5 HOUSING PREDICTIONS FOR 2014

By Michele Lerner, realtor.com

The U.S. real estate market made a robust comeback in 2013, surpassing expectations of many economists, as the combination of low inventories and historically low interest rates caused home prices to rise and even helped fuel bidding wars in some markets, surpassing the expectations of many economists. While positive trends, such as increasing home values, are expected to continue into 2014, mortgage rates are also expected to rise in the coming year and could put a damper on homebuyers' abilities to afford new homes.

Looking back at some 2013 data can give us a hint of the year ahead.

1. Inventory should gradually stabilize and return to traditional seasonal levels
The beginning of 2013 could be characterized as the “year of low inventory” as buyer demand ramped up and homeowners waited for further price increases and evidence of a solid economic recovery before putting their homes on the market. The year began with a significant shortage of inventory (reported by realtor.com), and then as early as February, the level of shortages started to decline slowly. As 2013 comes to a close, inventory is approximately the same as a year ago. However, homes are selling faster than in 2012, with the median age of the inventory down by 11 percent.

2. More homeowners are likely to return to positive equity
Rising prices helped 2.5 million homeowners who were previously underwater regain positive equity status during the second quarter of 2013. However, approximately 7.1 million homes were still in negative equity at that time and an estimated 10 million homeowners, or about 21.1 percent of all homeowners with a mortgage, remained “under-equitied,” with less than 20 percent in home equity.

The good news is that prices are expected to continue rising in 2014, which will lift more homeowners into positive territory. According to realtor.com, median list prices for homes in October rose 7.57 percent above the same month of 2012.

3. Mortgage rates are expected to rise
Mortgage rates increased approximately 100 basis points in 2013 and are likely to rise in 2014. The new chairman-designate of the Federal Reserve, Janet Yellen, is expected to continue the policies of Chairman Ben Bernanke, including keeping mortgage rates low by buying blocks of mortgage-backed securities. However, the Fed has considered tapering its bond-buying activity as the economy improves, which could lead to a slight increase in interest rates.

4. Foreclosure activity is expected to slow
Foreclosure sales are likely to play a minimal role in the housing market in 2014. September 2013 was the 36th consecutive month with a year-over-year decrease in foreclosure activity. Foreclosure inventory has dropped to multi-year lows, down nearly 33 percent since the end of 2012. Foreclosure starts were down 39 percent in the third quarter of 2013 to the lowest level since the second quarter of 2006.

5. Further declines in home affordability are expected
The National Association of Realtors' Home Affordability Index, which compares home prices with income, dropped to a five-year low in 2013 as price increases outpaced income growth. If the U.S. economy begins to grow at a faster pace and incomes begin to rise, though, the affordability index will slide further from rising mortgage rates.

While no one can predict with certainty what the housing market holds in store for 2014, a constant in real estate is always that local markets vary widely in their performance. National numbers can tell a story about the economy in general, but home prices, inventory and foreclosure activity depend on local market conditions. Contact a real estate agent in your community for the most up-to-date information about your market.
 
Photo by: Realestatecafe.com

5 SIGNS YOU'RE READY TO BE A HOME OWNER

Are you wondering if you've got what it takes to be a home owner in the new year? Read this article that I found on  Credit.com

5 Signs You're Ready to Be a Homeowner 

November 26, 2013 by Chris Birk

No one can tell you when you’re ready to become a homeowner. But it’s probably fair to say a lot of first-time buyers wish otherwise.

Buying a home is often one of the biggest purchases you’ll ever make. It’s also among the most infrequent. Knowing you’re prepared to buy a couch or a car is one thing. The last lot in a cul-de-sac is something else entirely.

The right time to pull the trigger is when you’re financially and emotionally prepared for the responsibility. But it’s not like the heavens part and a choir of closing agents signal the time has come.

It’s ultimately up to you to determine you’re ready. But here are a few signs and stages that might signal you’ve got a handle on homebuying.

1. You Genuinely Want It

This is an emotional component for sure. Renting is easier than owning a home in a lot of ways. Each exudes its own sense of freedom, and the flexibility of renting resonates with many people.

Looking at homeownership as a lark or even an investment isn’t always the best approach. A quarter of Americans have moved from their city or geographic area in the past five years, according to a Gallup survey released earlier this year. The last few years have also made clear that equity isn’t a guarantee.

Homeownership isn’t for everyone. Pursue a home purchase because you genuinely embrace the freedom, opportunities and potential challenges that come with it.

2. You Own Your Credit

Your homebuying journey will be a brief one if you can’t meet a lender’s qualifying credit score. Credit benchmarks will vary based on the loan type and the lender, but for most loan programs you’re talking a minimum of 620 (but likely significantly higher for non-government-backed loans).

Get free copies of your credit reports early from AnnualCreditReport.com. It’s also important to monitor your credit scores for changes — which you can do either by using a paid monitoring service, or using a free credit score tool, such as Credit.com’s Credit Report Card. About one in five credit reports contain errors and inaccuracies serious enough to affect your credit scores (and therefore possibly making harder to get credit, like a home loan). Hunt down mistakes and dispute them. Work to lower balances, pay down high-interest debt and get your credit in fighting shape.

Qualifying for a loan is the initial hurdle. But continuing to improve your score can also help you save money. Higher credit scores generally translate into better mortgage rates and terms.

3. You’ve Saved for It

Even if you’re eligible for a zero-down mortgage backed by the VA or the USDA, there are always going to be upfront costs to consider, from appraisals and home inspections to closing costs and even good faith deposits.

Assets are going to play an important role when you’re looking to land a loan. Most homebuyers will also have to contend with a down payment. FHA loans require a minimum 3.5% down, while it’s typically 5% for conventional loans. On a $150,000 mortgage, that’s $5,250 and $7,500, respectively, which you’re going to part with on closing day.

Beyond that, lenders are always on the lookout for “payment shock,” which is essentially the impact of higher monthly housing costs on a borrower’s bottom line. If that down payment is all you’ve got to your name, you might be in trouble.

4. You Understand Your Mortgage Options

If you didn’t serve in the military or you don’t have a family member who has served, you can pretty much skip VA loans. But you might be able to get a no-down payment loan using the USDA’s home loan program.

Conventional financing will require a higher credit score and a bigger down payment, but you’ll likely get better rates and terms than you would with an FHA loan.

Does your state offer a down payment assistance program? Are there first-time homebuyer grants or initiatives available?

You don’t need to be a mortgage expert to buy a home. But it’s important to understand the basics regarding your options and the pros and cons of each.

5. You’re Financially Prepared for What Lies Ahead

Shopping for and buying the home is the fun part. What isn’t so enjoyable is having your washing machine give out three weeks after closing, or finding your fridge is on the fritz.

The days of letting your landlord deal with repairs and maintenance are gone once you’re a homeowner. When the yard gets unruly, you’re either buying a lawnmower or paying a neighborhood kid. You’re rooting for hailstorms to skip over your street. In short, you’re paying for all sorts of things you didn’t have to before.

They’re sporadic costs, and they’re not always so drastic. But they’re something to consider as part of your homebuying calculus.

 

JOBS-->HOMES-->JOBS-THE CIRCLE OF REAL ESTATE

More and more people are going back to work in Oregon according to today’s Bureau of Labor Statistics report. Oregon’s unemployment rate fell .03% from October to November to 7.3%. That is a 1.1% drop from a year ago.

This is great news for the local housing market as more people can afford homes again. Meanwhile, businesses tied to the housing industry are hiring again to meet the demand of new homeowners. This scenario is being played out nationwide. Matt Ferguson, CEO of CareerBuilder, tells recruiter.com, “While some segments may still be trailing pre-recession employment levels and may not fully recover jobs lost, we’re seeing signs of a rebound in everything from construction and mortgage banking to home furnishing stores.”

The latest jobs report is just another sign that our economy is improving and a healthy housing market should continue to flourish in Portland despite rising interest rates.

HOW THE FED TAPER WILL AFFECT YOU!

The Federal Reserve announced Wednesday that they would cut back their bond-buying program by $10 billion a month now that the economy is improving. That announcement is considered to be a moderate start to the anticipated taper.

The good news is interest rates did not rise dramatically on the news as some had predicted.  Still, experts agree that the tapering of stimulus will affect you if you plan to finance a big ticket item in the coming months. Analysts say now is the time to prepare.

As interest rates begin their slow ascent over the next year, plan to pay more to finance homes, college loans, automobiles and appliances.

The current average 30 year mortgage rate is still under 4.5% but could rise to 5.5% next year. This could drastically affect your home purchasing power and prevent you from buying a home in the price range you desire.

Home affordability is not about the sticker price on the home, it is how much mortgage can you afford to carry each month and that’s dependant on mortgage rates, taxes and insurance. If any of these items rise, so will your costs reducing your affordability.

A 1% increase in mortgage rates can reduce your purchasing power by 10%. For example: Let’s say a home buyer could only afford to play $3500 per month on his mortgage. With interest rates at 5%, he would qualify for a $446,000 base loan but if the mortgage rate jumped to 6%, he would only qualify for a $399,000 home. See the difference? YIKES!

Rising mortgage rates could also affect sellers. As mortgage rates rise, sellers may have to drop their asking price to woo buyers who have less purchasing power onto their door steps.

The bottom line is today’s interest rates may be the lowest we will ever see from here on out in our lifetime. If you are planning on financing a big purchase or put your home on the market, sooner is definitely better than later. I would be more than happy to help you in your real estate transactions. Feel free to call me regarding real estate matters at 503-318-1918.

FIRST TIME HOME BUYING 101 CHECK LIST

 

 

 

 

The home buying season is heating up and if you're thinking about buying your first home, you'll want to be prepared. Here is a "Checklist" from realtor.com and Move Inc. to see if you're ready and your dream is in reach.

 

 

 

 

1. Get your financial house in order

  Before you decide to buy a home, it’s essential to make sure your credit is in good shape and repair any damage previously done.

  Have enough money set aside for a down payment. You will need at least 3.5% of the sale price if you are getting an FHA loan. a 20% down payment will do away with mortgage insurance, but it's not worth it if you are living on the edge. Also, expect to pay 2.5% in closing costs. 

 

2. Don't fall in love with a house you can't buy   

  Find out how much you can afford to spend by getting prequalified with a lender.

  Look for special loans available from FHA and government sponsored loans for first-time home buyers. That can reduce the amount of money you'll need to get into a home.

 

3. Learn the lingo

  It’s important to get familiar with the processes and terminology associated with home buying. Here are a few key terms from MortgageMatch.com to add to your vocabulary: 

• Bait Rate: Misleading mortgages with low rate promises and no contingencies generally for those with extraordinary credit. Rates are based on: credit, debt-to-income and loan-to-value ratios, the size and type of loan, property location, and the day you lock your rate, etc. The loan isn’t locked until the application is accepted. By then, it may be too late to find a better rate from another lender.
• Basis Point: A term used in the mortgage industry which simply means 1/100th of 1 percent.
• Closing Costs: The fees required to process and close your loan. They’re a cash obligation running from three to five percent of the purchase price. Motivated sellers might pay a portion of these costs.
• FHA: Federal Housing Administration, the Federal Government Agency that oversees the US Housing market. FHA Loans are loans insured by the Dept. of Housing and Urban Development.
• FRM and ARM: A Fixed Rate Mortgage Loan (FRM) is a loan where your interest rate stays the same for the life of the loan. ARMs are Adjustable Rate Mortgages with variable interest rates that fluctuate based on an agreed-upon index.
• GFE: The Good Faith Estimate (GFE) is a document explaining all costs involved in getting a loan.
• TIL: The Federal Truth-in-Lending Form is a document that spells out the costs and fees of the loan.
• Per Diem Interest: Interest you pay per day, from the day you close to the last day of the month.
• Underwriting and Underwriting Fees: Underwriting is a process the lender performs to qualify a borrower for a loan and the fee is what you pay the lender at closing to cover evaluating the risk involved with loaning you money.
• Warranty Deed: A legal document guaranteeing the seller has a right to sell a property, which is very important if you are considering a distressed or discounted property.

4. Check rates and find the right mortgage  

  There are a number of websites, such as MortgageMatch.com, that post mortgage rates in real time.

Sue Stewart, senior vice president for Move, Inc says you'll have the best chance of succeeding in your home purchase if you prepare early. “If you want to land the best mortgage that fits your needs, educate yourself on your financial situation, get your documentation together and find a lender you trust."

 

5. Find a REALTOR® and go shopping

 
   Finding a licensed real estate professional will make the process smoother and easier to understand. I am a full-time full-service agent who will assess your needs and narrow in on those homes that fit those needs. I will identify potential obstacles and tackle them before they become issues and I will be with you every step of the way from contract to close. My service includes communication, education and satisfaction. If you are in the market for a real estate professional who will work for you, contact me at 503-318-1918.

 

6. Not ready now? Here's how to prepare 

    If now isn’t the right time to buy a home, make a plan with a target date for when you expect to be ready. Improving your credit, paying down debt, stabilizing your work history, and calculating exactly how much you can afford, are the best ways to prepare for your future home purchase. It’s also important to refrain from making any new large purchases or applying for new credit.

 

7. Visit my website for hassle free, no obligation shopping and find out more about my services at jolynnwinter.kwrealty.com

PORTLAND RESIDENTIAL PROPERTIES LEAD THE PACK IN A RETURN TO POSITIVE EQUITY

  Good news for those of you who bought or refinanced your home at the peak prior to the recession. CoreLogic reports that more homeowners are regaining positive equity and the Portland area is leading the recovery.

   Portland comes in 4th behind Dallas, Houston and Anaheim with the smallest share of mortgages that are under water. The Rose City saw 6.6% of all mortgaged homes with debt that exceeded it's value. The low number of underwater homes is the result of rapidly rising home prices in Portland which are relieving home-owners who bought or refinanced at the peak.

  Since the first quarter of 2013, more than 3 million under water homeowners nation-wide bobbed to the top as home prices shot up. In the third quarter, 791,000 more residential properties moved into positive equity. But CoreLogic reported that there were still 6.4 million homes with underwater mortgages remaining, or 13 percent of all properties with a mortgage. That’s down from 14.7 percent in the second quarter.

  Negative equity should decline even further in the coming quarters as the housing market continues to improve.

  Find out more by clicking on the CoreLogic link: CoreLogic

Best November Home Sales In Seven Years According to RMLS

The Portland Metro real estate market saw the best November in closed sales since 2006 when 2,163 homes were purchased. This past November, we saw 1,821 closed sales. Year-to-date sales have also risen significantly as 24,872 homes closed so far this year representing a 15.4% increase.

  Even though Portland is experiencing a banner year, November sales dropped 16.8% from October as we headed into the holiday season. Active listings also dropped in November to 6,751 while the total market time increased slightly to 80 days. The market time for November was substantially shorter than the total market time of 101 days a year ago.

 The average sales price for 2013 is up 13.5% from last year to $310,800 while the midian price increased 13.3% to $265,000 so far this year.

 

10 Reasons To List Your Home During The Winter

 

1. Fewer Showings
Buyers who shop in the Winter are usually very serious and very qualified to make a purchase.
2. Less Competition
Most people wait until spring and summer to list their home, which means during the winter you
will have far less competition than any other time of the year.
3. Your Home May Show Better In The Spring, But So Will Your Competition’s
Buyers who need to buy NOW understand that plants are dormant. This means that your home
can shine above the rest with a little TLC on the inside, which won’t be difficult because there
isn’t much inventory to compete against.
4. January is the Biggest Transfer Month
More corporate moves happen in January so employees need homes.
5. Timing
Your house could sell quicker which means you could move sooner.
6. More Time to Get Top Dollar
By starting to market your home early you may be able to secure a higher price.
7. Great Time to Shop
If your home sells quickly you will be able to shop for your next home during the winter, which
could be a great time to find a bargain from desperate home owners who need to sell NOW!
8. More Advertising
Your home may be advertised more often than during the spring and summer months when
inventory is high!
9. More Attention
You’ll get more specialized attention to your needs as agents have fewer clients to manage.
10. The Market
Today's interest rates are at forty year lows. This gives you & buyers more spending power.

Please contact me if you want to put your home on the market this winter!

Jolynn Winter

Keller Williams Realty Professionals

9755 SW Barnes Rd. #560

Portland, OR 97225

Direct # 503-318-1918

Office# 503-546-9955

email: jolynn@kw.com

Web: jolynnwinter.kwrealty.com