According to the New York Times article published yesterday (New Indications Housing Recovery is Underway), there is indication of a significant recovery in the housing market.
This article does point out some trends that apply to Coastal real estate such as an increasing inventory in most price ranges and a reduction in the number of distressed properties on the market. It alludes to a slight increase in sale prices after steep declines over the past 6 years. This is not quite true on the Coast. Over the past 2 years our market has seen a decline in values of closed properties of 13%. This is in contrast to the historical figures up to 2006 when we consistently saw average annual increases of 15%.
What does this mean to home Buyers in the Coastal market? Depends on the objective. If you are an investor the competition is stiff for homes and condos that can be easily placed in the rental market. The demand for clean affordable rentals continues to outstrip the supply. For homes to be used as primary residences the inventory is fair to good.
Oregon coast homes priced between $190,000 to $250,000, are being caught in “bidding wars” that have not been common since 2004-2005. New construction is still at a standstill on the Coast as builders wait for cash Buyers prior to breaking ground, and bare land is in ample supply. For Investors coming in with cash, excellent buys are available. For primary coastal residences and beach homes, the selection is fair to good if the Buyer can come pre-qualified for a new loan with good credit.
This is overall a great time to invest in Coastal real estate no matter what the objective. After all, there is only one Oregon Coast. We love living here – so might you.
During your search for a home on the Oregon Coast, have you thought about purchasing a bank owned property?
People have a fairly accurate impression that great bargains in the form of deeply discounted prices can be found within this category. While generally true, bank owned properties present several unique challenges. Read on to become an informed buyer.
The big challenge is getting through the inspection process. Under Oregon law, financial institutions are exempt from the Disclosure requirements of all other Sellers. This means that the sale is always an “as is where is” situation. The bank will not negotiate (pay for) any needed repairs. So the prudent Buyer will need to be prepared to pay for all inspections whether the sale succeeds or fails.
The inspection process is not so simple as most bank owned properties are the result of foreclosure. The best managed properties have been winterized to prevent freezing water pipes and all utilities have been disconnected. In order to perform an inspection of all the functions within the home, water, electricity and gas service (if appropriate) must be reconnected. In some service areas, this can be done for a nominal fee to the Buyer. Again this is a Buyer cost.
Assuming that all the inspections pass on the home’s structure, utilities and mechanicals, the other big factor is an assessment of the general condition of the home. Many foreclosure actions result in damage or removal of fixtures by the departing property owner. For example, it is not at all unusual to find everything remotely portable stripped from the home. This includes kitchen cabinets, appliances, plumbing fixtures, light fixtures and even flooring. In some cases the departing owner will do extensive damage to walls, doors, windows and remaining fixtures as a way of “getting back” at the bank for taking the home. Some of the costs to repair or replace may be reflected in the offering price with a cover letter to the bank with written bids for the work.
The final hurdle in the purchase of a foreclosed property is negotiating with the bank itself. The bank will demand proof of pre-approval if a new loan is being obtained for the purchase, as well as proof of adequate funds to close.
The brokers in our Newport and Seal Rock offices can guide you through the sometimes time consuming and frustrating process of buying a bank owned home along the Central Oregon Coast. We want you to get the financial advantages, so our job is to help you avoid all the possible pitfalls along the way.