Mt Hood
According to the Wall Street Journal article last week titled “Misery across the U.S.” by Kathleen Madigan, Portland ranks 2nd only to Phoenix for the most miserable city in the U.S. I understand that the common feeling now is, “enough already with the rain”, but miserable? In full disclosure, Ms. Madigan didn’t base her story on interviews with residents in the cities she ranked. In fact, the she didn’t base her index on the perception of living in these cities at all.

The misery index was established by the 12-month change in the jobless rate, the percent of change in gas prices since the end of 2010, and the percent change in home values. The story established that the U.S. misery index would stand at 20%, and up from 8.3% a year ago.

I thought a great response to this story was by Stumped in Stumptown titled “Portland is miserable… on paper.” I agree with the author that, “Portlanders aren’t miserable. Our city truly offers the best of everything.”
I have traveled extensively around the world, yet I have only lived within about 100 miles of where I was born. I believe Portland and the Northwest offer so much, that I can’t imagine living anywhere else. So, maybe Ms. Madigan’s miserable index would make you miserable if you obsessed over it, but we have too much to entertain ourselves here to get caught up in it.

I don’t know many real miserable people here in Portland, do you?


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 Portland at sunriseis 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.

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.

BIBS installation 

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:

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 1st 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 15th 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:


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.

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 24th.  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:


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:


We had a CNN Money News report by Paul R. La Monica, on Wednesday the 25th, 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:


There was also a story in Reuters by Lucia Mutikani on Wednesday the 25th.  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:


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:

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:

After reviewing both our recent New Home Trends report and the Local Market Action RMLS report, I realized that there really is two different views of the inventory.  We got some bad news that our Portland Metro area total home inventory increased to 19.2 months in January.  However, new home inventory is down by over 25% from where it was a year ago. 


In review of the RMLS Market Action report, new listings were up 123% from December!  How do we interpret this?  Are home Sellers more confident to enter into this years market more so than last years?  If so, are they really coming on the market at this current markets value?  It also noted that pending sales were up 52% from December.  This could be a sign of more realistic Sellers or the begining of our seasonal climb in sales.  Though I feel both are possibilities, the increase in inventory relates more to unrealistic Sellers.  The brokers that I talk to still complain that the sellers they are working with, will not lower their prices to this markets value.  They are still hung up on what their neighbor got for his house in ‘05/’06.  Of course, I always ask, “Then why are you listing the property?  Why would you continue to throw good marketing dollars away on a property that you know is over priced?”


I actually, did not think that over a year into this that we would still have Seller’s not getting it.  Although, hopefully, after this boom of refinances rolls through in a few months and the neighbors start talking about what the appraisals came in on their homes, this might change some realities.  Let’s hope.


Here in lies the point of all this.  While resale inventories are going up, new home inventories are going down.  Why?  Well for starters, by force or by choice, builders are not increasing their new inventories.  Their focus is on reducing them.  Builders are reducing their prices to sell.  For instance, here at Marnella Homes, our town homes for sale at Volare in Happy Valley, are selling for what condos and town homes sold for in late 2003 and 2004.  We had to reduce prices in order to start selling again.  Also, Builders usually have the ability to be more creative and offer incentives that a home owner can’t or isn’t willing to do.  We buy the mortgage rates down, as has been seen recently with the 3.875% 30 year fixed mortgage promotions.  Another example is we allow people to move into our homes early so they are able to deposit in escrow the funds that they would ordinarily be paying in rent.  In essence, living rent free in our homes up to the closing date and having the ability to apply 100% of the monthly deposit towards the funds necessary to close.  Not too many home owners would allow a buyer to do that.


Besides the obvious reasons to buy a new home; new construction, energy efficiency, updated style and interior finishes, etc., it is the motivation of the builders that are moving this inventory.  These builders are far more motivated and creative than most home owners.  Most importantly, they get it!  They understand what has happened in this market and what is needed to move their inventories.


So, before you go out and make a final decision on the purchase of a resale home, check out the builder’s inventories in your area and see what values they are offering.  I am confident you will find the reasons that the new home inventories are moving.

Wait or Buy?

February 14, 2009

I wanted to share these stories because they address multiple points of the housing market with great points in all the stories.


In the first story, “Five reasons to buy this year”, it discusses the affordability being the best since the index was created in 1970.  I completely support this.  I feel that we are seeing an affordability that we may never see in our life time again.


It also quotes, Duane Andrews CEO of Clear Capital, “You buy for a quality of life…don’t buy on speculation”.   He goes on to say, “I wouldn’t buy a home expecting the market to rebound quickly in the next 10 years.”  We have been telling people for some time that we are back in a traditional real estate market whereas you will be planning on living in your home for at least the next 5 -7 years.  So, buy something that you will truly be happy in, and enjoy in the years to come, not just a home that has a great price tag on it.  There is truly a difference in a great price and a great value.


To review the complete story and related stories see link below:{01DA1B93-91D1-49E4-A1B1-0ACA9CE66FF4}


In the next story, “Five reasons not to buy a home this year”.  It refers to the concern over prices continuing to fall this year.  They might or will and in some markets there may still be more decline into late ’09 or early ’10.  However, anyone that actually thinks that they are going to time the bottom of this market is fooling themselves.  Plus, with only an increase of .5 percent in interest wiping out any savings a 10% decrease in value would realize.  I don’t see much value in fence sitting.  Especially, in the least hit areas like the Northwest, a home buyer will have more to loose than gain to wait out this market. 


It is quite possible that once we find the trough in this market, it probably isn’t going to be appreciating at a rapid pace.  However, rates can’t stay at the level they are for very long due to the threats of inflation.  So, even if we see modest gains in values, rates will go up and the affordability that we are realizing today will be gone.


I think these are all good points to consider in buying a home in the current market.  I think you need to look at all aspects of your own financial situation. Does your budget have the cushion to sustain surprises?  Do you feel comfortable with your job situation?  Any prudent competent person would consider these. 


This story quotes a renter that decided to rent because he wasn’t planning on staying in one place for more than 5 years. We discuss this with prospective home owners in our sales office on a regular basis.  Real estate is back to a long term traditional investment.


To review the complete story and related stories see link below:{22185FBD-7F44-4A49-A604-A29D4225E122}


 All good points however, all come to the same conclusion, if you are considering buying a home that you will be in for longer than 5 years that is within your means, it is the time to buy.  I hope you will take the time to read these stories and come to your own conclusion.

Or anyone who has not owned a home in the last three years.  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 $7500 is available to you.  The great news is that there are possible revisions to the original Housing Stimulus measure of last year.  On Tuesday the House of Representatives passed H.R. 1 that removes the repayment requirement of the housing tax credit which currently has to be paid back within 15 years.  Also, on Tuesday the Senate Finance committee passed their version which eliminated the repayment requirement of the credit, but additionally extended the dead line from June 30th, 2009 to September 1st, 2009.  These changes are exciting and hopefully soon we will see what the final outcome is.  Regardless of what form this Housing credit takes, the current form or modified with these 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:


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 $7500 Tax Credit almost covers the $8048 necessary for the down payment.  This would be almost like 100% financing except the $7500 is interest free, if the requirement to repay doesn’t get removed with new legislation.


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.


For additional information on the current Stimulus package and other tax changes go to the link below: