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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!
Sellwood and Westmoreland Neighborhood
Why Is It so Important to Be Pre-Approved in the Homebuying Process?
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.
What Are Experts Saying about Home Prices?
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.
What Are Experts Saying About the Rest of 2020?
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.
Eastmoreland Neighborhood
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.
Woodstock Family Protest
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.
Financing Your First Home in Portland (or Anywhere)
Buying a home for the first time is exciting and scary. This is most likely the biggest purchase you will make in your lifetime. But how are you going to finance it?
When people finally make the decision to buy, they often start with figuring out how much they can afford. There are all sorts of mortgage calculators online that can help you do this. They are great for giving a ballpark figure, but it is not until you talk with a lender or mortgage broker (What is the Difference Between Lenders and Mortgage Brokers) that you learn what programs you might qualify for. There are so many programs that can get you into a house from government options to neighborhood specific opportunities and they are worth researching before choosing a lender or broker.
Often, once a buyer finds a mortgage broker, they stick with that one—even if they are told that they do not qualify. Talking to a lender right when you decide to buy is a great thing to do. They can help you figure out how to increase your credit score or improve your debt to income ratio. However, just because you started working with one, does not mean they are the right lender for you. If you qualify for less than you were hoping for, get a second opinion. Not all lenders participate in the same programs. For example, in Portland, there are only a handful of lenders that will do Oregon Bond Loan which is not credit sensitive and can lower your rate or help you with closing costs if you qualify. This could be the difference between affording a house in the Portland area or staying a renter.
Ask your real estate agent to refer you to someone who can help you get into the market. If you can afford to pay the high rent in Portland, you are likely able to buy with the right program.
How to Buy Safely in Portland
We are still seeing a lot of real estate activity in Portland these days. Despite the Stay at Home order, the low mortgage rates and low inventory are sending first time buyers out to look for homes. Others were planning a move before COVID started and are continuing with their plans. Still others realize that their needs have changed because of the continued concern over the pandemic.
Real estate, like all industries, has had to adjust the way it does business. We want to help keep people safe, so we need to prevent crowded spaces and close contact. So how are we redesigning our model to maintain social distancing? And what do buyers need to know about this process?
Financing: Talking with a lender has always been the first step in the home buying process. It is more important than ever to start that process first so that buyers can limit their visits to homes that they can afford. This process can be done from home, over the phone and computer. If you have been temporarily laid off, this may not be a great time to apply for a mortgage. If you were pre-approved before the pandemic, you should contact your lender to make sure that nothing has changed. Pre-approval is essential to starting the buying process.
Looking for Homes: Even before COVID buyers have been searching for homes online first. The second step often involved Saturday and Sunday open houses where buyers would see anywhere from four to ten houses in one day. This step was often done without the buyer’s agent. In order to stay safe, open houses are no longer an option (though new forms of open houses are being developed as I write). Now every in-person showing needs to be done with an agent. This limits how many houses can be viewed. So what should buyers do?
- First search online. Ask your REALTOR to send you new listings daily or use REALTOR.com or other websites where you can set up searches that notify you when new properties go on the market. (Not all houses will come up on every site. If you work with a REALTOR in a larger company, they will have other sources for houses that are not put on MLS.)
- When you see houses you like research the neighborhood, then drive by the property or take a walk to the nearest park or business district. There are often things the pictures don’t tell you.
- Read all the details about the house. Can you live without the gas stove you wanted so badly? What about that of A/C?
- Tour the home virtually if you can. If the listing agent doesn’t have a virtual home tour, ask your agent to walk through with you on Zoom.
- If the home is still one of your top choices, go and see it in person. This can be done safely, and your agent will probably ask you to sign a form stating that you don’t have any COVID symptoms. You will most likely be driving in your own car and you will have to wear a mask (and possibly gloves)to enter the house. You will have to follow the protocol that the listing agent insists on which often includes a restriction on the number of people in the house at one time.
When choosing a REALTOR, find someone you can trust to keep your safety as well as your housing needs as a priority. Make sure to ask what their safety protocols are for in-person showings. Having a good agent is more important than ever.
The Woodstock Neighborhood Goats
I love seeing goats in Portland. Here we are, walking down a typical Woodstock neighborhood street, when there, in front of us is a man walking his two goats. One of them stops short and refuses to go any further—stubborn animals—because that is not the way she is used to. Further north, on one of the sweet unmaintained roads that that I have mentioned before, a little urban farmyard is set up, replete with goats.
I have a love/hate relationship with goats. I love the idea of them. They are cute (though their eyes are a little devilish); they reproduce; they eat weeds including blackberry (thorns and all) and young poison oak and they give milk. What a perfect domesticated animal. Except they are not.
I lived with and sometimes helped milk goats for 11 years. Once, when I was pregnant, our pregnant goat came up to me and butted me in the stomach—hard. And for no apparent reason. I had the distinct feeling that she knew what she was doing! Goats also tear the bark off fruit trees. They attract flies. And they are extremely stubborn.
Still, I love to see goats living in the city. There are three people raising goats in Woodstock that I know of, and that is on the south side alone. Some are so hidden you would never know they were there (until someone brings them out on a leash). Others are out there for kids to come watch. And though goats are really happy out in large meadows on a farm in the country, the city goats that I have seen are happy to climb on the roofs of their barns. After all, goats are mountain animals by nature.
Why Home Equity Is a Bright Spark in the Housing Market
Here in Portland, Oregon many of us don’t even know anyone who contracted Covid-19. But all of us know someone who has lost a job, whether temporary or permanent. Many people are scared about what this means for the future of the economy and to the housing market.
Given how we have seen more unemployment claims than ever before over the past several weeks, fear is spreading widely. Some good news, however, shows that more than 4 million initial unemployment filers have likely already found a new job, especially as industries such as health care, food and grocery stores, retail, delivery, and more increase their employment opportunities. Breaking down what unemployment means for homeownership, and understanding the significant equity Americans hold today, are important parts of seeing the picture clearly when sorting through this uncertainty.
One of the biggest questions right now is whether this historic unemployment rate will initiate a new surge of foreclosures in the market. It’s a very real fear. Despite the staggering number of claims, there are actually many reasons why we won’t see a significant number of foreclosures like we did during the housing crash twelve years ago. The amount of equity homeowners have today is a leading differentiator in the current market.
Today, according to John Burns Consulting, 58.7% of homes in the U.S. have at least 60% equity. That number is drastically different than it was in 2008 when the housing bubble burst. The last recession was painful, and when prices dipped, many found themselves owing more on their mortgage than what their homes were worth. Homeowners simply walked away at that point. Now, 42.1% of all homes in this country are mortgage-free, meaning they’re owned free and clear. Those homes are not at risk for foreclosure (see graph below):
In addition, CoreLogic notes the average equity mortgaged homes have today is $177,000. That’s a significant amount that homeowners won’t be stepping away from, even in today’s economy (see chart below):
In essence, the amount of equity homeowners have today positions them to be in a much better place than they were in 2008.
Bottom Line
The fear and uncertainty we feel right now are very real, and this is not going to be easy. We can, however, see strength in our current market through homeowner equity that has not been there in the past. That may be a bright spark to help us make it through.
