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re:PDX is presented by Claire Widmark, broker affiliated with M Realty LLC in Portland, Oregon.
Phone: 971-275-3691
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Wealthy Owners Defaulting at Higher Rate Than Middle Class
The new buzz phrase in distressed real estate is “strategic default”, or purposely walking away from an upside down mortgage. Apparently, wealthy homeowners are handing the keys back to the bank at a higher rate than their middle-class counterparts.
The NY Times reports that homeowners with mortgages in excess of $1 million are defaulting at a 1 out of 7 pace.
From the NY Times article:
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.
Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.
“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.
Photo courtesy of Corvair Owner, used under Creative Commons license.
Free Homeownership Preservation Workshop Comes to Portland
If you’re struggling to keep your home, you may want to take advantage of an upcoming workshop and free counseling put on by the federal government.
From the Making Home Affordable Program:
A homeownership preservation workshop, sponsored by the Obama Administration’s Making Home Affordable Program, HOPE NOW Alliance and NeighborWorks® America, will be held in Portland for all homeowners who may be at risk of foreclosure. The workshop is free, open to the public, and provides a chance for homeowners to meet face-to-face with their mortgage company and a HUD-approved counseling agency to work on a solution to help them stay in their home.
WHO: Portland homeowners who are in default on their mortgage or may be at risk of foreclosure
WHAT: Free Homeownership Preservation Workshop
WHEN: Tuesday, March 23, 2010, 1:00 pm -7:30 pm
WHERE: Doubletree Hotel Portland, 1000 NE Multnomah Street, Portland, OR 97232
The Obama Administration’s Making Home Affordable Program was created to help millions of homeowners refinance or modify their mortgage payments to a level that is more affordable.
More information at www.MakingHomeAffordable.gov and a link to the flyer (in Spanish, too).
Dude! Where’s My Stove?
In foreclosure-ravaged communities like Las Vegas, parts of California, and Phoenix, it’s not uncommon to hear of properties that have been stripped of their appliances and other relatively removable fixtures.
But it’s less common in the Portland area. In fact, this is the worst I’ve seen.
Damascus home stripped of fixtures
From The Oregonian:
DAMASCUS — After stripping his foreclosed home of everything from the air conditioning system to the kitchen sink, Grigoriy Bogoslavets was convicted of a crime that is often witnessed but rarely reported.
The 33-year-old electrician pleaded no contest last month to aggravated theft after stealing more than $50,000 of property attached to his former Damascus home, one of the few such cases in Oregon or across the country to result in prosecution. He will be sentenced Sept. 22.
In many of the distress properties I’ve viewed recently, sometimes the range, range fan, dishwasher, and the decorative light fixtures have been removed during the pre-foreclosure period. But I’ve never seen the island and the drawers from the cabinets taken. Can’t imagine how those will be used.
This guy got caught because the neighbors reported it to the police. If you live in a neighborhood with a house going to foreclosure, and you suspect a neighbor is doing the same thing, report it and protect your property values. This guy might get up to 4 years in prison.
Full story on OregonLive.com.
The Weekend Starts Early in Clackamas County
Want to record your title and take possession of your new home on a Friday, in time for a weekend move-in? Not gonna happen if your home is located in Clackamas County, because no one will be at work to record your title.
(Cue crickets chirping)
After November 1, 2008, many Clackamas County offices are moving to a 4-day work week, with only public safety services like fire and police open on Friday. The Friday shutdown is a trial program, designed to reduce the county’s carbon footprint by minimizing employee commutes and energy costs at the county building. New hours are expected to extend from 7am to 6pm Monday through Thursday.
So, if you have a home in escrow, check your sale agreements and notify your lender to change any scheduled Friday closings. Title officers will now have to get used to a crush of panic-driven Thursday closings, instead.
Heads-up courtesy of Trudy Bushard at Eagle Home Mortgage.
Craigslist Shakes Up Real Estate for Sale Section
Casual users of Craigslist may not have noticed a change last week to the Real Estate for Sale section. Recently, my bookmark for that section suddenly started showing fewer and fewer listings.
Around August 4, it appears the ‘real estate for sale’ category was split into ‘for sale by broker‘ and ‘for sale by owner‘ buckets. Fortunately, the company kept the ALL category alive, but is now addressed as http://portland.craigslist.org/rea/ (instead of /rfs).
I saw complaints about the previous real estate for sale section, like, “Why do brokers put their listings here (multiple times), when there is already an MLS?” The new categorization solves that issue if you just want to see owner listings. But when I looked in the ‘by owner’ section today, it seemed rife with spam, foreclosure ‘help’ ads, and other money schemes. Some policing will be needed.
Another thought, with the split, is Craigslist prepping to charge Portland brokers to advertise their listings like they do in NYC? We shall see.
Yar! Hand Over Yer Junque!
Cruising through Craigslist this weekend and ran across these scurvy dogs:
Here’s their Craigslist pitch:
Shake your booty. (All Over)
Shake it like it was LA!
Lose it sister. Get rid of it brother.
You don’t need that stuff. It’s no good.
And someday someone somewhere will find a way to link it to cancer.PREPARE YOURSELF (<– scare tactic)
By calling the Junk Pirates today!
1-888-47-BOOTY (that’s 1-888-472-6689)
Follow Fritz: www.myspace.com/junk_pirates
Now, from a branding perspective, I think this kills. Most cleanup crews have non-descript business names with no hook to remember them by or reason to refer them to anyone.
But you’d probably remember the Junk Pirates. At least I will. Heck, they even have a vanity 800 number.
Note: This is an unsolicited review. I have not used them or referred them to anyone.
Yet.
Market Talk with The Oregonian
I had an opportunity to talk with Dana Tims for today’s “Dealing With The Downturn” feature in the SW Weekly section of the Oregonian, which covers Tigard, Tualatin, and Sherwood.
Tims interviewed a homebuilder, supplier, remodeler, homeseller, and real estate agent to gauge how each sector is adapting to a slower housing market.
Here is the text, in case the link goes away:
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Trying to adapt to the new housing market
A builder, a Realtor, a seller, a remodeler and a supplier discuss their strategies
Thursday, April 10, 2008
DANA TIMS
The Oregonian Staff
Until recently, a vibrant housing market provided many of the jobs and much of the income that stoked the southwest suburbs’ economy for the past half-decade.
Much has happened in the past year to erase the double-digit profits that home sellers were taking for granted.
The number of houses on the market, for instance, has increased almost sixfold since 2006, giving buyers the upper hand.
Houses are lingering on the market far longer than they did two or three years ago. The multiple offers and bidding wars common among prospective buyers as recently as 2005 have been replaced by sellers trimming asking prices 10 percent and more to keep buyers from shopping elsewhere.
Some areas are feeling the pinch more than others. Below are brief profiles of five people and their accompanying market sectors. Each is trying to find new strategies for coping with the downturn.
The Realtor
Ron Ares jumped from his job as marketing director for a high-tech company to a family-run real estate business in West Linn three years ago. That may as well have been a lifetime ago.
“Inventories were half of what they are now, full-price offers were commonplace and if buyers didn’t have all their ducks in a row, they were likely to miss out on houses that were selling the same day they came on the market,” said Ares, a Tigard resident who specializes in the southwest suburbs. “It was one open house, one advertisement and ‘Katie bar the door.’ ”
The market hit its peak, in terms of median sales prices and number of houses sold, last July or August, Ares said.
Ultimately, he expects that this year will see a considerable dip in closed sales when compared with 2007, but the drop will be less than the 35 percent chalked up so far this year.
Successful agents — that is, those not among the nearly 1,100 Portland-area Realtors who decided not to renew their licenses at the beginning of 2008 — need to pay close attention to the market and be willing to expand their skills sets, he said.
Some agents, for instance, are focusing on so-called short sales, where the balance owed on the mortgage is more than a house’s market value. The endeavor involves negotiating with lenders, who may be willing to settle for less to avoid foreclosing.
In Ares’ case, he is working only with longtime lenders who have endured down cycles before and know how to source solid loans.
“What I’m telling clients is, if you need to sell and don’t want to get stuck, look at what the peak pricing was and take 5 percent off the asking price,” Ares said. “Otherwise, they’ll just be chasing the market down.”
Read the full interview for how the other interviewees are coping with a slower real estate market.
Sign Posts of the Times
Over the past few years, those companies that plant the 4x4x8 signposts in yards for real estate signs have had quite a bustling business. But even that little cottage industry isn’t immune to a little regulation.
Apparently, they are now required by law to call utility companies and have them locate all services before the post can be dug and set. Ostensibly, a few too many sprinkler lines and cable TV services got nicked over the past few years by aggressive posthole diggers.
Their advice? Plant a flag where the signpost will likely go, so that the utility companies won’t locate and mark EVERY utility path in your yard with day-glo orange, like what happened to the poor sap below:
Puts a damper on curb appeal, doesn’t it?
Picture and advisory courtesy of Classic Real Estate Services.
Toeing the Party Sewer Line
The city of Portland has stepped in to provide relief to homeowners dismayed to find themselves on the hook for unforseen, major sewer repairs.
But for a prospective home buyer, a $100 video will help you avoid such shock.
Hopefully, by now it is commonly understood that an inspection of the sewer connection is an integral part of a homebuyer’s inspection procedure. For the uninitiated, a sewer inspection consists of running a fiber-optic camera down the home’s sewer connection all the way out to where it meets the city’s main sewer. The cameras are calibrated to show their distance down the sewer line, so if a crack, tree root intrusion, broken joint, or other obstruction (rats!) is found, it can easily be located in the yard. When it’s done, the potential homebuyer usually gets a DVD or tape of the inspection–their own ‘dirty movie’.
If damage is visible, then repairs become a negotiable item between the seller and buyer. Most of the simple line replacements I’ve seen have run in the $3,000 to $4,000 range. But it can be a lot more–particularly when it comes to the dreaded party sewer line. These are sewer lines that collect from multiple homes, sometimes traverse over several private property lots, and eventually find their way to the city main.
On January 2nd, the Portland city council unanimously approved a subsidy to share the cost with homeowners of replacing party sewer lines with individual connections to the city’s main lines. Over 3,000 properties in the city of Portland are still affected by party lines, particularly those on large lots in older neighborhoods that were subsequently divided to build new homes. The inner SE is especially affected.
From The Oregonian:
The plan…guarantees homeowners a rate of $2.98 per square foot of lot to run city sewer lines near their home. That’s nearly $15,000 for a typical 5,000-square-foot lot. The city will pay the rest of the cost for the work. Homeowners must also pay a plumber to connect their house to that city line, which often costs $1,000 to $2,000, Danaher (city sewer manager) said. That’s still much cheaper than the $25,000 to $60,000 bills homeowners typically face, she said.
So, potential homebuyers, while the city subsidy might be viewed as relief to the existing owners who were staring down a $50,000 estimate, your $100 inspection lets you see the filthy truth with your eyes wide open–and watch it over and over.
Photo: Mark from City Sewer, getting some footage on a 1993 property in Tualatin. Yes, it is advisable to check newer lines, especially if they are long runs out to the city main.
[tags] Portland, Oregon, real estate, sewer, inspection, scope, disclosure, repairs, party line [/tags]
2008 Changes in Oregon Real Estate Practice
It’s a new year Baby, and with it come a handful of modifications to Oregon’s real estate practice.
The 2007 Legislature passed a few items that have impact on homebuyers and sellers, and Oregon’s largest multiple listing service, RMLS, has made some changes, too.
Here’s a summary*:
RMLS Listings Numbers Change: The listing identification number on properties for sale in the multiple listing service has changed. Starting January 1, all new MLS listing numbers start with an ’8′, as in RMLS# 8000043. This is standard procedure for RMLS, however, it does not ensure that the listing is NEW in 2008. Listings can change brokers, be removed from the market temporarily and relisted, or are merely refreshed with a new number (a practice that is frowned upon). Check with your broker for details for a history of how long a listing has REALLY been active.
Contracts address Measure 49, sort of: The Oregon Real Estate Sale Agreement commonly used by Oregon Realtors, now contains language addressing the recent passage of Measure 49. Like the previous language for Oregon’s Measure 37, the language cautions buyers and sellers to know their rights and the rights of neighboring property owners under the provisions of the new law. Those rights might seem a little murky right now as the courts and counties grapple with land use applications and lawsuits.
Flippers Get Relief: Oregon House Bill 2498 provides an exception to the licensing requirements for general contractors. Previously, if you were in the business of buying properties and fixing them up for re-sale (flipping), you were required to have a contractor’s license. Now, you may work on up to three existing homes and market them for sale per calendar year. Please note that if remodeling requires building permits, the property owner is required to hire a general contractor to perform the work or supervise subcontractors.
Tax Withholding: This change may bite a few investors this year. Oregon House Bill 2592 created a provision for tax compliance withholding at closing for all non-resident owners. So, escrow companies will now be required to withhold a percentage of sales proceeds at closing from out-of-state or foreign owners that do not qualify for an exception.
The withholding amount is the lesser of: 1) 4% of the consideration; 2) 4% of the net proceeds; or 3) 10% of the gain includable in taxable income.
The exceptions include: 1) when the consideration is less than $100,000; 2) if the property is acquired through foreclosure; or 3) if the seller is advised by ‘professionally competent knowledge or advice’ that it is a non-taxable transaction (i.e. tax-deferred (1031) exchange, sale of a principal residence, etc.). Real estate investors, beware…and talk with your tax advisor!
Other changes: Other changes for 2008 on Oregon’s real estate forms include new warning language surrounding legal lot or parcel validation and some minor changes to property disclosure language, but I won’t belabor them here.
*Note: I am not a tax or legal advisor, but have written this to highlight some of the more significant changes to Oregon real estate practice.
(Disturbing) photo by LifeSciences used under Creative Commons license.
