Tag: yomari cruz-deweese

“Is this a good time to buy a house?”

Posted on by Yomari Cruz-DeWeese

“Is it a good time to buy a house?”

People always wonder when is the best time to buy a house. Many considerations go into answering this question – for example: 

  • Are mortgage rates favorable? Are they likely to go up or down? 
  • Are house prices likely to go up or down in the area in the near future?
  • How much inventory is on the market in the area where I want to buy?
  • Is the real estate market cyclical in the area where I want to buy?

All of these questions are important, and you can find many discussions of each of these questions with a quick Google search. I’ve put some thoughts below from my perspective as a real estate agent in Portland. 

Where are mortgage rates likely to go?

Mortgage rates have improved since last year’s high of 7.9% (October 2023), and many people seem to think that they will continue falling slowly. Mortgage rates are generally influenced by the Federal Reserve, but also by rates of economic growth and inflation. Beginning in early 2022, with inflation concerns high, the Fed raised the benchmark federal funds rate (basically, the rate at which banks can borrow from each other), partially in an effort to curb inflation. This has contributed to rising mortgage rates. It’s hard for anyone to say exactly where mortgage rates will go in the future, because it depends both on how the economy in general does, and how the Federal Reserve reacts to concerns about inflation. 

It’s helpful to remember that the extremely low mortgage rates we’ve seen since the Great Recession are somewhat of a historical anomaly. In the mid 1990’s, the federal funds rate was around the same level as it is now. Beginning in mid-2000, and continuing after the 9/11 attacks, the Federal Reserve lowered the federal funds rate drastically, culminating in a low of 1% in March 2004, in an effort to boost the economy. As the economy sped back up after that point, partially due to rampant subprime mortgage lending, the Federal Reserve increased the federal funds rate back up to around where it is now, and then after the subprime mortgage bubble collapsed in late 2007, resulting in the “Great Recession,” the Federal Reserve took the unprecedented step of lowering the federal funds rate almost to zero, where it stayed until it gradually began to increase in 2015. 

When COVID hit, the Federal Reserve lowered the rate back down to zero, where it stayed until the Federal Reserve started increasing it in March 2022 in response to inflation concerns. This increase has leveled off at the current rate of 5.33%, and it is unknown where the Federal Reserve will go from here. All of this is really to say that where mortgage rates are going to go is difficult to predict even for financial geniuses. What’s less difficult to predict is the fact that we all need a roof over our heads. Also helpful in thinking about mortgage rates is that, if you get a mortgage, it’s going to stay the same unless you re-finance. So if mortgage rates go lower, you may have the option of taking advantage of those lower rates and re-financing later, and if they go higher, you are insulated from that increase because you already have a mortgage.

What about home prices? 

Home prices are influenced not only by what mortgage rates are doing, but also by the housing inventory levels in your area. It’s a supply and demand thing. Stated simply, if mortgage rates are high and inventory is high, prices may decrease; but prices trend higher when demand increases and supply decreases. The housing inventory in the Portland metropolitan area has recently increased slightly from historically low levels, but is still low. More inventory can mean less competition for houses resulting in a market is more neutral or buyer-friendly, but because people who already have mortgages locked in at the historically low rates of 2020-21 may not yet be incentivized to make a move unless we see further decreases, the inventory has remained low, and prices haven’t seen much decline. 

Is the Portland area real estate market cyclical? 

The short answer is yes. Like everything else, the real estate market tends to lull during the holidays, then begin to ramp back up heading into February. This is especially true in Portland, because people generally don’t like to move here in the rainy season. The Portland market generally reaches its peak around April to June, and stays at a higher volume until August, when it gradually tapers down over the next few months. In the summer, you’ll potentially have more competition but more options. In the winter, you will likely have less competition but fewer home options. I would like to note here that while having more choice and looking at pretty gardens is fun, inspecting basements during the rainy season in Portland is an advantage not many consider, and they should. 

So when should I buy?

While everything I explained above is important, at the end of the day the most important questions are very personal: why do YOU want to buy a house, and when does it make sense for YOU? If you currently have a great mortgage and would like to have a bigger house, maybe it’s not the best time financially, but maybe you have a growing family and you need the space. In that case, you need to decide how much it’s worth to you to get the right house for your family. If you are a cash buyer, now might be a great time to buy a house, because you won’t have so much competition, and you might get a great price on a very desirable house. If you’re looking to move out of a rental and into home ownership, and are financially flexible, it also might make sense to buy now. Because so much of it depends on each individual’s situation, consulting a buyer’s agent is key. 

A buyer’s agent can help educate you so you can make the best decision for you and your family. After speaking with a great agent, you should feel more empowered, because you will understand all of these factors better. If the first thing an agent tells you when you speak to them is that it’s a great time to buy a house, without knowing anything about you, you might want to ask them why it’s a great time for you to buy a house, or find another agent. 

 

If you are thinking about buying a house sometime in the future and are not sure whether to act now or wait for a little while, you can always take steps so you can make sure you’re ready when you feel the time is right. Check out my post about all the steps you can take now to be ready to put an offer on a house when it’s time! 

 

Step-by-Step Guide to Making an Offer on a House in Portland, Oregon

Posted on by Yomari Cruz-DeWeese

Want to buy a house in Portland, Oregon? Here is your step-by-step guide to making an offer on a house! 

In home buying as in everything else, knowledge is power. The following list of steps is intended as a step-by-step guide to what YOU can do to best prepare yourself for making an offer on a house and making one of the most important purchases for your family and your life.

  1. These first two steps are fun, and you can start doing them and continue as you’re answering the harder questions which follow:
    1. Start perusing online real estate listings as soon as you can, but with the idea that you are not necessarily looking for the house you want to buy, but rather just educating yourself about what’s out there. Look at lots and lots of houses and decide what excites you and what doesn’t. Do you like older houses? New construction? One or two (or more) floors? A finished basement? How important is a yard to you, and what do you want to do in the yard? How many bedrooms and bathrooms? You can also go to open houses. 
    2. Also, start frequenting the neighborhoods you’re interested in. If you want to buy a house in the neighborhood where you already live, you’ll do this naturally, but if, for example, you live on the west side of Portland and are interested in moving to the east, start walking around the eastside and getting to know the various districts, so you can get a feeling for where you might like to put down roots.
  2. Identify the reason you want to buy a house. Is it because you want a place to live and raise a family over the long term? Is it because you want an investment? Do some soul searching, figure out your true objectives in buying a house and let that objective guide you in all the next steps. For example, if you’re looking for a place to raise a family, whether or not a particular house will rapidly appreciate in value (or even appreciate at all) may not be as much of a concern as if you are looking for a house as an investment. 
  3. Identify whether you have any time pressures. Is your lease ending soon? Do you have a good opportunity to sell your current house? What are the current mortgage rates, and how might that affect your ability to get into the house you want? For most people, buying a house is one of the most significant investments of their lives. You should look at tons of houses, all kinds of houses, and really figure out what kind of house you like, so you can make the best of this very important decision.
  4. Identify whether this is the right time to buy a house for you. Answering this question really depends on your particular situation. In a market where interest rates are high, buyers who need to rely on financing for most of their purchase price may want to take a hard look at whether it is really the best time for them. At the same time, since so many people will be thinking the same thing, there may be less competition in a high-rate environment, so it may be easier to compete for the home you really want. And in a high-rate environment, cash buyers sometimes have great opportunities, for the same reason.
  5. Identify whether you need a house that’s in perfect condition and needs no improvements, or whether you have appetite for somewhat of a fixer. If you’re handy, being open to a house that needs some work may open up some possibilities that you might otherwise not have.
  6. Now make a list of wants and needs. Figure out what items are negotiable, and which are not. These may change over time, but it’s helpful to write this stuff down to organize your search. Be sure to share this list with your buyer’s agent!
  7. Now it’s time to talk to a mortgage broker. While some people like to stick with the banking relationship they may have developed over a long period of time and get a mortgage directly from their bank, I generally recommend that people at least talk to a mortgage broker. Banks have the mortgage products they have, and bank employees don’t have much choice but to offer you those products, whatever they may be. In contrast, because mortgage brokers get paid by connecting people with lenders, mortgage brokers have a huge incentive to ferret out the best deals, and the best brokers will really spend some time with you to understand your particular financial situation and real estate objectives and find the best mortgage product for you.
  8. Once you have talked to a mortgage broker, you will understand how much house you can afford, and what your range of purchase prices may be. Keep in mind that the purchase price of a house is only the starting point of how much the house will cost you – there may also be:
    1. Mortgage insurance (usually applicable if you put less than 20% down);
    2. Homeowners insurance;
    3. Property tax; and
    4. Utilities (water, sewer, garbage, gas, electric, etc).
  9. Additional potential expenses: 
    1. Repairs and Maintenance. As you figure out how much house you can afford, keep in mind that you may need to budget for more than just monthly expenses. You should understand how much of a short term budget you have for both routine maintenance and necessary major repairs. What if you end up buying a house that will need a new roof in the next five years? What if the furnace breaks down? Thinking about these potential expenses, and understanding what cash you’ll have available to pay them, will help a lot when you find a house you want to make an offer on.
    2. Other. Some houses have features that are great but cost money. Be aware.
      1. Homeowners Association Fees (can be a major cost);
      2. Pool and hot tub maintenance;
      3. Fireplaces and chimney cleaning;
      4. Etc.
  10. Now it’s time to look at houses FOR YOU, but it’s also time decide whether you want to work with a real estate agent. Buyer’s agents are a dime a dozen on the internet; the trick is to pick the right one. There are many factors to consider, and I will write about this in another post, but, in a nutshell, you should first try to get referrals from friends you respect and who seem to “have it together.” If someone you trust had a great experience with an agent and got a house they love, you probably want to talk to that agent. Remember, this is one of the most significant purchases you may ever make, and you want to find someone who respects that and brings that perspective and sense of importance to helping you. That may not be the person who has spent the most money on making sure they appear first in Google searches. Then you should interview at least three or four agents before deciding. And once you pick one, remember, you’re not locked in to your buyer’s agent. If you hire someone and they’re not working out or you are losing confidence in them, you can almost always terminate the relationship and find someone else. Don’t worry about hurt feelings – we are professionals, and what we want (or should want) is for you to have confidence in the services you’re getting from us. If you don’t have that confidence, you should find someone who you click with better. This is our job, but it’s your life.
  11. Look at houses. Lots of houses! In the beginning, try to cast as wide a net as possible, and look at a ton of different houses in a ton of different neighborhoods. You may think, going into the search, that you know what you want in a house and where you want to live, but you may change your mind after seeing what’s out there. 
  12. DO NOT FALL IN LOVE WITH A HOUSE (it’s easy to do!). This process is going to be full of emotional ups and downs. If you’re in a competitive market (and Portland is very competitive), it’s likely that you will be facing competing offers for the house you decide on. You may lose that competition, and it may happen multiple times. It is so easy to look at a bunch of beautiful house pictures on real estate websites and imagine yourself so happy living in one, and then be so disappointed when it doesn’t happen. But even more importantly, see if you can put some emotional distance between you and your house search process. Now that you’ve done the work of answering questions about what kind of house you want, why you want to buy, why it’s the right time for you to buy, and how much you can afford, you should be somewhat dispassionate about evaluating houses objectively to determine whether they fit your criteria. Honestly, this is a big reason people hire professionals to represent them – the professionals represent YOUR INTERESTS. Lawyers have a saying: “a person who is their own lawyer has a fool for a client” – meaning that it’s extremely helpful to rely on a professional who can bring their expertise to bear for your benefit, without any emotional entanglement or personal interest. The same thing is true for real estate agents.
  13. When you’re looking at houses, remember to find out how much the expenses of that house truly are. What are the monthly taxes and approximate cost of  utilities? Look at the condition of the roof and the basement. Determine whether any major repairs will be due, or if you’re going to have to do some remodeling to have the house you want. A good agent should be able to help you get accurate answers to these types of questions.
  14. When you find a house that you want to buy, figure out what offer you can afford to make that will make the seller choose to accept your offer. Trusting your agent to gauge potential competition, tell you if the home is well priced, and to communicate with the listing agent to help you assess what a strong offer would be, is crucial. Knowing you can listen to your agent’s recommendations to put your best foot forward is how you get the house. Understand that after your offer is accepted, you will have an opportunity to get a professional home inspection done of the house, and if you don’t like what it reveals, you can terminate the transaction and move on, no harm no foul. In fact there are many protections for buyers in the standard Oregon sale agreements I will write about in a future post!
  15. Before you make the offer and do a formal home inspection, there are a few things you can do to “kick the tires,” such as:
    1. Does the house have a basement? Check it out in rainy weather to see if it’s leaking. Also check out the yard to see how it’s draining.
    2. How is the water pressure in the house? How is the water pressure with all of the taps open and the toilet flushing?
    3. Are there trees near the house? I love trees! Trees are great! However! If they are deciduous trees, you could be paying someone each year to clean your gutters. The roots could damage the foundation. And if you currently live in Portland, you’ve seen the damage falling trees can cause in ice storms. Tl/dr: trees = good, but be aware.
    4. Look for squeaky floors; make sure the floors are level.
    5. Look for signs of leaks around water fixtures, sinks, toilets, tubs and showers.
    6. Check out how old and how clean the appliances are. Would you be happy using them for the foreseeable future, or will you want to buy new ones? If so, make sure you understand the cost of what you want to put in.

If you’ve done everything listed above and are satisfied that you would be comfortable assuming ownership of the house, and understand the costs involved, go ahead and make an offer! A great real estate agent can help you get through these steps, will guide you through the transaction once your offer is accepted, and will help you get to the finish line and into your new Living Room.