Are Low Appraisals Next?


I’ve been reading reports from other areas of the country about low appraisals. Basically, the appraisals are coming in low because they are not recognizing the shift in the market, and that because of excessively low inventory that prices are on the rise.

I have not experienced it yet in our market, but I can see it as a possibility. Like flowers in the spring, one feels right now if they look closely enough that they could actually watch them grow. That is how I am feeling about the prices of homes in the market at this time. I can almost see them rise.

So are low appraisals coming here next? And when the appraisers model is to look back 6 months, how do they adjust for prices that appear to be visibly rising? First thing that they need is to justify the price with multiple offers. That we are getting. Next there need to be all cash sales. These are typically investor buyers, or relocation buyers. We are getting both of those. Or, there need to be buyers who can afford to pay the difference between the appraisal and the purchase price (and want the house enough to “overpay”).

The people that will be impacted if appraisal start coming in low will be the first time buyers, or those with low downpayments.

While we definitely need a recovery in the market and I do believe that home prices dipped abnormally low on their correction. I do not want to see another bubble like we had in 2004-2006.

Where are the buyers searching

Common sense tells us that the lower the price, the more people who are in the market looking to buy.

Some statistics that I just got demonstrate what price ranges are being searched by consumers. These are numbers provided by the major players, Zillow, Trulia,, etc.

Last month, there were 28,171 views of 3 bedroom properties listed between $100-200k. There were 23,551 views of 3 bedroom properties between $200-300k.

And then the drop-off begins. Between $300-400k the number of 3 bedroom property views dropped to 11,132.

Just an interesting thing to keep in mind when looking at how much competition there is in the market with you. As a buyer, if you can raise your price range, you become a bigger fish in a smaller pond. And as a seller, if you can lower your price, you are in a pond with a whole bunch more fishes.

We’re Number 2

An article posted on CNN Money today listed the top 10 places in the country that they are predicting a housing price rebound. And Medford Oregon was listed as the number 2 spot town in the country.

Predicting economics seems to me to be like fortune telling. One can get lucky, and get it right some of the time, but it is far from a reliable science.

But if you check out my last post about the supply of houses vs. demand, it is easy to see how they are arriving at such predictions.

So all and all, I would call this good news. At the very least, it shows optimism…and that to me is the leading indicator of a healthy real estate market.

If you are interested in buying in this market at this time…please feel free to get hold of me.
Or you can search for a house on my website. Medford Oregon Homes

Falling Taxes on Real Estate in Southern Oregon

This is a reply or clarification from my standpoint on the article that came out in today’s (Oct 4, 2011) Mail Tribune as the front page story. I generally like to link to stories that I refer to, but the Mail Tribune decided that they are charging people to read the online version of their stories, and I can’t condone that decision.
The basics of the story are that property taxes should drop for 37% of Jackson County houses. I just went back over my old Blog posts, and realize that I don’t believe I have answered the question about how property taxes work in the state of Oregon.
The county computes 2 different values for a property. There is a value that is the Maximum Assessed Value (MAV), and a 2nd one that is the (theoretical) Real Market Value(RMV) . Now the RMV is generally off 90% of the time. I don’t really know how they come up with that number. The MAV however is what one pays taxes on. That value is fixed at the point in time that the house is constructed, or a major remodel is completed that significantly changes the value of the home. From that point in time, that value can only increase at 3% per year. Now while real estate was appreciating at a rate of greater than 3% a year, there became a pretty wider discrepancy between the MAV and the RMV.
Now that we have just gotten into our 5 straight year of depreciation though, the chances of a house’s RMV being lower than the MAV has become a reality. Especially for homes that were built after 2002.
I’ll give you some examples…
My home has a MAV of $143,500 and a RMV of $206,000. Now if I were to sell it today, I would get probably somewhere over $250,000. So my taxes will not be affected. My house was built in 1948, and it’s MAV will probably never be under the RMV.
On the other hand…after a quick search of the MLS, I found a house in Eagle Point that was built in 2005, sold in the last couple of months as and REO for $299,000. The county shows the MAV is $327,000 and the RMV is 395,000. The buyer of this property should be able to take their sale down to the assessors office, and have the value of that property changed. And that change should reduce their taxes by  close to $300 a year or so.
Now one more example…I am in the process of selling a house at this time that has a MAV $35,000 over what the accepted sales price is. It is a lower end, first time home buyer kind of a house. Now when getting a loan on a house like this, sometimes the ratio of payments to income is close. And the difference of $30 on a monthly payment could be the difference as to whether or not a buyer could get that loan. Under the new price, the taxes on this house should decrease by close to $500 per year. A Realtor who is representing their buyer should know these figures…and if getting the loan would be achieved easier by getting the taxed assessed value to go through…that would be the kind of problem solving that is needed in today’s market.
If it isn’t required for the loan, then at the very least they should recommend to their client to take the steps necessary to reduce their taxes.
It is easy to start. The Assessors office is on the 2nd floor in the County building on Oakdale in Medford. I have managed to have a person there to talk to within a minute every time I have visited that office.
Okay…sorry for the long post…I was trying to get a lot of information across. As always, when looking for property in Jackson County, Medford and Ashland, come talk to me. One of the best reasons to have a Realtor on your side is having someone who has that knowledge base. I sometime go into teacher mode a little strong….but I can certainly help you with the process.

Ashland Summer Not So Hot

This has really been another mild Summer in the Rogue Valley. For an area that has normally seen a handful of 100+ degree days by now, they are nowhere to be seen.

Image by Cle0patra via Creative Commons

This is good news to many who do not like that hot weather…plus good news to keep the forest fires down, and the rivers and lakes full.

Unfortunately, Ashland Real Estate is not as hot as it could be either. Since Summer Solstice, there have been 36 sales in Ashland. There are currently 30 pending sales to go along with that.

But there is a supply of another 195 houses still on the market. With an average of about 19 houses per month selling, that has Ashland at a 10 month supply.

So to relate that back to the weather analogy.

If the normal real estate temperature at this time of the year is pushing 100 degrees, then this year we probably are looking at temps around 85 degrees. Still fairly pleasant, but definitely not hot.

Okay, enough silly weather analogies. I’m going to go out and enjoy the pleasant 85 while we’ve got it…cause you all know that fall is right around that next corner.


P.S. Remember…if you want to look at what houses are currently on the market you have find Ashland Real Estate Listings Here.

Sitting in the Woods

It is beautiful up here in the Greensprings today. Sitting holding an open house for brokers at the Mountain Cabin I’ve had listed for a while.
The price has been lowered to $150,000 with possible owner terms.

So I am sitting in the sun on the south facing deck. It is slightly breezy, with pretty much only the sound of the wind through the trees. It kind sounds like there is a creek running in the distance.

I could get used to this.

New Tech in the House

With as techie as I am, I’ve kind of taken the last few months away from the blogosphere. A dying computer as an excuse, the effort to create and write disappeared.

Here is hopeful note that with some new equipment, that the future holds more posts, perhaps some video interviews, and a way to avoid putting out crap.

So forgive this meaningless entry, as it is mostly a test of the iPad.

I have also refreshed the look of my website. AgentInAKilt

Other new projects I am working on include:

A podcast of a personal nature with my brother.
Video editing for a book repair business run by my wife
More twitter presence (which by the way is way better with the iPad app then online)

And more…..

So if you have topics relating to real estate, especially in Ashland Oregon, please contact me via the twitter at @agentinakilt

An analysis of the effect of the home buyer tax credit

My last newsletter asked the question of what effect did the home buyer government stimulus money have?

My answer was I thought that the short term impact was huge. But I was really curious about what the long term impact was going to be.

And I concluded last time we’re really just in a wait and see mode to fully assess the impact.

And now we have waited…and now we can see. From the graphs, I would say that the tax credit worked, sort of. There is a definite bubble of activity that happened in April, but it was followed by a depression in July. And now, most indicators are pointing to being roughly the same as last year.

Therefore, what I thought might happen did appear to come true. People who were thinking of buying rushed their decisions, and bought early. Which did reduce inventory temporarily, but the after effect lull caused that figure to return.

I think the benefit of the credit, and a reason to do something similar again was to give 1st time buyers some cash to make repairs that are needed on many of the foreclosed homes that are dominating the market at the moment. But I could just as easily argue that the effect of that is probably not worth the cost of the entire program.

A different program that targeted foreclosed homes, and provided extra money to make them livable would be more likely to help. There are loan programs that are designed to do this, such as the FHA 203k loan, but the regulation and requirements for this particular loan can be a challenge to qualify for. I guess what I would like to see is a more streamlined method to borrow home improvement/repair money and incentives to do so. Especially for houses that will be primary residences.

Investors are buying

I was having a conversation with a fellow Handball player yesterday who was visiting for a game. He invests in real estate, and has for a number of years.

What he was telling me was that he couldn’t buy houses fast enough at this time. He’ s been going in with cash, and buying rental properties. His argument was that you could not replace the houses that he is buying for the cost that he gets them. That was what he considered a good investment. Buying something under value while everyone is scared. Don’t I wish this guy lived closer to me? You bet.

Can one be building long term wealth right now? You bet. This is the time that those who have money, get more money. However, the unfortunate downside is those that don’t have the money..things aren’t getting better for them.

Even if you can’t pay all cash for a place, but have some money that you might want to reinvest. Either sitting in a savings account or bond, or perhaps in the stock market.

If I could help you find a place that had a 10% annual return…and you had to borrow at 6% to make it work. You are still making 4% on borrowed money, while some renter is paying off the principle balance. If you can put something like that on a 15 year note, a $30,000 investment on a $150,000 home would be paid off in 15 years. So even with no appreciation, one could own free and clear the home…then all rent coming in would be strictly income. Do that 10 times, with a rent of $1000 a month per house…in 15 years, that could be $10,000 of income a month.

I could retire on that.

Whatever your financial situation is, if you would like to sit and discuss some real estate related financial goals, I would be happy to share some of my knowledge with you.

And as always, if looking for Ashland Oregon Real Estate, don’t forget to visit my website.

Protect Your Investment-De-moss your roof

One of the things I notice from the number of houses I visit, plus the house I own is the accumulation of moss on the roofs in our area. This happens most often on the north side of a house, or if there is a tree that is shading a portion of the roof. The moss is a slow growing organism that will over time cause enough damage to considerable shorten the life of the roof.

I recommend the following:

  • Inspecting the roof annually
  • Remove the accumulated moss
  • Copper and Zinc can inhibit future moss growth

Now since I am not a contractor (roofing, or otherwise) here are a couple of links to some articles about moss removal.

Ask the Builder

This Old House (video about installing Zinc Strips. I like the idea, but would prefer to use copper if accessible and affordable. Later in the video, they recommend using a bleach solution to kill existing moss, most sites I saw recommended against using bleach)

Non-bleach moss killer

Or Ace Hardware shows online that they sell a moss removal spray for $20 and that they have zinc strips for about $20 for 30 feet (although they show they are sold out at this time).

ZincShield online shows that they sell a 50 foot roll for $36.50.

I could not find affordable copper strips.