc. Sellwood/Moreland has two of these little commercial strips, each with its own personality—both walkable from just about any house in the neighborhood. On top of that there are great schools, two large parks, close to MAX, 99 and I-5 and best of all, river access. There is also an amusement park that hosts, in addition to the usual, a roller rink. Some streets are narrow, others wider—all tree-lined and shady; houses range from tiny bungalows, to over 3000 square foot extravaganzas on the cliff over-looking the Willamette. Though set back from the rest of Southeast, this neighborhood cannot be beat for convenience and charm. If you want to explore homes here, feel free to contact me. We can go by bike or electric car!

buyers • August 27, 2020

Why Is It so Important to Be Pre-Approved in the Homebuying Process?

by Bene Foley

You may have heard that pre-approval is a great first step in the homebuying process. But why is it so important? When looking for a home, the temptation to fall in love with a house that’s outside your budget is very real. So, before you start shopping around, it’s helpful to know your price range, what you’re comfortable within a monthly mortgage payment, and ultimately how much money you can borrow for your loan. Pre-approval from a lender is the only way to do this.

According to a recent survey from realtor.com, many buyers are making the mistake of skipping the pre-approval step in the homebuying process:

“Of over 2,000 active home shoppers who plan to purchase a home in the next 12 months, only 52% obtained a pre-approval letter before beginning their home search, which means nearly half of home buyers are missing this crucial piece of paperwork.”

This paperwork (the pre-approval letter) shows sellers you’re a qualified buyer, something that can really help you stand out from the crowd in the current ultra-competitive market.

How competitive is today’s market? Extremely – especially among buyers.

With limited inventory, there are many more buyers than sellers right now, and that’s fueling the competition. According to the National Association of Realtors (NAR), homes are receiving an average of 2.9 offers for sellers to negotiate, so bidding wars are heating up.

Pre-approval shows homeowners you’re a serious buyer. It helps you stand out from the crowd if you get into a multiple-offer scenario, and these days, it’s likely. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war and land the home of your dreams.

Danielle Hale, Chief Economist for realtor.com notes:

“For ‘a buyer in a competitive market, it’s typically essential to have pre-approval done in order to submit an offer, so getting it done before you even look at homes is a smart move that will enable a buyer to move fast to put an offer in on the right home.’”

In addition, today’s housing market is also changing from moment to moment. Interest rates are low, prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals (a loan officer and a real estate agent) making sure you take the right steps along the way and can show your qualifications as a buyer at the time you find a home to purchase.

Bottom Line

In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. If you’re ready to buy this year, let’s connect before you start searching for a home.

market news • July 20, 2020

What Are Experts Saying about Home Prices?

by Bene Foley

Last week, a very well-respected real estate analytics firm surprised many with their home price projection for the next twelve months. CoreLogic, in their latest Home Price Index said:

“The economic downturn that started in March 2020 is predicted to cause a 6.6% drop in the HPI by May 2021, which would be the first decrease in annual home prices in over 9 years.”

The forecast was surprising as it was strikingly different than any other projection by major analysts. Six of the other eight forecasts call for appreciation, and the two who project depreciation indicate it will be one percent or less.

Here is a graph showing all of the projections:There’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. Last week mortgage applications to buy a home were 33% higher than they were at the same time last year. The available inventory of homes for sale is 31% lower than it was last year. Normally, these numbers should call for homes to continue to appreciate.

Bottom Line

Because of the uncertainty with the pandemic, any economic prediction is extremely difficult. However, looking at the limited supply of homes for sale and the tremendous demand for housing, it is difficult to disagree with the majority of analysts who are calling for price appreciation.

My clients in Portland are seeing a very competitive market with multiple offer situations becoming the norm. Contact me with any questions.

market news • July 2, 2020

What Are Experts Saying About the Rest of 2020?

by Bene Foley

One of the biggest questions on everyone’s minds these days is: What’s going to happen to the housing market in the second half of the year? My clients in Portland, Oregon want to know if they should still buy or sell. Based on recent data on the economy, unemployment, real estate, and more, many economists are revising their forecasts for the remainder of 2020 – and the outlook is extremely encouraging. Here’s a look at what some experts have to say about key areas that will power the industry and the economy forward this year.

Mortgage Purchase Originations: Joel Kan, Associate Vice President of Economic and Industry Forecasting, Mortgage Bankers Association

“The recovery in housing is happening faster than expected. We anticipated a drop off in Q3. But, we don’t think that’s the case anymore. We revised our Q3 numbers higher. Before, we predicted a 2 percent decline in purchase originations in 2020, now we think there will be 2 percent growth this year.”

Home Sales: Lawrence Yun, Chief Economist, National Association of Realtors

“Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lock down and hence the cyclical low point…Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”

Inventory: George Ratiu, Senior Economist, realtor.com

“We can project that the next few months will see a slow-yet-steady improvement in new inventory…we projected a stepped improvement for the May through August months, followed by a return to historical trend for the September through December time frame.”

Mortgage Rates: Freddie Mac

“Going forward, we forecast the 30-year fixed-rate mortgage to remain low, falling to a yearly average of 3.4% in 2020 and 3.2% in 2021.”

New Construction: Doug Duncan, Chief Economist, Fannie Mae

“The weaker-than-expected single-family starts number may be a matter of timing, as single-family permits jumped by a stronger 11.9 percent. In addition, the number of authorized single-family units not yet started rose 5.4 percent to the second-highest level since 2008. This suggests that a significant acceleration in new construction will likely occur.”

Bottom Line

The experts are optimistic about the second half of the year. Portland area homes are still selling fast and interest rates are low. If you paused your 2020 real estate plans this spring, let’s connect today to determine how you can re-engage in the process.

Bene's Blog • neighborhoods • June 30, 2020

Eastmoreland Neighborhood

by Bene Foley

The Eastmoreland neighborhood is known for its architecture and tall, mature trees. Reed College Way runs North/South through the middle of the neighborhood with a wide median lined with mature trees in a double row split by a dirt path down the middle. Reed College is located on the North end of this road and offers a beautiful forested canyon and Tudor-Gothic buildings. However, college life does not flow into this neighborhood. These are quiet, tree-lined streets with a golf course at its western edge. The Woodstock neighborhood is on the east side so whenever I need some shade, I head to Eastmoreland to stay cool.

The houses in Eastmoreland tend to be large and the yards well-kept by landscaping companies. It is hard to avoid the noise of gas-powered gardening equipment in this otherwise quiet neighborhood. Despite finding refuge here in the heat of the summer, I do tend to get bitter about the landscaping companies that drive down my street in droves, with their trailers rattling first thing in the morning—including Saturdays—to service the Eastmoreland clientele.

Eastmoreland neighborhood association has been in conflict over whether or not to become a historic district. I can see both sides of the issue. Not living there, I am happy to take a neutral position. Whatever they decide, the architecture is very interesting and it makes for a fun tour. I am always surprised at the lack of eaves and covered entryways on these houses considering the climate. It makes me wonder if the early inhabitants built the whole neighborhood the summer they arrived, clueless to the coming rainy season. Regardless, the houses tend to be well preserved and most retain the physical integrity of the period in which they were built.

Eastmoreland was a planned neighborhood created by the same company that planned Ladd’s Addition and Laurelhurst. It was one of the strictest in its building guidelines. This neighborhood originally, like most in Portland at the time, prohibited Asians and African Americans from owning property there. For more history visit: https://www.eastmorelandpdx.org/history/

The Springwater corridor bike trail is close by, which can take bikers or walkers into Sellwood and beyond or out east to Powell Butte. The Bybee Max station (Orange line) is close, the 19 bus goes into Sellwood and there is quick access to southbound 99E. Both Moreland shops and the Woodstock shopping district are within a mile or two.

Feel free to contact me with any real estate questions.

neighborhoods • June 12, 2020

Woodstock Family Protest

by Bene Foley

Art by Jae Bell

There have been protests and marches all across the country in response to the murder of George Floyd by police officers in Minneapolis. I have a thirteen-year-old who began asking daily if I could take him to the protests in Portland. Because of the large police presence and the threat of violence, I hesitated taking him to the larger protests and was waiting for a vigil or smaller demonstration. The Woodstock community came through. Woodstock Facebook

On Friday at 5:00 my son and I made our way to Woodstock Boulevard to meet up with what I assumed to be a small group of like-minded Portlanders from the Woodstock neighborhood. Everywhere we looked we saw families walking in the same direction, some toting handmade signs. Faces covered with masks, we arrived at the starting point to find the church parking lot overflowing into the street and people swarming toward us.

The march began moments after we arrive and the organizer, carrying a huge rainbow flag began to lead the procession down the sidewalk. It took him about a block before he realized that walking on the sidewalk was never going to work with the amazing turnout of people. We took over the street and stopped traffic, sometimes in both directions, for the next 10 blocks. When we looped back around we could see that the people continued to come, so that 10 city blocks were full of protesters chanting, moving in both directions. I marveled over it again and again, how did our little neighborhood gather so many of us together? Once again, I fell in love with my neighborhood.

The only disappointment was that we did not march into the next neighborhood. Not far from us, on Reed College Place, artists and volunteers have put up an amazing memorial. The avenue is split down the middle and has a grassy median with evenly spaced trees on either side and a dirt path going between them. This mile-long street has a sign on every tree spelling out the names of people of color who had their lives taken from them by the police. It must have been a huge undertaking and would have made for an even more powerful march. As of this writing, it is still up. If you haven’t seen it, it is worth the trip.

These protests are long overdue and are really beginning to wake up whites to their privilege. I was working up the nerve to bring some of this to the attention of my Principle broker and to ask if there was something we could do in our own office. I didn’t have to. At our meeting this week he brought it up and we are now working on bringing in some educators to help us start thinking about our own privilege and how it affects others. I loved how one person said that they didn’t know how to show their support in case they offended someone and another answered, “We need to be okay with being uncomfortable, some people don’t have that choice.” These conversations are pretty common in educational settings, but it is great to finally see them happening in the workplace.