When Buying A House In Portland Narrow Your Search + RMLS Email Updates, by Betty Jung, Re/Max Equity Group

Last weekend showing property it was brought home to me again how important it is to narrow your search.  I met with two separate buyers in different parts of town.  They knew exactly where they wanted to purchase and their search is contained within those areas.

Several years ago I had a buyer who was interested in purchasing in Portland.  He told me he wanted to look in Clackamas, Washington, and Multnomah counties – pretty much half the state, or thereabouts.  It was extremely difficult for him to narrow down where he wanted to live because his search parameter was way too large in scope. I kept encouraging him to narrow his choices.  As a result, he thought a house in one part of the State looked extremely appealing when in fact compared to other areas and factors, it wasn’t a good deal at all.  It was like comparing apples to oranges.

That’s not to say you shouldn’t look at several areas, but the sooner you zero in on the location you would rather live in, the easier it is on you, the buyer.

One thing I tell my buyers is that I would hate for them to look on one side of the road and never having looked on the other side. When you first start looking for a house, of course, your parameters may not be as narrow.  It’s actually good if you start with a larger area and then narrow it down if you don’t know where you want to live.  But, that’s not to say you should include half the state of Oregon.  The sooner you know where you want to live, the sooner you will find your “dream” home.

For email updates of property listings direct from our RMLS,™ please click on this link and fill out the form to start receiving them.

Betty Jung

Another Home Buyer Tax Credit?, by Diana Olick, CNBC

Just when I thought the housing market was finally being left to correct on its own, I’m starting to hear talk regarding yet another home buyer tax credit. From HUD to the hedge funds, it sounds as if it is gaining steam yet again. This one could involve not just first time/move-up buyers, but a credit for buyers purchasing foreclosed properties or short sales (when the bank allows you to buy a home for less than the value of the outstanding mortgage).

HUD Secretary Shaun Donovan, appearing on CNN’s State of the Union this weekend, didn’t rule out another tax credit. He did say it’s “too early to say,” but then added that “we’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”

After that several Congressional candidates in Florida threw their voices behind the possibility, and Florida Gov. Charlie Crist then chimed in on the same show, saying that another tax credit, “would stimulate the economy. It would increase home sales in Florida.” He finished with: “I would absolutely encourage the president to support that because it would certainly help my fellow Floridians.”

So of course then I went the official route and followed up with a HUD spokesperson who responded:  “No news here…there are no discussions underway to revive the credit.”

Is it all political? And is another tax credit the answer?  “I don’t think it’s all political,” says housing consultant Howard Glaser. “I think they are panicked that the economy/housing got away from them.” Glaser doesn’t sound convinced the tax credit is really on the table.  “They can do a lot off budget with the GSE’s and FHA with no Congress.”

I know a lot of you out there would argue that a housing market correction, as painful as it is, is necessary for housing to truly find its footing again and recover for the long term. Another artificial stimulus could just prolong the agony and set us up for the same drop off in sales and prices that we’re seeing right now.  

But it could also move some inventory quickly. With inventories of new and existing homes dangerously high, and the shadow supply of foreclosures pushing that volume even higher, more stimulus could be a necessary evil. I liken it to what I’m doing with my lawn this week. All summer I fought the weeds, pulling them, using the organic sprays and repellents, spreading mulch to deprive them of any air.  And then I gave up.  I called the lawn service and told them to bring every chemical in their arsenal.  Shock the overgrown mess into submission once and for all, so that I can start fresh again and reseed this fall.

Obama Plans Refinancing Aid, Loans for Jobless Homeowners, HUD Chief Says, by Holly Rosenkrantz, Bloomberg

The Obama administration plans to set up an emergency loan program for the unemployed and a government mortgage refinancing effort in the next few weeks to help homeowners after home sales dropped in July, Housing and Urban Development Secretary Shaun Donovan said.

“The July numbers were worse than we expected, worse than the general market expected, and we are concerned,” Donovan said on CNN’s “State of the Union” program yesterday. “That’s why we are taking additional steps to move forward.”

The administration will begin a Federal Housing Authority refinancing effort to help borrowers who are struggling to pay their mortgages, and will start an emergency homeowners’ loan program for unemployed borrowers so they can stay in their homes, Donovan said.

“We’re going to continue to make sure folks have access to home ownership,” he said.

Sales of U.S. new homes unexpectedly dropped in July to the lowest level on record, signaling that even with cheaper prices and reduced borrowing costs the housing market is retreating. Purchases fell 12 percent from June to an annual pace of 276,000, the weakest since the data began in 1963.

Sales of existing houses plunged by a record 27 percent in July as the effects of a government tax credit waned, showing a lack of jobs threatens to undermine the U.S. economic recovery.

House Sales Plummet

Purchases plummeted to a 3.83 million annual pace, the lowest in a decade of record keeping and worse than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed last week. Demand for single-family houses dropped to a 15-year low and the number of homes on the market swelled.

U.S. home prices fell 1.6 percent in the second quarter from a year earlier as record foreclosures added to the inventory of properties for sale. The annual drop followed a 3.2 percent decline in the first quarter, the Federal Housing Finance Agency said last week in a report.

Donovan said on CNN yesterday that it is too soon to say whether the administration’s $8,000 first-time homebuyer credit tax credit, which expired April 30, will be revived.

“All I can tell you is that we are watching very carefully,” Donovan said. “We’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”

Reviving the tax credit would “help enormously” in the effort to fight foreclosures and revive the economy, Florida Governor Charlie Crist said on the same CNN program. Florida has the third-highest home foreclosure rate in the country, with one in every 171 housing units receiving a foreclosure filing this year.

To contact the reporter on this story: Holly Rosenkrantz in Washington athrosenkrantz@bloomberg.net.

Flipper Cash Propping Up Housing Market, Brett Neely, NPR

It was a bleak week for anyone looking for signs that the housing market is recovering. New home sales in July were at the weakest levels since the government began keeping records 47 years ago. Existing home sales weren’t much better.

But in all that news, there’s a number that jumps out: Almost one-third of the home sales were in all-cash deals. Before the housing bust, less than 10 percent of sales were in all cash, according to the National Association of Realtors.

Who buys houses with a big stack of cash? Often, people like Craig Fuhr. He’s been investing in real estate around Maryland for the past seven years. The license plate on his SUV defines his style of investing. It reads: “flippin.”

At a time when the housing market is so anemic that it threatens to send the economy back into a recession, Fuhr is a reminder that there are still people who make money investing in real estate.

And they tend to be very serious about it.

Turning $63,000 Into $250,000

Fuhr paid $63,000 in cash for a boarded-up, four-bedroom house on Diller Avenue in the Beverly Hills neighborhood of Baltimore. It’s a pretty neighborhood with lots of big trees and houses from the 1920s, but it’s no Southern California.

Inside, there’s debris everywhere from where Fuhr’s contractors have ripped out drywall. Once the place is fixed up, Fuhr thinks he and his investors may be able to get $250,000 for it.

Potential rewards like these are drawing investors into the real estate market right now, says Kenneth Wenhold of the real estate research firm Metrostudy.

“When you’re putting all cash into a particular transaction, it’s an indication that you believe that this is a good price for this home,” Wenhold says, “and [that] you don’t think it’s going to depreciate more, and you’re willing to bet a considerable amount of money that it’s going to start to appreciate again.”

In cities across the country, there are investors like Fuhr taking advantage of depressed housing prices to snap up dozens of properties on the cheap. When they’re not flipping those houses, they’re turning them into rentals.

Cash Is King When There’s No Credit

Cash sales have become a big part of the market because banks are issuing fewer mortgages. House flippers like Fuhr could once rely on bank loans to finance their deals. But no longer, Fuhr says. Now he has a group of investors who bankroll him.

“The big hurdle that everyone has these days is just finding the money to purchase and rehab. You know, not everybody has $150,000 sitting around, and the problem is … that no banks right now are lending,” he says.

Fuhr got into the real estate business at a time when banks lent to anyone with a pulse.

“You could do every single thing wrong and still make money. You could purchase the house for way too much. You could take way too long to rehab it. You could rehab it poorly and still sell it on the back end and make money,” he says.

A lot of house flippers got burned by the bubble — but Fuhr’s still flipping.

“You know, if you’ve been doing this as long as we have, you know that you make your money when you purchase the house — not when you sell it,” he says.

With banks still unloading their huge portfolios of foreclosed properties, houses remain very cheap these days.

Fuhr says he may spend close to $100,000 renovating the home he bought for $63,000. Even if the house doesn’t fetch the $250,000 he thinks it will, Fuhr isn’t worried.

“The market could literally correct itself $50- or $60,000, and we would still break even.”

Which means even if housing prices stay weak, investors like Fuhr could have plenty of chances to keep making money.