Property Blotter

Oswego Lake has always had a certain appeal. It is in the middle of the town and is certainly a focus of the community. Years ago the waterfront homes were little vacation cottages that people came from Portland to enjoy on the weekends and on summer break. As rail lines and freeways made the drive quick and easy, the little cottages have gradually been replaced with modern homes and some pretty incredible mansions. Even if you will never aspire to living on the Lake, the real estate on the waterfront is certainly intriguing. And if you do want to live on the Lake, you need to know a little bit about the various values that the waterfront solicits.

There are 4 distinct categories of values for the waterfront. I am going to explore each one and give you a list of the current inventory.

Condominiums
Up until 10 years ago, there just weren’t many condos on the lake. There is a really charming 1940’s 4-plex on Northshore, but that was about it. Then in about 2000 the Lakewood Bay Condomiums and Lofts were built. And in 2008 a couple of apartment complexes were converted to condominiums at the Eastern end of the Lake. Of the various developments, there are two condo complexes that have docks and lawn areas right on the water’s edge. Some units have boat slips. And for anyone with disabilities or trying to avoid stairs, the Lakewood Bay Condos have elevator access. Here is the current inventory of condominiums for sale:

Houses on the Canals

The canals are less expensive then the other areas of the lake.  Of course this will have a range of value with newer homes generally selling for more than older homes.  I think that location on the canals also affects the value.  Kelok Canal is a flowing body of water where the Lake is filled from the Tualatin River.  So the quality of the water is going to be better and more enjoyable to use than the more shallow and more stagnant water on the other canals.  Also, there is one canal that is so wide that it is often considered a bay, Blue Heron Bay/Canal.  There is a direct relationship between water quality and property values, in my opinion.  Here is what is currently for sale on the canals:

West Bay and Lakewood Bay
At each end of the lake is a bay. The bays are rather wide with enough room for boating and water skiing. Not as big as the lake, they still have better water quality than most of the canals. Lakewood Bay has the advantage of being next to Millinium Plaza Park for easy access to the Farmer’s Market. It also shares the water with restaurants with dock-side dining. Here is the current inventory of homes for sale on both of the bays:

Main Lake
The prime real estate on the Lake is the main lake. This body of water is a natural lake. At it’s deepest it is about 150′. It is a couple of miles long and about half a mile wide, so it is large enough for boating, sailing, and water skiing. In my experience the values on the lake are affected by the amount of sun that the home is exposed to. On the North shore the houses get full sun all afternoon. On the South shore there are areas that get very little sun light and remain shaded nearly all day long. For this reason, I do think that the North shore has higher values than the South shore. However, the North shore is the home of a rail line that is still in use. So the sunshine is shared with 3 or 4 trains on a daily basis. There is talk of taking out the train track some day and putting in a trail for biking. That’s still in the dream stage and don’t hold me to it. If you buy on the North shore, be aware of the train. Here is the current inventory for houses on the main lake:

And for those of you who really like to crunch the numbers, I thought I’d give you a list of the water front sales that have occurred in the last 12 months:

This is a pretty quick summary. But I think it gives you a small insight into what values are like for homes on Oswego Lake. The lake is just a very beautiful and unique place to own a home. In my experience people who aspire to living on the lake will start out in a more affordable home on a canal and then through the course of their professional lives move up to a home on the main lake. I have also known people who bought distressed properties on the canals and made enough money on a good remodel to sell at a profit and move onto the main lake. In any case, what a great place to come home to at the end of a long day at work. Living on the lake is like always being on vacation.

Please let Linda or I know if you have any questions about buying home on Oswego Lake.
Dianne

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There is some buzz in River Grove lately as word spreads that the property off of Childs Rd.,  east of Pilkington between there & Bryant Rd. has been designed for 34 lots by Renaissance Custom Homes.  The area is a sought-after intersection of sleepy River Grove residential living and nearby shops, freeway access and so much more.  Neighbors have been anticipating the future of this land for quite some time as it has languished undeveloped and left many surrounding residents wondering at its fate.

I spoke with Jack Hall of Renaissance who confirmed that they are taking lot reservations for a fully refundable cost of $2500. per lot.  The plats are not recorded as yet, but I’m told that all has been approved, with lots ranging from 7400SF – 11,000SF.  Homes range from 2100SF to 3600SF with prices from $559,900 to $659,900. Excavation with roads and utilities will begin the first week in July. Assuming recording of the plat in October, you would be in your new home by Spring 2011!

The big kick-off party was held at Renaissance this past Monday evening where I’m told floor plans, prices and a fit list were released.  The result was that three of the 34 lots are now reserved.  More information may be obtained by contacting Jack Hall at 503 545 3982.  You may also wish to visit Renaissance Woods online at: http://www.renaissance-homes.com/futureDev.html As always, feel free to give Dianne or me a call as we’d be happy to assist you if you are not already working with a Realtor.

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I thought it would be interesting to do a couple of snap shots of various price points in the Lake Oswego real estate market. These each cover all listing/sold activity for the last six months and are divided into value ranges. These are for single-family, detached homes and are all located in the 97034 and 97035 zip codes.  Click on any of the graphs to see a larger, easier-to-read version:

Houses priced from $200,000 to $400,000

• 166 were offered for sale
• 88 sold
• There is currently a listing inventory of 6.3 month
• The average sales price was $324,773
• Among the sold homes, the CDOM (cumulative days on the market) averaged 129 days

Houses priced from $400,000 to $600,000

• 156 were offered for sale
• 71 sold
• There is currently a listing inventory of 10.7 months
• The average sales price was $480,964
• Average cumulative days on the market to sell was 165 days

Houses priced from $600,000 to $800,000

• 76 were offered for sale
• 36 sold
• There is currently an inventory of 10.7 months
• The average sales price was $701,924
• Cumulative days on the market to sell was 234

Houses priced from $800,000 to $1,200,000

• 76 were offered for sale
• 30 sold
• There is an inventory of 17.2 months
• Average sales price was $947,899
• Cumulative days on the market to sell was 373 days

Homes priced $1,200,000 to $2,200,000

• 52 were offered for sale
• 16 sold
• There is a 24.5 month inventory
• Average sales price was $1,552,281
• Cumulative days on the market was 323

I like these little snap shots.  It allows you to visually see the market.  It is very apparent that the first-time-home buyer tax credit that was originally supposed to expire in November had a big impact on the less expensive homes (we will probably see something similar this April with the extension).  It’s also very easy to see that less expensive homes sell more easily than more expensive homes.  Cumulative days on the market in the expensive homes is out and out ugly.

One reason for doing this post, this week, was so that I could play with the new statistics function being offered to Realtors by the RMLS.  Our local multiple listing service was the first in the entire United States to go completely web-based about 8 years ago.  Since then they have continued to push the functions of the website and the new statistics function is the latest enhancement.  It still has some limitations, but it is really cool.  Linda and I can now take snap shots of pretty much any part of the market, depending on what our clients needs are, and produce these spiffy graphs and statistics.  Besides being fun, I think it’s going to be extremely helpful.

I hope you found something useful in the information presented today.  If you have any other areas of the market you’d like studied or questions you’d like answered, just let us know.

Dianne

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Newly listed, this home should be at the top of your list if you are considering buying a condo in Lake Oswego. Priced at $229,900, it is a spacious 2 bedroom, 2 full-bath home that has been recently updated. It is immaculate with all new windows, crown moldings, and walnut floors.

This property is on the top floor and at the end of the building. So it is very, very private and very, very quiet. It is also all on one level with an elevator, so there are absolutely zero stairs. It also has an over-sized, one-car garage that is 13×20 feet. The garage is just a few steps from the elevator. So access to your condo is both easy and convenient and you are covered and out of the weather the entire time.

The rooms in this condo are large. The master bedroom is 17×12 and the living room is 21×14. The master has a huge walk-in closet and its own full bath. The living room has a wood-burning fireplace and a deck that goes the entire length of the room.

Did I mention the view? There are spectacular views of SW Portland looking towards the city as well as Mt. St. Helens. Seriously, this is a lot of value for the money without there being a gorgeous view. Then add in the fact that every single day you get to live on top of the world and you have found one great place to live.

This condo is located in Mt. Park on the Western edge of Lake Oswego. Mt. Park is one of the first planned developments in the United States. It features 15 miles of walking paths, tennis, basketball, swimming, weight rooms, exercise classes and a gorgeous rec center that can be used for meetings and receptions.

Here are some of the numbers:
Priced at $229,900
1506 square feet with 2 bedrooms and 2 baths
HOA fees are $361 a month (includes 2 pools, weight room, water, sewer, and garbage) and $207 every 6 months to Mt. Park
taxes are just $2799 per year
The condo was built in 1981 and it has recently been remodeled inside.
The complex is extremely well cared for with gorgeous landscaping and all buildings in excellent condition.

I would love to have the opportunity to show you this property in person. Do not hesitate to give me a call to make an appointment. I can be reached via phone at 503-803-6298 or via e-mail at jdgregoire@earthlink.net

Thanks for taking the time to hear about this fabulous property!
—Dianne

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1) Some Interesting Updates on the Portland Area Market:

-       (According to RMLS)

• Home sales in the Portland area showed marked improvement when compared with the same period (December) a year prior. “Closed” sales were up 52.6%, “Pending” sales rose 40.9%, and “New Listings” rose 11.9%.
• In addition, the average sale price was down 2.5% compared to Dec. 08.
• The average sales price for the 12-month period of 2009 was down 12.1% from the previous year.

2) Tax Credits: The “First Time Home Buyers” tax credit was extended to this Spring (yikes… getting close) and there has been an additional tax credit extended to those “Buying Up” who have lived in their current home for five years and are buying a property of less than $800,000.  Both of these tax credits expire in April: The contract must be inked by April 30^th, and the closing must be by June 30^th.  If you or someone you care about are considering taking advantage of this amazing opportunity, you really must start looking for a home now to make the timeline.

3) Interest Rates to Rise: According to Carrie Bay of DSNews.com (among many others), interest are projected to begin rising, and have risen .25% already within the past month.

4) F.H.A to Raise Standards for Mortgage Insurance: No date has been set yet, but the word is “summer”. (ANOTHER reason to put your home-buying plan in motion now…)

-      (excerpted From David Streitfeld of the NY Times)

• Borrowers who get an F.H.A.-insured loan will soon have to pay a higher initial insurance premium. The new premium will be 2.25 percent of the value of the loan, up from 1.75 percent. 
• Starting this summer, sellers will not be able to offer as much help to buyers to pay their closing costs. The maximum amount of assistance will drop to 3 percent of the value of the property, from the current 6 percent.
• Left largely untouched by the changes is the most controversial aspect of the agency’s program: a provision allowing buyers to make a down payment as low as 3.5 percent. Private lenders these days require at least 15 percent.
• Borrowers who want to put the minimum down will now be required to have credit scores of at least 580. Previously, there was no minimum score. (This is a relatively decent bar though, so this rule may have little effect.)

5) Attention Investors: Yay! HUD has decided to waive the 90 day seasoning financing contingency for buyers!

-(From Pat Goodell of Academy Mortgage ~ 503 380 0953)

Effective February 1^st,  2010, there will no longer be a requirement for a seller of a property to be on title for 90 days or more in order for approval of an FHA backed loan. This is incredible news, since the majority of buyers in today’s market are FHA buyers! The 90 day seasoning issue has long been an issue for investors and agents when working with short sales. This is changing on Feb 1st. The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.”

-          ***Linda’s note: There are a few minor restrictions on this.  Let me know if you’re interested & I’ll send you the entire document with more detail.

6)Credit Card Companies Get Slapped w/Restrictions: We all know how hard the new mortgage guidelines have hit some potential home-buyers.  Sometimes it seems like every time you turn around the consumer is facing yet another hurdle from the banking industry.  Well, this time the consumer is being offered protections that should make it easier, less expensive, and less confusing to do business with, or work to pay off credit card companies.   Here’s an excerpt from the Federal Reserve’s Announcement:

The Federal Reserve Board on Tuesday approved a final rule amending Regulation Z (Truth in Lending) to protect consumers who use credit cards from a number of costly practices. Credit card issuers must comply with most aspects of the rule beginning on February 22.

“This rule marks an important milestone in the Federal Reserve’s efforts to ensure that consumers who rely on credit cards are treated fairly,” said Federal Reserve Governor Elizabeth A. Duke.  “The rule bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts.”

Among other things, the rule will:

• Protect consumers from unexpected increases in credit card interest rates by generally prohibiting increases in a rate during the first year after an account is opened and increases in a rate that applies to an existing credit card balance.
• Prohibit creditors from issuing a credit card to a consumer who is younger than the age of 21 unless the consumer has the ability to make the required payments or obtains the signature of a parent or other cosigner with the ability to do so.
• Require creditors to obtain a consumer’s consent before charging fees for transactions that exceed the credit limit.
• Limit the high fees associated with subprime credit cards.
• Ban creditors from using the “two-cycle” billing method to impose interest charges.
• Prohibit creditors from allocating payments in ways that maximize interest charges.

Consumers can learn more about changes to their credit card accounts by accessing a new online publication. “What You Need to Know: New Credit Card Rules.” It explains key changes consumers can expect from their credit card companies as a result of the new rules. The Board plans to release additional “What You Need to Know” publications in conjunction with other major rulemakings

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I thought I’d bring you along with Dianne and I to see some of what was on Brokers’ Tour Tuesday in Lake Oswego.

What do we DO on tour??? Well, we check out properties that are new on the market or that have had a major change such as remodeling work or price reductions. We also enjoy visiting with each other & learning more about the properties (this is a great way to find out material information that is not included on the listing sheet), and you should know that Realtors LOVE to eat on tour! Usually we’ve been at meetings all morning and are ravenous by the time we get out to tour.  Dianne calls it the Pavlov Response… she postulates that even when we don’t tour, we automatically get hungry on Tuesdays at 11:00…  I think she’s right!

I was not able to post everything we saw on Tuesday, but I’ve got quite a bit to show you… Let’s get going! (all photos used with permission ~ remember that you can enlarge any photo by clicking on it)

We headed over to Westridge to 51 Hillshire Dr., to visit a custom contemporary home set up above the road and surrounded by luscious landscaping, giving it peaceful views out the many bright windows.  We were met by Debbie Todd who answered questions and showed us around with warmth and hospitality. This one is stately, with 4306 SF, 4 bedrooms, a formal but open entry, master suite on the main floor, high vaulted ceilings, hardwoods, great room with gorgeous kitchen (yes, that’s Dianne in the kitchen), fireplace and access to the spa/patio area (also accessible from the spacious master).  Daylight basement offers pool table area, 1/2 bath, media area, and a beautiful wet bar.  Three bedrooms are upstairs (one non-conforming). The flow of this home is so elegant, and the feel so open and peaceful… I would highly recommend a look.  This one is set & ready to welcome it’s new owners with style & comfort from day one.

From Westridge we drove to 2057 Summit Dr  in Summit Heights where the neighborhood is nestled up the graceful slope from Lake Oswego. This particular home is a totally remodeled 4 bedroom, 3 1/2 bath 1975 Craftsman with panache. I mean, this home shouts easy, comfortable living from the street as you enter the circular drive.  It is just a ’superstar’ sitting there waiting for the perfect occupants. Set back a ways from the road, we meandered up the walk and were met by Susy Darm, another charming local Realtor with tons of information about the property to share. It is 4589 SF on a .45 acre lot overlooking the lake with beautiful views from the upper deck & grand master bedroom.  The outdoor living options begin with the main level deck that wraps from the porch around to the side… vaulted with forest views & accessible from the kitchen and dining areas.  Did I mention the kitchen?  Let’s just say stunning slab granite, Dacor Pro stove, Sub Zero, Viking, alder cabinets, and an open/airy feel.  The great room is wired for surround sound, there are three fireplaces, one of which boasts an alluring river pebble fascia. I could go on & on… media & game room, stellar bathrooms… but really, this one needs to be seen in person.

Leaving Susy, we decided to finish up our tour with the new construction  home at 567 6th Street in First Addition. We walked through this one about a month or two ago when it was in full building mode… we gingerly stepped through the home being careful not to trip and trying to visualize the finished result.  It was fun to see the transformation yesterday.  Shari Newman met us in the beautiful kitchen featuring one of my favorites… Carrera Marble for back-splash.  It offers 2568 SF of brand new home, with 4 bedrooms and 3 1/2 baths.  Floors are luxurious, dark hardwoods. Bathrooms feature granite and elegant fixtures & finishes.  The generous master is conveniently located on the main level. Upstairs also opens to three more bedrooms, one of which has high ceilings and could probably also be used as a game or media room.  Little touches than really shine include the brass gutters, and slatted wood ceilings on the front porch.  Style.

Well, that wraps up our Broker’s Tour for this week.  Hope it was fun tagging along with us! We’re always here to take a call & show you property if you find something that “speaks” to you.

If this is making you want to tour yourself, I’ll be holding 371 6th St. Open on Sunday in Lake Oswego from 2:00 – 4:00 PM.  This is a sweet 3 bedroom, 3 1/2 bath custom rowhouse in First Addition. C’mon down! We can chat.

Very Best,

Linda

You may reach me at:  503 318 2116

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Happy 2010 to each of you!  I don’t know about you, but I can feel the excitement (and dare I say relief) in the air.  It’s a new year, and things are looking good.  Lake Oswego is already celebrating its Centennial, employment figures are up, real estate tax incentives are in full force (for a few months anyway), stocks started the year with a rally, and “the trend is still up” according to Rob Lutts, chief investment officer at Cabot Money Management.

Are there naysayers and warnings of impending doom?  Yes, as always.  I, however, am “cautiously excited” at the prospect of renewed opportunity all around.  I see my clients achieving their goals and changing their lives, and I know that time does indeed march on.  For my clients, job changes happen, marriages and divorces happen, families grow & need more space, loved ones want to be closer geographically, retirement and downsizing happen, and of course, “upsizing” is also very much alive.

The beginning of the year also always brings some legislative changes, like needing a hands-free device to talk on your cellphone in the car.  The new law does, however “…exempt motorists who are on their hand-held cell phones ‘in the scope of the person’s employment if operation of the motor vehicle is necessary for the person’s job’.”  Hmmmm, I wonder if that includes Realtors?  Well, I think I’ll opt for safety anyway, but I can smell some friction (is that burning rubber?) ahead in the way of challenges to these minimum $142. tickets.

In the real estate world, there are all manner of regulatory changes, and changes to the “new” forms we’ll be using.  Make sure to talk with your Realtor (or Dianne and I if you are without a Realtor) if you have any questions.  Some of the changes could affect the timeline of your transaction if you are not aware of them. For instance, if a transaction includes any seller-carried financing, and the document is prepared by escrow, there is a 3-day mandatory review period… so if the Buyer is just seeing the document for the first time at signing, there will be a 3-day delay in closing.  Also, you will notice that our ML#’s have gotten a bit longer.  As we are starting a new decade, the ML#’s now start with “10″… so they’ll be longer numbers & have lots of zero’s for awhile : )   As an aside, the count on these, and therefore the number of new January listings as of today in Lake Oswego number 24, and range in price from $90,000 to $998,500.

Last, but definitely not least, I want to address the excitement of the ongoing Centennial Celebration in Lake Oswego.  I’m including a link here to a pdf that has all kinds of historic Lake Oswego photos, and news stories from 1910. By that time Lake Oswego had been in existence for 60 years already.  Three previous attempts at incorporation had failed due to fears around “additional regulations and taxation” (sound familiar?). Residents in First Addition were interested in: “promoting small businesses, water quality, fire protection, debate over the sale of alcohol, as well as government autonomy. The vote in favor of the measure was 79 to 22.  Only men cast their ballots because Oregon women did not win the right to vote until 1912.” You really MUST check out this link.  Some of the headlines read: “City Government Controls Width of Tires”,  “Buy a Lake-Front Lot for $50.”,  “Oswego’s Bear Population”, “Illiterate Cows”,  “Pig Penmanship”, and many, many more.

Happy, Happy 2010 to you and yours, and thank you for reading the Property Blotter!

Linda

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I think the best thing I can say about the Lake Oswego real estate market of 2009 was that it wasn’t 2008. Remember a year ago? We’d seen the collapse of some of the Nation’s largest banks, the first bailout/stimulus package had been put into play, and the entire Nation was in a wait and see mode as the country transitioned to a new Presidency. It was a very difficult time. And it makes today’s market feel, well, pretty darn good.

Let’s start by looking at the Portland Metro area.

• At this time last year the RMLS was reporting 19.2 months of inventory.  In other words, to sell all of the active listings at the pace that properties were then selling, it would take 19.2 months.  Today that same inventory is just 7.1 months.  Whew!
• Closed sales from November of 2009 (the most recent report available at the RMLS) are 72.4% greater than they were in November of 2008.  Don’t get too excited about that one.  It’s a reflection of just how horrible sales were in November of 2008 and how great they were comparatively in 2009.  Putting better perspective on it requires doing a 11 month average of January-November for 2008 and then 2009.  When this is done the closed sales are greater in 2009 by 2.6%.  Still, an improvement.
• November of 2009 compared to November of 2008 has pending sales up by 19.9%
• November of 2009 compared to November of 2008 has new listings down by 7%
• We have continued to see a decline in home values of 11.4%, year over year.

Looking at the specifics of Lake Oswego:

• There are currently 396 single-family homes for sale and 130 condos.  Of the single-family homes, 96 are priced at over $1,000,000 and 54 are priced at $350,000 or less.
• There are currently 49 single-family homes and 12 condos with pending sales.
• In the last 12 months 393 single-family homes and 95 condos have sold and closed.  Of those 42 cost $1,000,000 or greater and 93 were priced at $350,000 or less.  In those high-end homes, 7 were priced over $2,000,000.
• At the pace that $1,000,000 and greater homes are selling, based upon the performance of the last 12 months, there is still 2.2 years of high-end inventory.  And that also means that the less expensive homes ($350,000 or less) has just 7 months of inventory.
• The average sales price is $419,300.
• Property values saw a decline of 12.9% in the last 12 months.
• Average days on the market (length of time between listing a home for sale and accepting an offer) is 163 days.

I just can not leave this subject entirely without doing my compulsive comparison of affordable homes in Lake Oswego versus Sellwood, a neighborhood in SE Porltand.  I like to do this because I used to live in Sellwood, so I think I have a good idea of the area, and because I remain convinced that Lake Oswego is misunderstood by buyers.  Many people assume that Lake Oswego is just too expensive for their budget.  This is, in fact, not true at all.  At this time there are currently 54 houses for sale in Lake Oswego priced at $350,000 or less, whereas in Sellwood there are currently just 27.  Lake Oswego is a good place to find an affordable home.

• The least expensive home in Lake Oswego is a short-sale property that needs work.  It’s priced at $169,000 and has 1382 square feet with 3 bedrooms and 2 full baths.  It’s on a quiet street near Waluga Junior High School.  Offers have been submitted to the lender for 3rd party approval.
• The least expensive home in Sellwood is a short-sale property that is being sold “as is”.  It looks to me like it needs some work but is in better condition than the LO property.  It is priced at $209,000 and has 850 square feet (120 of that in the basement) with 2 bedrooms and 1 bath.  It too has received an offer and is waiting for lender 3rd party approval.
• The most expensive home in Lake Oswego remains the 5.5 acre private island in Oswego Lake that is priced at $19,500,000.  Built in 1929, it has 13,500 square feet with 5 bedrooms and 6 1/2 baths.  There are waterfalls and a lake side pool.  To arrange a showing, buyers must provide verification of funds. Yep, LO has those kinds of houses too.

We will never be able to foresee the future.  We can only look at the present and the recent past to get an idea of what to expect ahead.  My prediction is that the tax incentives for 1st time buyers, and now for repeat buyers as well, will continue to boost sales.  I think people intending to sell who are serious will continue to price their homes at reasonable levels that will attract an offer.  I also think that people have been beat up in the last couple of years and realize that many mistakes were made.  Even if the economy improves, I predict caution from home buyers for many years.  People will shop carefully and make home choices carefully.  I will also tell you that from my perspective, having survived the housing market of 2008, and now the market of 2009, I am really looking forward to 2010.

Linda and I want to wish you a safe, healthy, and happy New Year.

Yours in real estate, Dianne

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Both in my personal experience, as I see transactions through escrow to closing, and in the continuing education classes I have lately been taking, I am seeing some very strong changes in lending guidelines. These changes are coming from the Federal Government as part of addressing the mortgage crisis that our country has recently endured. I think that it is important, no matter where you fit into the real estate picture, to understand these changes and adapt your expectations and behavior to accommodate them. The days of having a credit score and a pulse to get a mortgage are over. The days of a 30 day escrow are going to be rare, and here is why:

The first big change in lending practices happened June 1 of 2009 with the implementation of MIDA, the Mortgage Improvement Disclosure Act. This Federal law requires that every time a borrower receives a Good Faith Estimate (the paperwork that lays out estimated costs to obtain a mortgage) the borrower must be given a 7-day disclosure period in which to become knowledgeable of the terms of the mortgage and either accept those terms or shop for a better deal. It makes sense. Buyers are faced with a very large and important financial decision. They need to understand what they are doing and approve of the loan product that they will be obtaining. It gives a borrower some breathing room in the process so that they are not pressured into a loan that they will later on regret. Where it gets dicey is if any changes happen to the loan while it’s in escrow. Every time a change occurs that affects the APR by more than 1/8th, a new Good Faith Estimate must be issued and a new 7 day disclosure period must pass. So let’s say that a buyer does not lock their interest rate until just prior to closing and the rate changes. The lender can not allow closing of the sale until that 7-day disclosure period has passed. A more common variable would be if the buyer has a home inspection and chooses to have the seller pay some of his closing costs in lieu of repairs. When the seller pays the buyers closing costs it changes the buyers Good Faith Estimate and a new 7-day disclosure period must pass. This is not going to be a big deal if all parties go into the escrow period understanding how important it is to allow time for disclosure periods and being aware of what can trigger them. I think it is more important than ever to lock in your interest rate early in the escrow period so that you don’t get thrown for a loop at the last minute.

The other changes that are occurring are a result of the Real Estate Settlement Procedures Act, which goes into effect on January 1, 2010.

The Federal Government has now defined what constitutes a pre-approval on a loan application. In the past a buyer would make a loan application prior to making an offer on a house. That buyer could then provide a letter of pre-approval from a lender showing that they are approved as a borrower but subject to finding a house. The Federal Government is now saying that no loan approvals can be given without an address attached to the approval. So a borrower can get pre-qualified for a loan (credit report pulled and debt to income factored to estimate that they can be approved in the future) but they can not get pre-approved.

The next big change is the change to required Federal forms for both the Good Faith Estimates and for final HUD Settlement Statements. I have seen the new Good Faith Estimate forms and I like them. They look more like a worksheet. And they have very clear sections where the lender must put in total sum numbers for “all other settlement charges”. So many lenders call their fees by different names. So a borrower, when comparing loan programs, would have to compare a variety of charges that, because they had different names, were confusing. By requiring a lump sum figure it doesn’t matter the names of the charges or even the quantity. What matters is the bottom line and this new form makes it easy for a borrower to see the sum total and compare sum totals between lenders. Once the Good Faith Estimate is given the lender is required to allow the borrower 10 days to shop other loan programs. The Good Faith Estimate has blank columns that line up next to the estimate given that allows a borrower to write in the fees they find with other lenders. The finished form will clearly show the borrower the various costs for various programs. I think it is an improvement.

Another change is that there is a 3-day disclosure program for the appraisal. This means that the borrower must be given a copy of the completed appraisal at least 3 days prior to closing so that they can look it over and understand it. The days of the appraisal being given to the borrower when they sign the loan papers, or perhaps even having to request that it be mailed to them, are over. Again, I think this is an improvement. Not only do buyers deserve to see the documentation of value, it just seems like professional courtesy to take this extra step.

Finally, there is what is called the 10% Tolerance. At closing the numbers given in the Good Faith Estimate are lined up against the actual settlement charges on the HUD Settlement Statement. If there is a difference in the charges of 10% or greater, the lender must absorb the difference. This can be done by reducing the lender charges at closing or by reimbursing the borrower within 30 days of closing. Seriously, this is a big IMPROVEMENT for borrowers.

All of these changes are going to mean that if there is a mortgage involved, it will take a little longer to close a transaction. Realistically, you should expect escrow to last about 45 days. And as much as the buyer and seller might be willing to close sooner, the process can not be rushed. These are Federal guidelines that preclude the terms of the written contract.

I have got to share one more word of advice. If you are buying a home and you have made an offer that has been accepted, do not purchase ANYTHING using credit. Lenders are now pulling credit reports just prior to funding the loan. If your credit score has changed or your credit card balances have increased, it can kick your new mortgage right back into underwriting. This recently happened to a buyer of one of my listings. Not only did he have to pay off the new credit card charges, but we had to wait an entire week for the lower credit card balances to be reflected on a new credit report from one of the National credit reporting bureaus. It delayed closing on the purchase for 2 weeks. So much for moving in by Thanksgiving……

So be aware, be patient, and be realistic about what to expect. There is a new lending environment, but for the most part it does benefit the borrower. Change can be a good thing.

If you would like a pdf of the Real Estate Settlement Procedures Act, click here.

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It isn’t often that we shine the spotlight on any particular property, but when we heard that the new luxury town homes on Sixth St in sought-after First Addition had just lowered their prices by $100,000 each to $599,900., Dianne and I just had to run over there and take a look.

There are six of these little gems with four of them left & available for purchase. The address is 363 Sixth St., and the ML# if you want to get a preview is 9057549. Each has 2258 SF, 3 bedrooms, 3 & 1/2 baths, 2 levels with additional full finished basements, and probably just everything you’ve been looking for.

First of all, they really are gorgeous. The finishes in these are superior. The first feature you notice inside are the beautiful plank maple hardwood floors. A sleek yet spacious slab granite kitchen with long island, pantry & light beech cabinets also boasts additional built-ins and smart features like a pull-down bar. The dark french doors to the front porch area off the dining room are a rich contrast, and the white wainscoting throughout adds that crisp old-world cottage feel. The 2-car detached garage out back with private courtyard to the house is an added bonus in First Addition, and from there you enter the great room compete with gas fireplace and more built-ins.

Downstairs you find another gas fireplace and generous media room as well as another bedroom & bathroom w/an additional laundry area for guests or your reclusive teenager. Upstairs is the master bedroom & bath showing off glorious travertine w/onyx, a clawfoot tub & separate shower as well as an additional bathroom w/soaker tub & yet another bedroom. Walk-in closets of course, and the main laundry near the upstairs bedrooms check those final “must-haves” off the list.

Overall, these are just so unique & have that easy-living feel that goes hand in hand with the First Addition lifestyle… you know, walking to all the services, trendy shops and restaurants, not to mention Millenium Park Plaza for a view of the lake & all the festive local activities like Farmer’s Market, open air Movie Nights, Holiday Tree-Lighting festivities and on & on. First Addition is just a strolling kinda place; a small-town feel with all the amenities. Cottage Living magazine named First Addition as one of the ten best cottage communities in the country. American Planning Association name it one of the top 10 neighborhoods in America. The accolades go on & on.

Yes, these are nice indeed. But you know, on the practical side, in addition to the location & amazing price when comparing features & finishes to other offerings, there are also NO HOA fees. Compare that with other HOA’s nearby at anywhere from $136./month to $455./mo.

Come on down & take a look. Bring a Realtor as there has been a lot of interest. They will be held open both Saturday & Sunday from 1 – 4.

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