I think one of the most under reported stories about the real estate market today is just how close to normal our markets are.  What we keep hearing is how far off we are “from the peak”.  Well, “the peak” was unsustainable in any market so, why are we comparing our current market’s health with such unrealistic statistics.  For our market here in Portland Oregon, inventory levels are currently at 6.5 months (inventory levels are calculated by taking the current number of active listings divided by the number of pending sales in any given month).  In fact, Happy Valley was one of the first and hardest hit markets in the Portland metro and it has reduced it’s inventory in line with the metro average as well.  The Portland metro started out in January of this year at 19.2 months of inventory!  Not a bad adjustment.  In comparison, the time period between 1998 and 2002 experienced monthly inventory levels ranging from 4.1 to 10.1.  Averaging mostly between 5 & 6 months of inventory until the spring of 2003.  We are currently carrying about 3000 more listings than we averaged during that time period however, we had approximately 350,000 fewer people then as well.   

In wrapping up this year, it is exciting to hear such statistics as “”The affordability equation is now at its most favorable point for buyers since 1970.”, “The 64% jump in pending sales is the largest same-month increase since February 1996.”, “New home inventory, on a non-seasonally adjusted basis, is at its lowest levels in over 14 years.” and “The 30-year (mortgage rate) has never been this low since Freddie Mac began its weekly survey in 1971.”  All of which came out this past week.

After the correction we just went through, normal is ok.  In fact, welcome.  So, it’s time that we started acknowledging, better yet, appreciating what we have instead of dwelling on such unrealistic comparisons. It is time to enjoy the sun rise on a new day, no matter how “normal”  it might feel and let yesterday, be just that.

The answer is, yes, to both. The architectural style is what most people associate town homes with, yet the lifestyle is truly the most appreciated aspect by those that chose town home living.

Webster’s Dictionary defines a town house as: “a usually single-family house of two or sometimes three stories that is usually connected to a similar house by a common sidewall.” Thus, an architectural style. However, what isn’t clarified is the lifestyle also associated with Town homes/houses. Town homes are ideal for those who lead active lives. Town home owners typically enjoy traveling, outdoor activities and social activities. They are often business professionals with careers, parents with children and those looking to wind down. One of the many benefits of town home living is that a homeowner can enjoy all their activities without having to worry about home maintenance like yard work, exterior painting, gutter cleaning and roof maintenance. These homes and communities are designed for a quality of life that puts you and your family first and leaves home maintenance and yard work up to someone else.

In a current societal shift that has brought back the theme of “less is more”, the town home lifestyle fits right in. Owning a home with unused rooms has become less important. The large abundance of square feet that was once deemed necessary is being replaced by smaller, more charming and functional spaces.

With ever increasing energy costs, the smaller more energy efficient homes not only create a more comfortable living environment, but create less impact on the household budget and environment. As an example, the town homes at Volare in Happy Valley, being built by Marnella Homes, offer monthly energy savings of approximately $40 more than a code-built or detached home of similar size. This monthly savings equates to extra money that a homeowner can keep in their pocket.

Another positive aspect of town home living is a feeling of safety and security. Those living in town home communities tend to develop a “look out for your neighbor” atmosphere which is very comforting. You can leave on vacation and return to find your home just as you left it; not only secure and safe, but grass mowed, weeds pulled and well maintained.

If you walk through a town home community like Volare and meet the homeowners, you will find that the option to buy a single family detached home was available, yet they purchased a town home. Whether current Volare residents owned a larger home and decided to make the switch to town home living or were first-time homebuyers who liked the town home lifestyle, the reasons to live in a town home tend to be very similar. Ease of living to accommodate an active lifestyle.

So, before you think of a town home as just another style of housing, explore all they have to offer and you may find that a town home is in your future, too.

It is not surprising that when you talk with someone about our differences in how we insulate their eyes glaze over.  However, it is very important.  In a market that is no longer a “buy & flip”, but a “hold for the long term” as in years past.  Features like insulation, heating systems, quality levels of materials, etc are important for the lasting value of a home.  Considering that buying a home is only half of the transaction, the other half is when it is sold in 5 – 10 years.  What features will provide that lasting value that older homes and many of the other new homes on the market will not have.  I have commented on our testing and heating systems in the past, now I am going to talk about insulation and why blown-in bib (BIB) insulation should be an important feature to a home owner.

 The difference between BIB insulation and batt insulation is that batt insulation is rolled up insulation that is unrolled an applied between wall studs, ceilings trusses and floor joists.  Which means that it rolls over any electrical conduit, plumbing, heating ducts, etc. and cannot fill in the entire void between the wall studs or joists.  This leaves pockets or voids where the insulation couldn’t insulate which will allow for heat to escape.  However, BIB insulation is just that, insulation blown into a wall or ceiling cavity leaving no air pockets or voids.  The result is densely packed insulation producing higher R values, cuts down air infiltration and slowing the transfer of temperature in a wall or ceiling cavity through the flow of air.  This reduces both sound transmission as well as energy loss.

At Marnella Homes, Our current wall BIB system, for our Volare town homes in Happy Valley, is tested and documented at a R24 rating.  Code only requires a R21 rating for walls and our ceilings have a R49 rating with code only requiring R38.  This is a significant increase in insulating performance.  The R value insulation ratings are used to measure insulations ability to resist heat flow. The higher the R value, the more effective it is.  For more information on what the “R” value for insulation is, see the following link: http://rvalue.net

This results in a direct benefit to the home owner in reduced energy costs.  Combined with the other performance enhancements, like a high efficiency furnace and hot water heater significantly reduce monthly energy expenses.  Money each and every month that you keep in your pocket.  It today’s world every dollar saved is important.  At Volare, our town home owners are saving on average $40 a month compared to a home built to code.  These home owners are not only enjoying a more comfortable living environment, but they have extra cash to either save or treat themselves to something well deserved.

For our potential first time home buyers out there, the $8000 Federal Housing Tax Credit that you are eligible for is coming to a close.  By the 1^st of December 2009, only 3 months way, this tax credit will be no more.  However, due to the time necessary to close a home taking about 30 – 45 days, what this really means is that you will need to have your sales agreement accepted and in escrow by the 15^th of October just to be safe.  Since you have only about a month and a half of shopping time left, don’t delay.  Take advantage of all that is available in the market place right now; historically low interest rates, home values that have reset in many markets to 2003/2004 prices and an $8000 government give-a-way.

Don’t be one of those who feels that the housing market has a long way to fall.  There is too much positive news coming out all over the country to counter that theory.  Remember, it only takes interest rates to move up a half of a percent to wipe out the benefit of a 10% drop in sales price.  With many markets identifying their bottoms already, waiting for deeper price cuts is a mistake that you will surely regret when the tax credit is gone and rates go up.  Which, they will.

Don’t miss out on what will be looked back upon as an opportunity of a lifetime for those willing to take advantage of it.

For frequently asked questions and more information on the Federal Housing Tax Credit refer to: http://www.federalhousingtaxcredit.com/2009/index.html

and

http://www.irs.gov/newsroom/article/0,,id=206291,00.html

I wrote back in January about the behind the scenes inspections and testing that the green high performance homes get that many don’t know about or if they do, don’t appreciate the intensity of them.  Since we continue to hear about Buyers wanting the “Best Deal” or the “Best Value”, it occurred to me that the Value of these homes is also not being realized.

For instance, 100% of the homes we build here at Marnella Homes are built to the Earth Advantage/Energy Star “Gold” level.  Our homes are extremely well sealed and with blow-in insulation achieve a very low leakage rating.  Also, with our 95%+ HVAC systems, fully sealed ducting and all inside the home in conditioned space.  Our home owners save on average $40 – $50 a month in our 1400 – 1600 sqft homes over a similiar sized code built home.  

Home owners have been sold over the years all the features that builders put in and are told how great they are and sometimes even how many years the home owner will receive a payback from these features.  What so many times doesn’t get either explained or truly appreciated by the home owner or buyer is the value of these features.  We took on the venture of Green performance building with the “What’s in it for me” approach.  Thinking just selling features to someone who doesn’t know much about the industry will tend to make their eyes glaze over.  So, we have tried to show our home owners and buyers “what is in it for them”. 

In the case of a monthly savings, this is a direct savings over what they would be paying for utilities at any other new code built home.  Plus, even with many builders getting on the green built performance band wagon most are doing just the minimum to get their homes certified so, we are outperforming most builders in our area.  This is money that can be for that massage every month, the manicure, dinner, a movie with the family, a ski lift ticket in the winter, etc.  So, many things that these homes make easier to afford.  Because, isn’t the old saying, “a penny saved is a penny earned” more relevant today than ever before in our life time?

Now that I have addressed the actual savings, let’s look at the added value.  Using the $40 – $50 a month in savings, at today’s interest rates that is about $8,000 to $10,000 in additional value to the home. Of course, our lenders aren’t going to let you borrow more because we can show the energy savings, but wouldn’t it be great to know that you have built-in additional financial strength due to the lower monthly cost of home ownership?  I do believe that some lenders will eventually see this value and want to work with builders like us once this resonates with them. However, I am not holding my breath for this to happen anytime soon.

Lastly, now that real estate has moved back to a more traditional style of ownership, I feel that the long term value that these homes offer is also important.  Energy costs are going to continually rise so, in 5, 7, 10 years or so when we sell our homes doesn’t it seem that it will be a added value to your buyer that your home saves a considerable amount in monthly utility costs over the resale homes that will be on the market at the same time?  I think it should now and most assuredly then.

So, buying a home isn’t just the countertops, the carpet and appliances.  Sure those are the features that you can see, feel and touch, but don’t over look some of the most important features that truly create the “value” in your home.  You can always change your carpet, appliances and countertops, but it tends to be a little harder to retrofit a high performance HVAC system inside your home in the conditioned space if you are replacing a traditional system it’s not very easy to go back and effectively caulk and seal up a home that is already completed.

Please share your comments.  I would like to hear from you.

Marnella Homes has had many firsts for a home building company here in the northwest.  As we strive to improve our homes and the buying experience, we continue to look outside the box and create new programs to assist and benefit our home buyers and owners.  Some of the things that we have done to differentiate ourselves are:

 Our “Home Sellers Assistance Program”.  This program offers our home buyers the opportunity to list their current homes at a 3% total brokerage fee.  We bring in an interior designer to assist in getting their home ready to sell. We coordinate any necessary repairs and we credit back to our buyer the cost of these repairs towards their home purchase up to $5000. 

• We are the first production builder to build 100% of our homes over the Earth Advantage/Energy Star Gold level.  Which combined with our marketing efforts earned us the Energy Star award for large builder in Oregon.
• We also offer a buyer’s guide to our home buyers to use when shopping for a home. It helps to educate and inform them of what features they should look for that will provide them lasting value and comfort in their next home.
• Now, we offer the “Rest Assured Plan”. 

 Marnella Homes’ Rest Assured Plan provides security and reassurance in these uncertain times. At no cost to our buyers, our plan guarantees that in the event of a job loss within 24 months after closing, their mortgage will be paid for up to 6 months. We want to make sure that the fear of something that may not ever happen doesn’t keep someone from purchasing their next home.  We understand that there are economic challenges right now however, we hope that these concerns won’t prevent families from making a sound investment in their future. Now is a great time to buy a home. Prices and interest rates are at record lows and the U.S. government has created incentive programs and tax advantages for home buyers.  We have faith in the American Dream and we’re here to help families achieve it without losing sleep.

Our list won’t end here as complacency will never be acceptable.  With our home buyer’s needs ever changing in a market that is ever changing, it will be necessary to continually strive to improve our programs and our buying experience.

Performance rating for new homes is equivalent to the Miles Per Gallon (MPG) rating for a car.  Whether you chose your next car specifically because of it’s MPG rating or not, in most cases it at least makes up some part of the decision making process.  Especially, if you were buying a car last summer.  The building industry believes that energy efficiency, utility costs and environmental impact are factors to consider when buying or building a home.  They can affect the real and perceived value of a home.  The Energy Performance Score (EPS), developed by Energy Trust of Oregon, provides a clear and quantitative way to compare a home’s energy use and costs.  The lower the score, the more efficient the home is and the lower your estimated utility costs. 

A home energy rating involves an analysis of a home’s construction plans and onsite inspections. Based on the home’s plans, the Home Energy Rater uses an energy efficiency software package to perform an energy analysis of the home’s design. Upon completion of the plan review, the rater will work with the builder to identify the energy efficiency improvements needed to ensure the house will meet ENERGY STAR performance guidelines.  A home’s EPS is based on many factors such as the home’s size, level of insulation, air leakage, heating and cooling systems, major appliances, lighting and water heating.  The rater then conducts onsite inspections, typically including a blower door test (to test the leakiness of the house) and a duct test (to test the leakiness of the ducts). Results of these tests, along with inputs derived from the plan review, are used to generate the EPS for the home.

Marnella Homes, as an Energy Star and Earth Advantage Certified Master Builder, is using this rating system.  Our homes have an EPS of 42 which rates our homes as some of the most efficient new homes built in Oregon (as Compared to an average home score in Oregon of 81). Our homes have an estimated average monthly energy savings of $70.  Our home owners realize that choosing an energy-efficient home not only benefits the environment, but can also help you save money. 

We see this as a “separating the wheat from the chaff” on the over used “Energy Star Certified” claim that too many builders use.  We see many builders that state that they are building homes to Energy Star Certification.  A consumer doesn’t know whether they build 100% of their homes to this certification or 10%?  Do they just meet the bare minimums to achieve the certification or are they truly committed to Green Performance building and exceed the minimum.  As I have stated in an earlier post, whether a builder is doing just the minimum or much more, their homes usually have quality controls that are inherent to building to any level this certification.  Which makes a “Certified” home in most cases still a better value than any “Uncertified” home.  However, this rating system will clear away this confusion.  The score will tell a consumer, if educated on what it means, all they need to know.

So, whether a low EPS score is the deciding factor in the purchase of your next home or just “a” factor, it will be made available to you by participating home builders.  Our industry hopes that this rating system will be easy to understand and will be adopted by consumers much the same way as the MPG rating is in the auto industry.  As this becomes more main stream it will become one more tool that consumers can use to make informed decisions on their home purchases.

Wow, what a week for housing news.  Whether this is a flash in the pan or it is truly a sign of more great things to come, we are encouraged by it either way.  Of course, our “glass half full” friends will discredit any of the many groups reporting this, but this shouldn’t be much of a surprise.  They will claim that this is just a normal seasonal increase.  It might be, but it is still an increase.  They will claim that the only reason for the increase in sales is due to the short sales, foreclosures and deep price reductions.  Doesn’t this still mean that people are buying again and lenders are still lending?  At the end of the day, sales are still up Month over Month.

There was a story from MarketWatch by Rex Nutting on Tuesday the 24^th.  Mr. Nutting reports,  ”U.S. Housing prices rose 1.7% in January compared to December, the Federal Housing Finance Agency reported on Tuesday. This was the first increase in a year.”  I feel this is big.  Bigger than an increase in sales.  Showing the possible signs that in some markets there is some bottoming being found.  Mr. Nutting goes on, “The “unexpected rise” in January was partially due to stronger sales in some markets, the FHFA said.”

For a viewing of the complete story, follow this link: http://tinyurl.com/de37e3

There was a MarketWatch news story by Stacey Delo on Wednesday the 25th.  She discusses with USC real estate economist Delores Conway this surprise in news in the Housing data.  Ms. Conway states that the reason for this increase is really a bit of both the lower prices and interest rates that have pushed sales up Month over Month.  Still acknowledging that sales are down compared to last year.  It noted that over half of the sales that have been reported are to first time home buyers.  This is due to the affordability being enhanced by historically low interest rates and lower prices.

To watch this entire story, please see the following link:  http://bit.ly/QSKf8

We had a CNN Money News report by Paul R. La Monica, on Wednesday the 25^th, that talked about how Wall Street and the Housing Sector was very encouraged by this weeks results. This story reported; “The Commerce Department reported Wednesday that new-home sales rose almost 5% last month after hitting their lowest point ever in January. Economists were expecting a decline of about 3%

This comes on the heels of two reports showing a better-than-expected gain in existing-home sales and the first increase in construction of new homes since June.”

John Buckingham, fund manager said, “Clearly there is interest in homes. Whether it’s in foreclosure or not, there’s still a buyer. That helps put in a floor on prices and could boost confidence.”

To read this complete story, please see the following link: http://tinyurl.com/c4cxxq

There was also a story in Reuters by Lucia Mutikani on Wednesday the 25^th.  Ms. Mutikani noted that in a Commerce Department report, ” Sales of newly built U.S. single-family homes rose at their fastest pace in 10 months in February, it said in another report.”

To read this complete story, please see the following link: http://tinyurl.com/cmsdpz

What is amazing is that these are just some of the reports out this week.  From many sources and from many perspectives, we are seeing some signs of improvement.  Most do feel that it is too early to tell if a recovery is process, but regardless of the reason, it is still good news and we will take it!

I wanted to post another entry about the Federal Tax Credit. When I first discussed this back in January, I mentioned the changes to the Federal Tax Credit that were being discussed at the time. Well, some of the changes did end up being made and with just 20 days until tax time, I felt I should visit this one more time.

If you are considering buying a home this year, take advantage of the Federal Housing Tax Credit. The Federal Tax credit is available to you for a purchase of your new home. The sooner you talk with a tax professional the sooner you can determine how much of the allowable $8000 is available to you. This amount was $7500 under the previous bill and had a requirement to be paid back within 15 years. In addition, the deadline was extended from June 30th, 2009 to September 1st, 2009. These changes were made through the last stimulus bill.

As I mentioned before, regardless of what form this Housing credit takes, the current form or modified with new changes, it is a great incentive to assist you in the purchase of your next home.

For more details and frequently asked questions about the Federal Tax Credit go to the following website: http://www.federalhousingtaxcredit.com

To put this in perspective, our town homes here at Volare in Happy Valley, start at $229,950. On a purchase, utilizing a FHA loan, the $8000 Tax Credit almost covers the $8048 necessary for the down payment. This would be almost like 100% financing with the government gifting you the $8000, with no requirement to pay it back.

Adding to this, at our meeting this week with our preferred lender from Wells Fargo, Matt stated that he was locking some buyers in at 4.5% and one of our own team just closed on a loan at 4.375%! These are mortgage rates that have never been seen before!

So, if you are considering buying a home, look into this as soon as possible. If you can purchase a home before you file your 2008 return you can claim this credit on your 2008 return. Just one of the many opportunities that exist in this housing market, right now!

For additional information on the current discussions about other tax credit changes, go to the following link: http://tinyurl.com/ddteb6

I have read the naysayers comments about how far they estimate (hope) the Portland market will fall by comparing us to other hard hit metro areas around the county. They pine and lament over how the market has a lot farther to fall.  Encouraging their followers to continue to rent and join them on the sidelines to watch Rome burn. 

However, this “glass half empty” crowd refuses to acknowledge the demand that exists for our city.  Year after year, we remain in the top ranks for most livable, most bike-friendly, most walkable, most active, etc.  So, it is no surprise to read the two stories below that have Portland the 5^th most popular relocation city and 4^th best housing market. 

This isn’t to ignore what has happened to our market, it is struggling, but it does acknowledge why Portland is still a good investment.  This is why we continue to have a quality of life that helps create lasting value for our market.  As long as we continue to have a city in which people want to live, our stock will remain in demand.  I also, believe that our recovery will be sooner than some expect.

So, as a life long Portlander, I continue to believe in our town.  The high rankings that Portland maintains, are no surprise to me.  I love the northwest and all that it and Portland has to offer.  It would be great if our negative friends would believe in us as well.

Here are two recent links for your review:

http://tinyurl.com/aa6j6v

http://tinyurl.com/dmbjn4