Rabbit Door knocker

You can’t pick up a newspaper or read a news app these days without hearing about the crisis in affordable housing, particularly the buying and selling of individual homes. On Thursday of this week, MarketWatch wrote that the Federal Home Mortgage Corporation, commonly known as Freddie Mac, released data indicating that the interest rates on 30 and 15 year mortgages are still rising with one result being that mortgage applications have fallen to their lowest level in 22 years. Yahoo Finance also quoting the Freddie Mac reported data announced that “home sales are falling.  Inventory levels are rising. And home sellers are cutting list prices at the fastest clip since 2019”. 

Why, you might ask yourself, don’t we see this in the Beaverton real estate market?  Why are prices still so high?  Why are houses still priced at levels that prohibit many first time buyers from participating in the market?

To get some answers I spoke to Patricia Kirk, a real estate broker in the Beaverton area working with Keller Williams Realty.  “Beaverton is a highly desirable place to live and I’m not seeing prices dropping here. We are seeing a shift in the market however,” she says, “some houses are sitting on the market longer, particularly houses where the owners have priced the houses at the top of their range.  Other houses though, ones that are more moderately priced, are often found in the middle of bidding wars with the winners paying thousands more than the asking price in the end.”

So much of what is at fault in the housing market right now is a lack of supply, she says, which sometimes comes from owners deciding they don’t want to sell because they themselves face higher costs so instead of selling, they stay put. Also the rising interest rates are making people nervous.  “The interest rate last December was 2.99% and today that same buyer would get a 5.5% rate which is a 184%  difference. 

House Beaverton 01

So is this a time to buy?  Kirk says it’s always time to buy but the way to decide that for your particular situation is to ask yourself some questions.  Are you going to stay in the new home for five years?  Most home buyers will not lose money on their purchase if they plan to stay for at least five years because they will be able to ride out the market corrections that come their way, she says. 

The next question to ask is why do you want to be in a particular area.  Is it the schools?  Is it the walkability, the shops, the restaurants, the cultural ambiance.  Is it to be near family and friends? In these cases, the funds strapped buyer might consider buying less house to get into a particularly desirable area like Beaverton.  “Maybe you would like to have a three bedroom, two bath house with a yard but, because you want to get your kids into a particular school district you, decide to buy a townhouse or a condominium and stay there for five years before moving up,” she says. 

First time buyers who are looking at substantial down payments could consider 100% financing options she suggests. Although they will have a higher monthly payment, if they plan on staying for at least five years, they will still probably make a profit when they sell. 

House Beaerton Backyard

Also there are various programs to educate first time buyers, Portland has one although Beaverton does not, and these programs often can help with the down payment for people who complete the program. 

In the case of the home buyer who already has a home and who would like to buy something bigger but is feeling a little uncertain about the current funding environment, many of those people are choosing to upgrade their current property rather than sell. They might add a second bathroom or put an ADU unit in the backyard to use as a home office.  

It’s important to remember, she says, that there are tax advantages to home ownership that offset some of the expense.  You can deduct the mortgage interest on your taxes and the increase in property value over the years belongs to you.  Remember, you are going to have to live somewhere and the money you spend on rent is money that doesn’t build your personal wealth. 

Kirk offers some tips for would-be home buyers in today’s volatile home markets. 

  1. Narrow your search to the area you want to live in and understand what it is about that area that means the most to you so that you can tailor your search to fit and fulfill your own personal values.
  2. Have a conversation with a realtor and a finance person. Many people who think they wouldn’t qualify for loans are wrong. 
  3. Be realistic about what you can afford.  Nothing sucks the joy out of home ownership like finding yourself strapped for cash and a slave to your mortgage.  You can always move into a bigger or better home later.  The important thing is that you get that first step on the property ladder.
  4. Be confident and creative. Explore possible programs that can help and remember, interest rates are still at historically low levels.   
House Beaverton 02

The fed is raising interest rates in order to better control inflation so, assuming that effect is achieved, the overall economic situation should be more viable. You aren’t going to see a fall in market prices like you did when the market imploded in 2008 because buyers overall are in much better shape and the guidelines for lending have curtailed predatory loans that left lower income buyers on the hook for payments they really couldn’t afford.  

It’s anybody’s guess what will happen to the economy in coming months but the important thing to remember is that even while the market fluctuates, home ownership is long term and creates more stable families and communities so don’t give up on your dream of home ownership.