Eugene Oregon Real Estate Blog

Good Monday Morning!

Home sales nationally have softened.  Maybe it is time for the Fed to revisit its policy of interest rate hikes.  The yield curve, which can predict recession has changed negatively and could be pointing towards tougher economic times.  It might be time for the Fed to halt interest rates hikes and abandon its agressive approach.  Could it be time for the Fed to even lower rates again?  Here is an article from Realtor.com that addresses the current national home sales slump.

Sales of previously owned U.S. homes posted their largest annual decline since 2014 in October, as the housing market continues to sputter due to higher mortgage rates that are reducing home affordability.

The latest data offered a mixed picture of a market that isn’t in free fall but also is far from robust. Existing-home sales edged up 1.4% in October from the previous month to a seasonally adjusted annual rate of 5.22 million, the National Association of Realtors said Wednesday. That broke a six-month streak when sales declined compared with a month earlier.

Sales, however, posted a sharp 5.1% drop compared with a year earlier, indicating the market is likely to end the year on a sluggish note.

Lawrence Yun, the trade group’s chief economist, said the annual decline signals softness in the housing sector that is likely to persist in the months to come.

“There is some feeling that the market could actually go even lower than what it is now in terms of sales,” Mr. Yun said.

When sales began slowing this spring, economists initially blamed a shortage of inventory, which has plagued the housing market throughout the recovery. But rising mortgage rates are playing a bigger role in slowing buyer demand than many economists had expected, shaking confidence that now is a good time to buy a home, according to recent surveys.

Mr. Yun said higher interest rates appear to be choking off buyer demand, and said the Federal Reserve should consider pausing its rate increases to give the housing sector time “to be on firmer ground.”

Mike Fratantoni, chief economist at the Mortgage Bankers Association, said recent declines in the stock market are also causing fresh unease. “The level of volatility in the stock market is reflecting a lot of uncertainty about where we are with the broader economy. There is a little bit of increased anxiety about how much things are going to slow,” he said.

The good news for buyers is that conditions are becoming friendlier to them, as mortgage rate and home-price increases slow and inventory of homes for sale is growing compared with last year.

The rate for a 30-year fixed rate mortgage averaged 4.81% this week, down from 4.94% a week earlier, according to data released by Freddie Mac on Wednesday. Rates are still up significantly from a year ago, when they averaged 3.92%.

The median sale price for an existing home in October was $255,400, up 3.8% from a year earlier. That shows a cooling from a year ago, when prices rose about 5.5%.

There was a 4.3-months’ supply of homes on the market at the end of October, based on the current sales pace, down from 4.4 months in September but up from 3.9 months a year ago.

Mr. Fratantoni said the combination of more muted price growth and a greater number of homes for sale could boost the housing market in the spring, especially if wages continue to rise.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

1849 Crescent Ave 

Price: $319,000   Beds: 3   Baths: 2  Sq Ft: 1344

Wonderful updates in this N. Gilham home! Great Rm layout, hickory cabinets, granite counters, engineered wood flr, recessed lights, stone gas fireplace, vinyl windows & French drs w/ built-in blinds. Kitchen w/ under-mount sink, island & eating bar. Master ste w/ slider. Laundry/mud rm. Fenced yard, shed, covered deck & patio, plus RV parking. Located in highly desirable area, on bus route & only 6 min drive to shops, schools & park.

View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

Here are the home sales numbers for October of 2018.  For the most part, there is little change taking place over previous months this year. This reflect on a market that has flattened out and maybe starting to decline slightly. This actually is good news and may help us maintain a strong housing market going into 2019.  Here is the report for Lane County in October of 2018.

October brought mixed numbers to Lane County, but new listings saw a gain over October 2017. At 469, new listings rose 5.2% ahead of the 446 new listings last year in October 2017, despite a 2.9% cooling from last month in September 2018 (483).

Closed sales (421) were 5.5% warmer than last month in September 2018 (399) but fell 1.6% short of the 428 closings recorded last year in October 2017.

Pending sales fared similarly,warming 6.1% over the 429 offers accepted in September 2018, but falling 4.6% short of the 477 accepted last year in October 2017.

Total market time rose to 43 days in October with inventory decreasing slightly to 2.1 months from 2.4 months in September.

Year to Date Summary

Comparing the first ten months of 2018 to 2017, closed sales (4,451) have increased 1.9%. Pending sales (4,611) have decreased 0.4% and new listings (5,753) have decreased 0.5%.

Average and Median Sale Prices

Comparing 2018 to 2017 through October of each year, the average sale price has increased 6.9% from $288,200 to $308,200. In the same comparison, the median sale price rose 8.5% from $260,000 to $282,000.

Have An Awesome Thanksgiving Week!

THIS WEEKS HOT HOME LISTING!

1849 Crescent Ave 

Price: $329,900   Beds: 3   Baths: 2  Sq Ft: 1344

Wonderful updates in this N. Gilham home! Great Rm layout, hickory cabinets, granite counters, engineered wood flr, recessed lights, stone gas fireplace, vinyl windows & French drs w/ built-in blinds. Kitchen w/ under-mount sink, island & eating bar......

 View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning,

The national home sales statistics for October 2018 indicate that the national housing market remains flat.  There was little change in home sales numbers and home prices from the month of September.  Mortgage interest rates were up slightly, but still remain favorable.  These numbers indicate that the national housing market remains healthy.  With little change going into the Fall months, this suggest that we should see a very healthy and stable national housing market into the first quarter of 2019.

The housing market in the Eugene and Springfield area remains very robust for the price ranges of $300,00.00 and under, but drops off considerably in the upper end price ranges over $500,000.00 and above.  The housing market for homes that work for first time home buyers remains a strong sellers market, but changes considerably from a sellers market in the upper end market.  This trend should remain unchanged going into 2019.

View video HERE.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

 88139 KEOLA LN

Price: $495,000   Beds: 4   Baths: 3   Partial Baths: 1   Sq Ft: 2794

Gorgeous & private rural living! Serene tree views surround 1.37 acre estate. Well-manicured gardens w/ paths, sitting areas & huge patio. Finished 3-car garage & half bath, w/ guest suite above. Features media rm, open layout & private master suite...View this property >>

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Morning!

There can be some confusion in the minds of the average consumer about interest rates, especially as it relates to the Federal Open Market Committee, or FOMC, meetings. About every six weeks, the FOMC meets to discuss the current state of the economy with an eye toward the future. One important task is to monitor and adjust the cost of funds. In general, the “Fed” tries to keep inflation in check and in theory raise or lower the cost of funds. They do so by adjusting the Federal Funds rate and this is the rate that gets so much press each time the FOMC meets.

The Federal Funds rate is the rate banks can charge one another for short term lending. Short term as in overnight. Why does a bank need to borrow money on such a short notice? Banks are required to keep a certain amount of liquid capital, in other words “cash,” at the end of each business day. These funds are essentially demand funds. When a consumer wants to withdraw some cash either at the bank or at any automated teller, there needs to be cash available to meet those withdrawal requests. If the bank sees their reserves to meet these requests do not meet the reserve requirements, banks seek out a short term loan from another depository institution to meet the reserve requirements. This is what the Fed adjusts, the overnight lending rate. But the Fed doesn’t directly impact the everyday 30 year conforming fixed rate mortgage.

When lenders set their rates each day, they refer to a specific mortgage bond. For example, with a 30 year fixed conforming loan underwritten to Fannie Mae standards, the lender will review the current yield on the FNMA 30-yr 3.0 mortgage bond. Just like any bond, with the price of the bond goes up, the yield will fall. And when the price goes down, the yield will rise. Investors buy bonds, all types of bonds, as a safe place to park cash. When the economy appears to falter, investors can get a little skittish and pull some funds from the stock market and transfer those funds into bonds, including mortgage bonds. If on the other hand the economy is healthy and improving, the opposite will occur.

When the Fed makes an announcement at the end of their two-day meetings, investors are anxious to hear if the Fed raised, lowered or kept rates the same. If the Fed announces they decided to raise the cost of funds by 0.25%, it can tell investors the FOMC decided the economy is doing rather well but to hold of any potential inflation, it will raise the cost of funds that banks will pay for short term lending. It’s not a direct affect on mortgage rates, but definitely an indirect one.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

825 SAND AVE

Price: $550,000    Beds: 3    Baths: 2    Sq Ft: 2344

Grand very well-maintained home! Light filled vaulted open layout w/ large windows & skylights. Living rm w/ gas fireplace opens to dining area. Office/bonus rm w/ exterior entrance & Shoji sliding dr/rm divider. Massive kitchen w/ cook island, pant...View this property >>

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Morning!

A loan program that was popular several years ago is making a comeback and many lenders are now offering options for a mortgage loan program called "the Piggyback mortgage".

The following will give you some insight into just what a Piggyback mortgage is and also it will give you some information to help you decide if a "Piggyback" loan is a good option for you, if you are searching for a home loan.

Definition of a Piggyback Mortgage

Also called a “purchase money second mortgage,” a piggyback loan is used by homebuyers with less than 20 percent down to avoid paying for private mortgage insurance (PMI).

Types of Packages

Typical packages might be called 80-10-10 (80 percent first mortgage, 10 percent second mortgage, and 10 percent down payment from the buyer), 80-15-5 (a 15 percent second mortgage, and a five percent down payment) or even an 80-20 (80 percent first mortgage, 20 percent second mortgage, and no down payment from the buyer).

Buyers considering this financing should compare the costs of a second mortgage (they do have higher interest rates than first mortgages) with the cost of a bigger first mortgage plus mortgage insurance. They should compare the after tax costs, because borrowers with higher incomes may not be able to deduct mortgage insurance, but they may still be able to write off mortgage interest.

Piggyback Loan Explained

Essentially, a piggyback loan helps homebuyers who don't have the traditional 20 percent down payment when applying for a mortgage.

A piggyback loan occurs when a borrower takes out two loans simultaneously: one for 80 percent of a home's value, and the other to make up for whatever cash is lacking to make up a 20 percent down payment. This is used as an alternative to private mortgage insurance. A piggyback loan is also known as a second trust loan.

The most common type of piggyback loan is an 80/10/10 where a first mortgage is taken out for 80 percent of the home’s value, a down payment of 10 percent is made and another 10 percent is financed in a second trust loan at a higher interest rate. In some cases, you may even qualify for a piggyback loan with as little as a 5 percent down payment (known as an 80/15/5).

Many lenders will finance loans with down payments of less than 20 percent, but you'll pay a price. Usually, the lender insists you buy private mortgage insurance (PMI) which guarantees that the outstanding balance of your loan will be paid off if you default. You will either pay a lump sum each year for PMI or add the cost to your monthly mortgage payments.

Piggyback loans eliminate the need for PMI. You combine this loan with your down payment to reach the 20 percent down needed for a conventional mortgage. This can significantly lower the interest rate of your mortgage.

If you get a piggyback loan, you will close on it the same time as you close on the mortgage. You will most likely have to pay closing costs, which will require additional upfront cash.

You will probably also have to make two loan payments each month — one for your mortgage and one for the piggyback loan. The interest rate on the piggyback loan will probably be higher. But, the monthly payments of both loans are often still less than they would be if you were paying PMI.

Another benefit of a piggyback loan is that the interest may be tax-deductible, potentially saving you even more money. Check with a tax adviser on how a piggyback loan would affect your tax situation.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

176 V Street

Price: $225,000   Beds: 3   Baths: 1   Sq Ft: 1,011

Lovely Hayden Bridge home centrally located! Pride of ownership shows. Step-down living rm w/ pellet stove. Kitchen opens to dining area w/ sliding door. Combination mud/pantry/laundry rm. Workbench in garage, large covered deck w/ hot tub...View this property>>

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

Finally, some bright news for would-be homebuyers. Mortgage interest rates are holding steady and may even see a decline. This trend may help take heat off of a housing market that continues to be over priced for many buyers.

Borrowers saw a slight cool down in mortgage rates this week following last week’s seven-year high. The 30-year fixed-rate mortgage dipped for the first time after five consecutive weeks of increases, averaging 4.71 percent.

But the higher rates may be deterring some would-be home buyers. “The strength in the economy has failed to translate to gains in the housing market as higher mortgage rates have contributed to the decrease in home purchase applications, which are down from a year ago,” says Sam Khater, Freddie Mac’s chief economist. “With mortgage rates expected to track higher, it’s going to be a challenge for the housing market to regain momentum.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 4:
(Scroll over interactive data chart)

• 30-year fixed-rate mortgages: averaged 4.71 percent, with an average 0.4 point, falling slightly from last week’s 4.72 percent average. Last year at this time, 30-year rates averaged 3.85 percent.

• 15-year fixed-rate mortgages: averaged 4.15 percent, with an average 0.4 point, decreasing from last week’s 4.16 percent average. A year ago, 15-year rates averaged 3.15 percent.

• 5-year hybrid adjustable-rate mortgages: averaged 4.01 percent, with an average 0.3 point, rising from last week’s 3.97 percent average. A year ago, 5-year ARMs averaged 3.18 percent.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

6997 GLACIER DR

Price: $359,900    Beds: 4    Baths: 2 ½   Sq Ft: 2406

Completely remodeled! Fresh interior & exterior paint. All new carpet, vinyl wood floors, LED lights w/ Decora switches, heat pump, furnace, hot water heater. Large lower level bonus space (not included in SF) w/ lots of potential; could make a grea... View this property >>

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Morning!

As a homebuyer, having a competitive edge during our current housing market is an important part of the homebuying process.  I am often asked as to whether it is better to be a pre-approved buyer or a pre-qualified buyer for mortgage financing. The followng article from U.S. News will give you details on both and help you get that competitive edge.

Before you can buy a house, you have to know how you’ll pay for it. For 88 percent of homebuyers, that means financing the purchase with a loan, according to the National Association of Realtors' 2018 Home Buyer and Seller Generational Trends Report.

A major part of finding the right lender and knowing what you can afford is providing information to the bank, credit union or other lender to prove you can continue to pay back the loan, with interest, over time.

There are two options to find out what a bank is willing to lend you, as long as everything checks out once you’ve picked a house: prequalification and preapproval.

Prequalification. Having a prequalification letter from a lender means you’re conditionally approved to purchase a home up to a certain price, based on basic information about your income, debt and how much you have saved for a down payment.

While prequalification doesn’t require the documentation and proof of funds needed for a preapproval, it’s particularly helpful for homebuyers who have no idea about their budget for a home. “Prequalification gets them in a position to shop,” says John Pataky, executive vice president at TIAA Bank.

Preapproval. With preapproval, you’re providing the details about your employment and financial information and letting the lender pull your credit history to learn more about you as a borrower. A preapproval means the lender is stating confidence in lending you a certain amount of money to purchase a home, pending any issues with the house itself or unforeseen circumstances with your finances.

While the differences between preapproval and prequalification are merely a matter of reporting financial information versus providing documentation for it, a preapproval letter can be far more powerful when it comes time to place an offer on a home. That's because with preapproval, the seller has proof of your lender's confidence in you as a borrower. While prequalification makes it easier to shop for a home you can more realistically afford, preapproval gives you the strength to negotiate a purchase price, Pataky says.

Brian Simmons, founder and CEO of Ask a Lender, an online platform to help consumers shop lenders and loans and get financial advice, echoes the preference for preapproval: “One of the first things a buyer should do when they begin looking at homes is getting preapproved for a mortgage.”

If your local housing market is seeing frequent bidding wars and multiple offers on houses, a preapproval could help keep you from being overlooked by sellers who have many options to choose from when it comes to sale terms and price. Still, there are times when prequalification may be your best option to begin house hunting. 

Here are five things to keep in mind as you decide whether prequalification or preapproval is the best move for you.

To shop lenders, prequalify. You may not have decided on the lender you’d like to work with yet, and shopping around by inquiring with three lenders or so is always recommended. Rather than just talking to a loan officer about available programs, you can use the prequalification process to gauge how much a lender would be able to lend to you. Of course, don’t base your choice of lender solely on the maximum price you prequalify for. Also consider what terms, rates and other details will best suit you in the long run.

Don’t get preapproved by too many lenders. Preapproval includes a full review of your financial background, including your credit history. As a result, that inquiry is noted in your credit report and can negatively impact your credit score if you have too many recent checks into your credit history.

“It doesn’t necessarily reflect well on you,” Pataky says. If you’re unsure which lender you want to work with, ask more questions and consider trying out prequalification first, then apply for preapproval once you’ve made your decision.

Neither guarantees a rate lock. The interest rate on your mortgage may be a deciding factor in whether you can afford a certain house. But your ability to secure a desirable interest rate through a rate lock, which guarantees your rate will not increase over a set time period – typically between 30 and 90 days – often only happens when you’ve found the house you want to buy.

Rate locks vary based on lender practices, but prequalification rarely offers a rate lock, and preapproval often doesn’t include a rate lock until you’ve identified the house you wish to purchase – or even until the seller has accepted your offer. 

Ask your lender what’s required to ensure a rate lock and how long that rate lock lasts. In many cases, the lock is limited to 30 days, which is just enough time to get through the contract period on a house.

Preapproval still isn’t a done deal. Even if your lender is impressed by your salary and pristine history of paying off debt, no preapproval is a guarantee that a mortgage will be approved once you’ve found the house you want. There are still other factors at play, the first of which focuses on whether your financial situation has changed.

“The factors by which you were preapproved have to be maintained,” Pataky says. That means not quitting your job, not buying a Maserati to keep up with the Joneses in your new neighborhood and not opening up five credit cards in the last two weeks, he explains.

Another factor standing between you and mortgage approval is the house’s condition and appraised value. Even if you’re preapproved to buy a house for $400,000 and agree to that same price with the seller, if the house appraised for only $375,000, your lender will likely only approve you for a mortgage on the house at $375,000. You’re then tasked with trying to renegotiate on price with the seller, coming up with the extra cash on your own or starting your search for a home all over again.

Keep asking your lender questions. Even if you’ve bought a home with a mortgage before, it’s likely been at least a few years, and the process will feel different. At every step of the way, you shouldn’t be afraid to ask your lender about expectations, timing and documents you should have ready to help streamline the process as much as possible.

“During the preapproval process, the buyer will need to provide some of the documentation their loan officer will use when it’s time to underwrite the loan,” Simmons says. “This is a good opportunity to ask the lender questions about the process and get a checklist of documents the lender will need, such as pay stubs, bank statements and tax documents.”

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

6997 GLACIER DR

Price: $359,900    Beds: 4    Baths: 2.5    Sq Ft: 2406

Completely remodeled! Fresh interior & exterior paint. All new carpet, vinyl wood floors, LED lights w/ Decora switches, heat pump, furnace, hot water heater. Large lower level bonus space (not included in SF) w/ lots of potential; could make a grea...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!! 

Good Monday Morning!

Don't let the sales statistics from August fool you, we are heading into a shifting market quickly in the Eugene and Springfield area. The months to come certainly may see slower home sales with more pressure on home prices and longer times on the market. Home prices over the past several years have increased too rapidly and have outpaced buyers ability to purchase. In the past, this scenario has always created a market adjustment. If you are needing to sell a home now, you should be pricing your home accordingly. Don't think that you can price above this current market and expect a sale. Here are the August sales numbers.

August Residential Highlights

Lane County saw some gains in closings and new listings this August. Closings, at 575, outpaced August 2017 (519) by 10.8% and July 2018 (491) by 17.1%. It was the strongest August for closings in Lane County on the RMLSTM record, dating to 2001!

New listings (711) saw a 4.6% gain over the 680 new listings  on the market last year in August 2017 and a 9.4% gain over the 650 new listings on the market last month in July 2018.

Pending sales, at 505, showed a 3.8% decrease from August 2017 (525) and a 7.5% decrease from July 2018 (546).

Inventory edged down to 1.7 months in August, with total market time increasing to 36 days.

Year to Date Summary

Comparing the first eight months of 2018 to 2017, closed sales (3,564) have increased 4.1% and pending sales (3,772) have increased 0.9%. New listings (4,762) have decreased 0.4%.

Average and Median Sale Prices

Comparing 2018 to 2017 through August of each year, the average sale price has increased 6.3% from $288,900 to $307,200. In the same comparison, the median sale price rose 7.9% from $259,900 to $280,500.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

3187 Kentwood Drive

Price: $264,900   Beds: 3   Baths: 2   Sq Ft: 1,172

Fantastic updated home in Ferry Street Bridge! New laminate wood floors, doors and hardware, fresh interior and exterior paint, and kitchen countertop. Bright and open inside. Living room with dining area. Kitchen with eating bar opens to family roo... View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!! 

Good Monday Morning!

Nationally, both home sales numbers and average sales prices have dipped slightly.  This has not caught up to the Eugene and Springfield area just yet, but I believe that it is on the horizon.  I am noticing that many homes in our area are not selling quickly at this time and also I am starting to see a good number of price reductions.  This is a strong indication that change is on the horizon.  I would guess that we will most likley be seeing a much softer sellers market over the next quarter.  

If you have been looking for a home in the Eugene and Springfield area and became frustrated during the frenzied strong sellers market of the last year, this might be your opportunity to jump back in and potentially have a much easier time finding a home to purchase.

Trouble viewing video? View it here.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

84305 Derbyshire Lane

Price: $414,900   Beds: 3   Baths: 1.5   Sq Ft: 2,019

Beautiful country property! Serene tree views surround 5.27 acre estate w/ gate entry. Engineered wood floors, 2 fireplaces, ductless heat pump, recessed lights & sliding door. Open galley kitchen w/ eating nook. Living & family rm, plus bonus rm w/... View this property >>  

AND HERE'S YOUR MONDAY MORNING COFFEE!! 

Good Morning!

Nationally, pending home sales continue to decline for the seventh month in a row. As the video explains, this is primarily due to home affordability, low inventory and also to a lesser degree, rising mortgage interest rates. This trend could begin the shift to softer home prices down the road. View video HERE.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

6997 GLACIER DR

Price: $369,900     Beds: 4     Baths: 2.5    Sq Ft: 2406

Completely remodeled! Fresh interior & exterior paint. All new carpet, vinyl wood floors, LED lights w/ Decora switches, heat pump, furnace, hot water heater. Large lower level bonus space (not included in SF) w/ lots of potential; could make a grea... View this property >>

AND HERE'S YOUR MONDAY MORNING COFFEE!!