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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.

When Discrimination is Okay

I guess it takes something as horrific as this to get me to start writing again.

Aryan Nation Wants To Locate Headquarters in John Day, Oregon

First, I would like to commend Gene Officer, the Realtor quoted in the story, for his comments. I would also like to commend all other Realtors in the area who will not help these people buy property, and I condemn any who will.

I believe strongly in the fair housing act that was passed into law in the 60’s and its subsequent revisions. The law as I understand it is to  not discriminate based on race, religion, color, national origin, familial status, gender or disability. I think sexual orientation needs to be added to this list ASAP.

BUT….Political point of view is not a protected class. If I wanted to choose to not work with anyone who is a Republican, or a Democrat, or a Tea Partyist, or a Libertarian, or a Green Party….that would be my right…and I don’t believe that it would violate any laws.

The idea that this Mullet dude would sue the city of John Day for not allowing him to buy in the town is crazy. I’m not a lawyer…but there is nothing that says you have to sell to anyone….it just says you can’t discriminate based on the above criteria. But Mullet believes in discriminating based on race, religion, disability, etc….  And for him to even threaten to sue is somewhere between pathetic and ironic.

Memo to the Aryan Nation. You cannot stand behind discrimination laws to justify your unjustifiable actions.

Realtors of John Day…(and the rest of the country)…you do not have to help people who promote hate.

Owners of Property….you don’t have to sell to people who promote hate..you don’t have to sell to child molesters (they are not a protected class), you need to follow fair housing guidelines…but if it is not a listed protected class…it is not protected.

Again, I am a Realtor, not a fair housing attorney. And I suppose I could be wrong.

But Aryan Nation…get out of my state, and get out of my Country.

Seller’s Market under $200k—but not over

I’ve been looking at the added sales volume we have had in the Rogue Valley lately, and hearing stories (and experiencing) multiple offer situations. It has been feeling like a seller’s market in many ways. However, it all seems to be in the lower price range. So I just ran a few numbers.

For the record…the numbers are generate from sales reported to Southern Oregon MLS, and are in town properties for sale in Medford, Talent, Phoenix, Ashland and Jacksonville, with reported sales in the last 3 months.

A quick refresher…I am going to be talking about absorbsion rate. That is the rate of current sales divided into current inventory…or how many months it would take to sell all of the available homes if no other homes were listed.

So the numbers go something like this:

  • Under $200k, there are currently 332 properties available, and an average of 59 sales a month. So there are 5.5 months of supply.
  • Between $200k and $300k there are currently 326 properties available and an average of 32 sales a month. So there are 10 months of supply.
  • Between $300k and $500k there are currently 294 properties available and an average of 20 sales a month. So there are 15 months of supply.
  • Between $500k and $800k there are currently 124 properties available and an average of 3 sales a month. So there are 41 months of supply.
  • Over $800k there are currently 52 properties available and an average of 1 sale a month. So there are 52 months of supply.

A six month supply is considered a balance market….so there is a balanced market at under $200k….but in all other price ranges, it is still a buyer’s market.

How does one account for this? I think the first time home buyers and investors are thinking now is the time to buy. The $8000 tax credit appears to be working. What we are missing is the buyers that are moving up…or the buyers that are moving in from other locations.

May Stats Are Here

With every set of statisics I run or receive there is always good news….and there is always some bad news. That is the nature of real estate. What is good for sellers, is not necessarily good for buyers…and vice versa.

That being said…it appears that we are approaching a point in the market where the two may be getting close to meeting…where there is a balance in the market, and neither the seller, nor the buyer has the convincing upper hand. That point is if we hit a point where there is about 6 months of housing supply at the current rate of sales and listings.

We are getting there. It looks right now like there may be about a 8 month supply (down from 14).

  • Sales by volume are up by 30% over this time last year (county wide)
  • Sales by volume in Ashland are up 35%
  • Median prices are down across the region to appoximately 2004 prices
  • Listing volume is down 27% from this time last year
  • Listing volume in Ashland is down 35%
  • REO/Short sales account for 17% of all listings
  • REO/Short sales account for 47.5% of all sales
  • Last month REO/Short sales accounted for 18% of all listings

The whole chart with all areas should be published tomorrow in the Mail Tribune.

By the numbers–short sales and REO’s

In the last 3 months in Jackson County

  • 384 total sold residential properties
  • 125 sold REO properties
  • 35 sold Short Sale properties
  • Median price of REO/short sale properties is 20% lower than non-duress properties

Total 42% of the sold market is REO/Short sale

In the last 3 months in Ashland

  • 39 total sold residential properties
  • 4 sold REO properties
  • 2 sold Short Sale properties

Total 15% of the Ashland real estate sold market is REO/Short sale

In the last 3 months in East Medford

  • 91 total sold residential properties
  • 27 sold REO properties
  • 7 sold Short Sale properties

Total 37% of the East Medford real estate sold market is REO/Short sale

In the last 3 months in West Medford

  • 60 total sold residential properties
  • 19 sold REO properties
  • 4 sold Short Sale properties

Total 38% of the West Medford real estate sold market is REO/Short sale

In the last 3 months in Central Point

  • 65 total sold residential properties
  • 28 sold REO properties
  • 11 sold Short Sale properties

Total 60% of the Central Point real estate sold market is REO/Short sale

In the last 3 months in Eagle Point

  • 34 total sold residential properties
  • 15 sold REO properties
  • 3 sold Short Sale properties

Total 53% of the Eagle Point real estate sold market is REO/Short sale

To search for properties, please visit www.AgentInAKilt.com or www.realestate-southernoregon.com

How a calculator can help you buy a home.

Top Ten Rules to Follow When Buying a Home Part 4

4. Determine how large your mortgage can be. Explore different loan options to determine
what is best for you.

This is a good exercise for anyone looking to buy, or even hoping to buy in the future. Find a mortgage calculator online and determine in reverse how large of a mortgage you can afford.

Business man accountant calculating invoices in office

Business man accountant calculating invoices in office

On my website there are some really cool online calculators. Click on the menu button that says Mortgage Information. There are 23 different loan calculators there. But for buyers, the important one is probably the Affordability Calculator. It will ask for how much down payment you have, what your income is, and what your debt is. Don’t worry about it sending information to me…I don’t see it. It will then let you know about what the payment the bank thinks you can afford is, and what loan amount and purchase price that would qualify you for.

Give it a try….at www.AgentInAKilt.com

Other great calculators are available there….such as how much time you could cut off of your mortgage by paying more each month, what your tax savings is buy owning a home, a rent vs. buying cost calculator…and more.

If you would like me to do it for you, give me a call.

Ten Rules to Follow When Buying A Home

1. Make a commitment. Commit yourself to your new home for at least a couple of years
before making your next move.
2. Money matters. If you’re considering a mortgage, shore up your credit and get a copy of
your credit report.
3. Get pre-approved. Save yourself the time and grief of looking at houses you can’t afford.
4. Determine how large your mortgage can be. Explore different loan options to determine
what is best for you.
5. Decide what (and where) you want to buy. Prioritize your needs (i.e., location, schools,
amenities).
6. Consider your re-sale value. Even if you don’t have school-aged kids, a strong school
district is a good thing.
7. Do your homework. Bid based on sales trends of similar homes in the neighborhood.
8. Calculate the hidden costs. Property taxes, insurance, maintenance and association
fees can impact your wallet over time.
9. Don’t be house poor. Double and triple check to be sure you haven’t maxed yourself out
on the cost of your home and left nothing for maintenance, etc.
10. Get help. Hire a REALTOR® to get the most for your money. It pays to have
someone looking out for your interests. (note: when it says Hire a Realtor, make sure you sign a buyers service contract with the Realtor that spells out the Realtor’s responsibilities to you.)

Banks are working hard at workouts

It seems that as the economic situation in this country is still a bit on the scary side, more and more people, media, companies and politicians recognize that the housing market is the key to a stable economy.

Houses are an investment that people can really relate to them. You can touch a house, you can clean a house, you can demolish a house. Unless you are Bear Stearn, it isn’t quite so easy to demolish a stock.

So Fannie and Freddy are getting presure put on them, and in turn are pressuring companies such as Wells Fargo to make deal with homeowners to keep them in their homes. The latest article I read today was that they were looking at doing loan workouts that dropped the monthly payments of properties to 38% of the property owners income. That is historically where the banks wanted payments to be in order to loan money.

How this is really going to work is anyones guess. What happens if the homeowner is one of the thousands of people who have lost their jobs? 38% of nothing is ?????? nothing?

The good news is that the banks/politicicans recognize the problem. They are listening to the Realtor association about what us professionals have found to be the kinks in how they are trying to solve problems.

If you are a homeowner at this point who is having problems paying your mortgage…hang in there. There look to be some workout options around the corner.

Top Ten Rules When Buying a Home Part 2

Number Two: Money matters. If you’re considering a mortgage, shore up your credit and get a copy of
your credit report.

This was the MOST important thing you could do to secure credit 2 years ago. A good credit score could get you a loan. Now, it is just one of the things you need to do. It is very important that your credit score is accurate, and decent.

However, this is not the only important issue as it once was. What you need to consider, (as you alway had) is if you can afford the payments you need to make with the income you have. However, not only do you need to be comfortable with the payment the banks want to make sure that you can make the payment as well. Seems logical, but a couple of years ago, the banks didn’t really care if you could make the payments. They just wanted a good credit score.

Money Matters

But as opposed to a few years ago,
To buy a house today, you need

  1. 1. a downpayment (there are some exceptions to this, but they have been dwindling),
  2. 2. a verifiable job or income source,
  3. 3. and good credit.

Gone are the days where you could buy a house for nothing. Can you believe these bankers, just because of a few billion dollars are now wanting the home buyers of America to have have money, and some skin in the game?  Ridiculous!!

Stay tuned for part 3….and I have a feeling it will be a long one.

Ten Rules to Follow When Buying A Home

1. Make a commitment. Commit yourself to your new home for at least a couple of years
before making your next move.
2. Money matters. If you’re considering a mortgage, shore up your credit and get a copy of
your credit report.
3. Get pre-approved. Save yourself the time and grief of looking at houses you can’t afford.
4. Determine how large your mortgage can be. Explore different loan options to determine
what is best for you.
5. Decide what (and where) you want to buy. Prioritize your needs (i.e., location, schools,
amenities).
6. Consider your re-sale value. Even if you don’t have school-aged kids, a strong school
district is a good thing.
7. Do your homework. Bid based on sales trends of similar homes in the neighborhood.
8. Calculate the hidden costs. Property taxes, insurance, maintenance and association
fees can impact your wallet over time.
9. Don’t be house poor. Double and triple check to be sure you haven’t maxed yourself out
on the cost of your home and left nothing for maintenance, etc.
10. Get help. Hire a REALTOR® to get the most for your money. It pays to have
someone looking out for your interests. (note: when it says Hire a Realtor, make sure you sign a buyers service contract with the Realtor that spells out the Realtor’s responsibilities to you.)