Loans on Lots

In today’s conservative lending environment, it can be very difficult to obtain loans in Lane County on raw land, or even on bare lots in a subdivision.  Raw land is often in its natural state and probably doesn’t have utilities or other infrastructure in place, whereas subdivision lots are often ready to build on.

So what do you do if you find that perfect parcel of land, but don’t have all the cash to buy it?  In some cases, seller’s will agree to a land sales contract, in which they essentially finance the purchase.  Sellers retain title to the property until you perform under terms of the contract.  Sellers I know usually want the cash, if possible, and aren’t thrilled with the risk of holding title to a property not controlled by them; they may need to take it back, or there could be a problem brought about by the new buyer, like dumping of something nasty on the property.

Most banks don’t want to loan on raw land because the loans are difficult or impossible to sell on the secondary market.  (Most banks don’t own your loan, merely the servicing rights; the underlying loans typically get sold off on the secondary market.)  Land is also perceived as risky, because if they need to repossess it, there is no quick source of rental income, and development costs can be largely a mystery.

There are a select few lenders in Eugene Springfield that will loan on bare land.  There are the so-called hard money lenders, but they tend to be expensive, and LTV ratios are low.  However, for certain situations, they may make sense.  There are a few portfolio lenders in town, who can and will loan on raw land, or just about anything that makes financial sense to them.  Down payments may be as low as 30%, which is great for land.  If I were wanting to purchase land in Lane County, I think a portfolio lender would be my first stop so I could find out about the financing available.  My second stop would be to call a good honest realtor, especially because it’s free as a buyer.

Below is a picture of a lot I have listed, and on which I lowered the price.  It’s a good example of property for which a portfolio lender makes a lot of sense.

92166 Lot for sale in Marcola Oregon

92166 Lot for sale in Marcola Oregon

Low Crime in Eugene Springfield

Is crime out of control?  Not in Oregon, at least according to just released 2011 FBI statistics.  Depending on which measurement is looked at Oregon’s cities are some of the safest in the country, which is, of course, a good thing.  Low crime makes a location desirable, and desirability (demand) props up real estate prices.

So, what are the numbers for Eugene Springfield?  Violent crimes and murders in particular are very low. Cities which are typically thought of as higher crime, like Detroit, MI, have murder rates over 40 times that of Eugene Springfield.  Non violent crimes are higher in Eugene Springfield, but still less than average compared to the rest of the nation.  Apparently bike theft is pretty bad because we’re such a target-rich environment.  So, Eugene Springfield is very safe if you’re a person, and not so much if you’re a bike.

The FBI statistics cover Metropolitan Statistical Areas, which are generally over 50,000 people, and don’t look at smaller towns per se.  So, they’re not the whole picture but I think a good overview of crime rates.  Our rankings compared to about 370 other MSA’s are below.

Crime Rates for Eugene Springfield

Crime Rates for Eugene Springfield

First Time Home Buying in Eugene Springfield Oregon

Most people want to own their own home–it’s part of the American Dream.  There are a variety of programs, grants, and loans that help first time home buyers get into a house, sometimes with little or no money down.  Home prices have started back up, so many folks are choosing not to wait any longer to buy.  I work with first time home buyers, and often it’s cheaper to buy than to rent.  Record low interest rates, decreased house prices, and first time buyer’s programs make home buying now especially appealing.

So, how do you go about buying a house?  Many will look on the internet to get a feel for what’s out there, guess what they think they can afford, and there’s nothing wrong with that.  And, there’s always driving around and picking up fliers.  If you’re just starting out mortgage calculators can give you an idea of what monthly payments on a loan will be.  If you need a quick back-of-the-envelope type estimate, figure that a home mortgage costs about $5/1,000, meaning you’ll pay around $500 a month for a $100,000 loan.

A better way to go about the process, once your plan gets a little momentum, is to talk to a lender, who will be able to tell you exactly what you can afford, and once you get that number, your home search will be much easier.  Finding a good Realtor will also help you.  It doesn’t cost anything  as a buyer to work with a Realtor, and they’ll be able to guide you through the home buying process, which is often emotional and complex.

There are a number of programs exclusively for the first time home buyer, and there are other available programs for all buyers, that often help first timers, which in summary are:

  • Oregon State Bond Program:  Up to 3% for buyer’s closing costs or lower interest rate on the mortgage.  Within Oregon.
  • HAP:  Up to 10K as a zero interest silent second.  Within Eugene city limits.
  • SHOP:  Up to 7K as a zero interest silent second.  Within Springfield city limits.
  • USDA:  100% financing (zero down payment).  In Lane County, eligible properties are outside Eugene and Springfield city limits.
  • VA:  100% financing (zero down payment)  For veterans only.
  • FHA:  3.5% minimum down payment.

Some of the programs and are income based.  Some are area specific.  And, all of them have their own unique set of requirements.  A good lender will be familiar with the programs and a good realtor will know what types of houses qualify for which program.  Also, some programs are sometimes out of funds, and therefore temporarily unavailable–again, this is something your lender should know.  Below each of the programs is described in more detail.

Oregon State Bond Program:

  • For first time home buyers, meaning buyer hasn’t owned a home in the last 3 years.
  • Can be combined with 15 to 30 year FHA or USDA loans.
  • Program provides up to 3% for buyer’s closing costs, or lower interest rate on the loan.
  • House must be in Oregon.  Can be used or newly constructed site-built, however the underlying loan may have its own requirements, such as no used mobile homes for USDA; each loan program has its own requirements, though.
  • No bankruptcy in last 2 years or foreclosure in 5 years.  The underlying loan will have its own timing requirements if you’ve had a short sale, foreclosure or bankruptcy.
  • If the house is sold within 9 years of purchase and your income limit exceeds certain set limits for the year you sell, you will be required to pay back some of the money, although this doesn’t often happen.  Your lender will review it and explain it to you.
  • There are income limits by county and number of people in the household.  A budgetary estimate of income limits in Lane County is 70K to 80K, or 115% of the median income that year.
  • There are property value limits.  A budgetary estimate for Lane County is 313K to 383K, depending on location.

HAP

  • No funds are available before July 2013.
  • For first time home buyers, meaning buyer hasn’t owned a home in the last 3 years.
  • Maximum income requirements based on family size.  In 2012, this ranged from 33K to 55K.
  • House must be within Eugene city limits.
  • Must be your primary dwelling, single family (can’t use as a rental or be a duplex).
  • Up to 10K in funds for down payment or closing costs, in the form of zero interest, silent second mortgage which doesn’t need to be repaid until you sell or refinance.
  • House must meet HUD requirements.  The condition of the paint is very important.
  • Maximum house price is about 260K.
  • Used in conjunction with another loan program, for example FHA, for which you must qualify.

 

SHOP

  • For first time home buyers.  Buyer or their spouse can’t have owned a home in last 3 years.
  • Up to 7K in funds for down payment or closing costs, in the form of zero interest, silent second mortgage which doesn’t need to be repaid until you sell or refinance.
  • House must be located in Springfield city limits.
  • Maximum income based depending on family size.  Income maximums between 31K and 59K in 2012.
  • Must be primary residence.
  • House must meet HUD standards.
  • Maximum house value is 185K.
  • Buyer must contribute $1,500. of their own money.
  • Used in conjunction with another loan program, for example FHA, for which you must qualify.

USDA guaranteed loan

  • Not exclusively for first time home buyers.
  • Minimum down payment:  0.
  • Maximum income requirements based on area and number of people in household.  In Lane county, with 3 people in the household, the maximum income is approximately:  74K.
  • The house must be in the USDA definition of a rural area.  In Lane County this excludes properties in Eugene and Springfield city limits.
  • Maximum purchase price is $417,000.
  • Property types:  Generally existing or newly site-built.  In certain instances modular or manufactured homes may be allowable, but check with your lender for the latest on that.
  • Farms are, surprisingly, not acceptable.
  • There are specific time requirements for bankruptcy, short sale or foreclosure.  Almost all loan programs need at least 2 years and sometimes the minimums are more.
  • All household income is counted towards the income maximums even if person is not on loan.

 

VA Loans

  • For Veterans
  • Zero down payment up to a home price of 417K.
  • No location requirement for the house.
  • There are specific time requirements for bankruptcy, short sale or foreclosure.

FHA Loans

  • 3.5% minimum down payment.
  • House must meet HUD standards.
  • Loan maximum by county.  In Lane County, it’s currently $417,000.
  • There are specific time requirements for bankruptcy, short sale or foreclosure.

Generally, for all of the loans and programs you’ll need to meet minimum credit standards and have verifiable income.  Your loan officer will know the most about the requirements of different loans and programs.

Most home purchases with mortgage loans have closing costs.  Closing costs may include:  prepaid home insurance, prepaid taxes, loan fees, and a surprisingly large number of other expenses.  Each deal and each loan will vary in the amount of closing costs, but a back-of-the envelope estimate is 3% of the sales price.  As a realtor, I usually try to get the seller to contribute as much as possible to closing costs so my buyers have to come up with as little out of pocket costs as possible.  Typically, when you’re buying a home, you don’t have an abundance of excess cash laying about.

I helped the buyer of this home; she was a first time buyer and had to come up with very little cash out of pocket and utilized some of these programs.  It was cheaper than renting for her, and the purchase price was 100K.  What a deal!  If you’re interested in buying a house in Eugene Springfield or anywhere in Lane County, Please contact me.

Good buys still exist in Eugene Springfield Oregon for the first time home buyer.

Good buys still exist in Eugene Springfield Oregon for the first time home buyer.

Real Estate Shadow Inventory Fears Ease

Time Magazine reported today that the shadow inventory of homes, nationwide, appears to be shrinking.  In 2012, estimates of the shadow inventory were as high as 10 million homes.  One reason they cite is investors snapping up distressed properties.  In Lane County that’s certainly the case and I see a lot of activity in that segment.  Well priced homes are often gone within 1 week of listing.  We do appear to have a significant shadow inventory in Lane County, but the properties seem to come on line slowly.

I thought it interesting that Time’s author said:  “All this goes to show that predicting the movement of large, complex markets like housing can be difficult even for experts who make a living doing just that.

Shadow inventory fears appear to be cooling off

Shadow inventory fears appear to be cooling off

Rural Industrial Property in Lane County

I remember the days of the mills’ hard-working saws piercing the air of the Mohawk Valley.  Not long ago, when it was warm and your windows were open, you could hear the saws’ whine in the night.  Now, but for an occasional car, or lonely coyote’s wail, the night is quiet.

The disappearance of saw mills isn’t unique to the Mohawk Valley.  It has been happening all across Oregon, with the peak number of mills after World War II at over 1500, fewer than 80 mills remain today, statewide.  In the boom years, lumber and related industries made up more than 10% of Oregon’s economy; there were over 70,000 well-paying jobs, and families could have a good life with a single wage earner.  When I was a kid you could earn $15/hr. at many of the mills around Eugene Springfield.  Advance  the clock forward to now and I’m not so sure you can easily find those $15/hour jobs, and things are much more expensive.  Now there are only 25,000 timber and mill jobs left in Oregon, and the pay is merely average.

Weyerhauser’s 21 mile private railroad ran through the Mohawk Valley, starting at the mill off 42nd street and terminating in the former town of Wendling, east of Marcola.  Remnants remain of the old railroad that was last used in 1987.  Across from the Riverview Market on Marcola Road, Hayden Bridge has stood since about 1900, when it was moved from Utah.  It’s hard to imagine moving a giant bridge that long ago, but I guess our ancestors were ingenuitive–people were still using horses for transportation back then.  The bridge, while historical, has fallen into disuse.  Occasionally, when it’s hot out, you’ll still find local kids using it as a diving platform for the chilly McKenzie River beneath.  You can also spot the above-grade gravel railroad bed running through the Mohawk Valley if you look carefully.

Hayden Bridge was moved here from Utah in 1901.

Hayden Bridge was moved here from Utah in 1901.

This forlorn mill site in the Mohawk Valley is one victim of our recent economic downturn.  The buildings have stood for a long time and how much of their lumber went into the building of our great state, no one will ever know.  Most recently, for 20 years until 2007, it gobbled up peeler cores and transformed them into studs, posts, and stakes.

Old mill site in the Mohawk Valley, Oregon

The area where the Mill sits, off Old Mohawk Road, was previously called Yarnell, being named after one of the early owners of surrounding land.  Yarnell now exists only as a reference on historic maps.  The Mohawk River was the original method of getting logs to mills.  Subsequently, Southern Pacific and later Weyerhaeuser, used to run log trains regularly, and there was a siding and spur near the mill site.  Sidings are a parallel set of tracks which allow trains to pass, and spurs are a dead-end set of tracks serving a facility.  Old maps also show two log ponds to the east of the mill, but they are now filled.  Operating mills rarely use log ponds any more, but in the past they were used to store, clean, and move logs; newer technologies make ponds no longer necessary.

Yarnell had a covered train bridge, crossing the Mohawk River, built in presumably the late 1800’s.  Weyerhaeuser is thought to have removed the cover and rebuilt the bridge around 1961.  Remnants of the old bridge remain, but are on private property.  The main automobile bridge was also covered at one time.  This bridge stood from 1916 to 1958 and has been replaced by a modern structure

Near where Old Mohawk Road now runs.  Looking north towards Coburg Hills.  Ca. 1910

Near where Old Mohawk Road now runs. Looking north towards Coburg Hills. Ca. 1910

Interestingly, there’s a very long history of lumber milling in the Mohawk Valley.  The image is from the first survey done in the area, in 1855.  Present at that time was a mill race, dug from the McKenzie River, servicing the old Scott Mill.  Little record remains of the Scott Mill, but presumably it was fed by logs floated down the McKenzie or dragged by oxen down the Mohawk Valley.  Part of the main channel of the river appears to have changed to the old mill race and can be seen here.

1855 survey of the Mohawk Valley, Oregon, showing mill race.  (Emphasis added.)

1855 survey of the Mohawk Valley, Oregon, showing mill race. (Emphasis added.)

Mill sites are the most common uses in RI zoning, Rural Industrial, which is fairly rare.  RI zoning allows for industrial uses and pursuits in otherwise country type property.  Some of these old properties are distressed or industrial/commercial short sales, which is also uncommon.  I have done commercial short sales and they have their own unique process that’s different from residential short sales.  Short sales occur when the sales proceeds are short of (less than) the required amount to pay off the bank loan(s).

As with any industrial or commercial real estate purchase, previous uses are important.  If a lender is involved, the buyer will almost certainly need a level one or level two environmental report, and they’re a good idea even if there is no lender.  Environmental Site Assessments are common and give you a base-line idea of what went on.

Determining value on industrial properties can be a challenge.  It likely will have the most value to an owner-occupant.  Uses that require zoning changes are difficult in Lane County, which means the highest and best use is likely similar to its previous use.  Appraisers will arrive at a value by reconciling the three approaches to valuation:  comps, income and replacement value, but this may be different than what an arms-length willing buyer may be willing to pay.

I, for one, hope the old mill is purchased and reopened.  People need jobs and Oregon has a lot of sustainable trees.  If you are a buyer or user of commercial or industrial property in Oregon, please contact me.

Oregon forests are sustainable.

Oregon forests are sustainable.

2013 Lane County Real Estate vs. National Trends

The real estate market continues to improve.  Some analysts predict rising home prices in 2013 of 6%, on a nationwide basis.  Of course, all real estate is local–there can be a boom in one town and a bust in another.  So, what are real estate prices in Lane County going to do in 2013?  We tend to follow national trends, so my guess is that prices will go up, but not as rapidly as they will nationally.

Prices are being buoyed by fundamentals, namely decreasing unemployment and a low inventory of homes for sale.  Fundamentals are good–they’re the opposite of bubble conditions; bubbles are unsustainable, which is anathema in Eugene.  In Lane County we’re seeing gradually decreasing unemployment and there is a low supply of homes for sale, but not as strong as national trends.  The single biggest factor, in my opinion, is our 5.2 month’s supply of houses for sale versus 4.4 months nationally.  If you have questions on Eugene Springfield real estate, please contact me.

Lane County vs. National real estate trends

Lane County vs. National real estate trends

2013 Real Estate

What will the 2013 real estate market hold in store for us?  CNN-Money just released their predictions:

National 2013 housing predictions

1.  Buying will be less affordable because house prices are rising,

2.  Job rates, not housing prices will show the condition of the housing market,

3.  Mortgage delinquencies will continue to drop,

4.  Mortgage interest rates will stay at record lows, and

5.  There are fewer first time home buyers, but that might increase.

All eyes are on the housing market in 2013

All eyes are on the housing market in 2013

 

Of course, it’s very difficult to predict the future, at least if accuracy is important.  Even Gary Shilling, one of the nation’s most prominent real estate price guru’s got it wrong for 2012, when he said home prices would drop another 20% because of a flood of foreclosures, among other things.  Fortunately, that didn’t happen, and 2012 house prices rose nationally and locally, in Eugene Springfield Oregon.

So, how do the experts’ national predictions apply to Oregon and Eugene Springfield.  They seem right on the money to me.

The biggest factor that may affect our housing market is the State Supreme Court’s ruling and legislative changes on foreclosures, which will occur later this year.  If I had to guess, I’d say one or both will make changes that speed up the foreclosure process.  If that occurs, then more foreclosures would come on the market, taking some of the steam out of rising prices.

Dowtown Springfield Oregon

Downtown Springfield the new hotspot?  Maybe so.

Commercial property is interesting.  Changes in rules & regulations or changes in traffic patterns can make the once lively die; or the slow and out of the way into the next hot spot.  At one point in time, Sixth and Seventh streets in Eugene were part of Highway 99 which ran from Mexico to Canada.  Properties along those streets were prime real estate, but that began to decline with the construction of I-5 in the early 1960’s when much north-south traffic bypassed Eugene entirely.

Similarly, the downtown core area of Springfield used to be the center of town and the most desirable place to be, but this was decades ago.  What started the decline isn’t precisely clear, but increased ease of transportation and building of satellite shopping centers or malls didn’t help downtowns.  At one point in time, downtown Springfield was the Gateway Mall of its day, and when I grew up here, the Gateway area was merely wet grasslands, laying fallow, bathed by the noise and exhaust of I-5.  Time shows us nothing if not that things change.  Gateway is hot.  Downtown Springfield is on its way back up.

Mayor Christine Lundberg in her 2013 state of the City speech was very positive on Springfield’s possibilities and progress.  She even joked that she’s looking forward to having a Logger Lager at the soon to be opened Planktown Brewery.

Probably the start of the Wildish Theater project in 2001 marked the beginning of Springfield’s renaissance.  The 284 seat theater took 5 years to complete at a cost of some 3.2 million dollars.  LTD opened it’s highly visible and cool looking transit facility in 2004, which gave the area a further boost.

Jim's Landing in Springfield is awaiting a new use

Jim’s Landing in Springfield is awaiting a new tenant

Three downtown bars had their liquor licenses pulled and closed in 2010, which was said to improve things.  One of the bars, Jim’s landing, had been in business since 1934 and there was always a bar in that location since the construction of the Fry and Rankin building in 1911.  There was also a real estate office in the same building–hmm–sounds like a good idea to me.  Neither I nor anyone I know thinks the closing of Jim’s Landing was a good idea.  However, the area is on its way up, even if the wheels of progress are sometimes indiscriminate on what they roll over.  The spot is for lease, and I’d be glad to show it to you if you have interest.

Washburne Cafe in Springfield, Oregon

Washburne Cafe in Springfield, Oregon

The Washburne Cafe opened kitty-corner to Jim’s Landing in 2010.  The brainchild of Karen Hageman, a longtime area builder, it has a cool urban feel to it.  I had breakfast there this morning  and will definitely come back.  The building was originally the Springfield Armory, built about 1921.

The Plank Town Brewery is a couple of doors down from The Washburne.  The target opening date was last Fall, but they seem to be running a little behind.  Plank Town is on the ground floor of the IOOF Building, which was built in 1907 for $10,995.  The Oddfellows still occupy the second floor.

Planktown Brewery, Springfield, Oregon

Plank Town Brewery, Springfield, Oregon

Is this the genesis of the next Barmuda Triangle or Whitaker?  Time will tell, but Downtown Springfield is on its way up.

Historic Oddfellows Building, Springfield, Oregon

Historic Oddfellows Building, Springfield, Oregon

Foreclosure prices: Eugene Springfield Oregon

Just how cheap are foreclosures these days?  In a just posted CNN-Money survey of foreclosed homes around the country their cheapest example was $19,900 in Detroit, MI.  It made me wonder what the stats are for foreclosed homes around Eugene Springfield, so I took a look at the RMLS data.

In Eugene Springfield, the cheapest listing price was $40,900, and the most expensive was $624,900.  The most common price range was between 100K and 149K.  Foreclosures can make great buys and if you have an interest in them, please contact me.

Listing Prices of Foreclosures in Eugene Springfield Oregon

Listing Prices of Foreclosures in Eugene Springfield Oregon

Springfield Oregon Short Sale

This short sale at 3285 S Redwood Drive in Springfield, Oregon shows what kinds of affordable housing you can still find, even in today’s rising real estate market.  It’s 3 bedroom and 2 baths, with over 1,400 square feet.  It was listed at 179K.  It’s MLS # 12535420  If you’d like more information, please contact me.  While this one is gone, there are other great buys out there.

MLS 12535420

3285 South Redwood Drive, Springfield Oregon