Contingencies In A Real Estate Purchase Agreement

The 5 Most Common Real Estate Contingencies Explained

A contingency in real estate is best explained as a clause in a contract where a specific condition or criteria that must be met in order to continue the forward movement to the next step in the contract. In real estate, a contingency is defined as a condition that must be met by either the buyer or seller in order for the purchase agreement and transaction to continue toward a successful close of escrow. Contingencies serve to protect both the buyer and seller, allowing the opportunity to terminate a transaction without penalty (in most cases) if a contingency condition is not met.

There are several types of contingencies in a residential purchase agreement, but five are most common.

Home Inspection: A home inspection, a comprehensive assessment of the condition of the property being purchased, is a crucial component to any real estate transaction. When a buyer is viewing a home and considering a purchase, they’re looking at what’s readily apparent. Buyers aren’t able to conduct a detailed examination of the inner workings of the building and assess not only potential safety issues, but structural, mechanical, electrical and plumbing issues. The home inspection allows a buyer to take a deeper look at things that may not be readily apparent to a buyer during a showing and at the time of making an offer. This contingency allows the buyer the opportunity to investigate the true condition of the home and approve of the said condition before moving forward in the purchase process.

Financing Contingency: When a buyer has a pre-approval for a loan, this does not guarantee that the buyer will be able to secure financing to purchase a home. The financing contingency allows the buyer the opportunity to apply for a loan and begin the formal loan application process for a specific property. Not only does the buyer need to be approved for financing of the home, but the home must meet specific criteria in order to qualify for the loan program the buyer is using.

Appraisal Contingency: This runs hand in hand with the financing contingency. In order to secure a loan, the lender requires that the subject property market value is in line with the purchase value. Essentially, the appraisal contingency protects both the buyer and the lender from a sales price that’s over what is considered fair market value.

Title Contingency: The title review contingency allows the buyer the opportunity to verify that the home ownership record is clear of any liens or clouds that could potentially cause issue for the buyer. It allows the buyer to verify that the property does in fact have a clear chain of ownership. Verify and approve of any easements recorded on the property and ensure that no one else can claim ownership or right to the property.

Home Sale Contingency: This contingency is not used as commonly as it once was. It allows a buyer a specified time period to sell their current home in order to complete the transaction on the home they are offering to buy. If the buyer is unable to sell their current home, they can terminate the transaction. Additionally, a seller may also place a contingency that they must be able to find a suitable replacement property in order to complete the transaction with a buyer. These types of contingencies offer little to no assurances of the ability to close and as such have become less common in real estate purchase agreements.

Contingencies are designed as protections to allow for an informed purchase. As always, be sure to discuss any questions on the process with your local real estate professional.


Also read this in The Source.

Redlining: The U.S. Heritage Of Inequality In Homeownership

The lasting effect of a decades-old housing policy

Fifty-two years ago, President Johnson signed the Civil Rights Act of 1968. The Act prohibited the discrimination on the sale, rental and financing of housing based on race, color, sex or national origin. Title VIII of this Act is known as the Federal Fair Housing Act, later amended in 1988 to include the prohibition of discrimination based on disability and familial status. One of the practices that this Act banned was redlining.

Redlining, as it applies to real estate, is the discriminatory practice by which a lender or bank refuses to lend—or places loan limits—within certain geographic areas. Redlining was once a federal government practice. In the 1930s, federal surveyors would analyze neighborhoods in hundreds of cities across the United States, and “color code” them based on perceived desirability and the creditworthiness of inhabitants. Green-lined areas were considered to be the “best.” Blue was “desirable,” yet not the best neighborhood. Yellow, “definitely declining” and red “hazardous.”

Redlined neighborhoods were predominately comprised of minority populations; specifically, Blacks, Jews and other immigrant populations. Lenders and banks would then utilize these neighborhood surveys to deem credit worthiness and property values. Redlined areas and the populations that resided in the government-designated sectors were deemed to be “high credit risks,” if credit worthy at all, in large part because of racial and ethnic demographics. Being a minority living in a “hazardous” neighborhood made it nearly impossible to get a mortgage to purchase a home in any area, let alone in a relined neighborhood prior to the Fair Housing Act of 1968.

This 1930s-era policy essentially prevented Black and other American minorities from home ownership. What’s more, this practice had a long-lasting legacy and effect on real estate values, and exacerbated the wealth/homeownership gaps between white Americans and minority American populations and available amenities, school systems, etc. within the formerly redlined areas around the country.

In Oregon, redlining was practiced in Portland, where, according to historical maps provided by Mapping Inequality, a project established by four universities in Virginia and Maryland, numerous parts of inner-city and north and northeast Portland were in the red zone. The project does not list other cities in Central Oregon as having established redlining maps.

The effects of redlining are still very much a reality in 2020. As an example, Black Americans are five times more likely to own a home in a formerly redlined neighborhood. National homeownership rates are 30% lower for Black families compared to white families in modern-day America. A homeowner in an area that was once a redlined neighborhood has gained 52% less in personal wealth generated by real estate investment, when compared to that of greenlined areas over the last four decades.

Many of the formerly redlined neighborhoods still remain some of the poorest neighborhoods. In Baltimore for example, 70% of the original redlined neighborhoods remain low-income and inhabited by predominantly minority populations. On a national scale, 85% of the green lined, “best” neighborhoods, today remain predominantly white, middle to upper economic class.

As we have witnessed in the decades since the Civil Rights Act was passed, the negative effects of our country’s racially biased roots and history still remain. Real estate and lending have not been exempted from the discriminatory history of our country. As we continue to create change and true equality among Americans, we must visit the dark realities of American history and identify the inequities in every corner of our country, in order to create collective and lasting change.


Also read in The Source.

Forward Progress And Upward Trends After May’s Real Estate Reports

Who is ready for some good news?

The past several months have been ones filled with uncertainty, fear, scarcity and a host of other emotions; all of which had a huge impact on the markets. The stock market tumbled, the real estate market experienced a massive downturn in new inventory and pended transactions, unemployment skyrocketed and the political divide over COVID-19 and civil rights raged—with the latter two of the aforementioned, ongoing.

After months of writing about the uncertainty of the market, it’s a pleasure to share some good news. With the surprise news that contradicted the forecasts on job loss, and instead showing 2.5 million jobs gained in May, the Dow, S &P and Nasdaq all responded with upward gains at close of market on June 5. As of the morning of June 8, the market was continuing to trend upward.

The good news not only reflects in the behavior of Wall Street, but the mortgage markets showing increased activity as well. Freddie Mac’s chief economist said “…all signs continue to point to a solid recovery in home sales activity heading into the summer as prospective buyers jump back into the market.” The Mortgage Bankers Association reported that purchase applications have increased for the seventh week in a row with an 18% spike over 2019; likening the increase to “pent up demand from home buyers returning to the market.”

Windermere Real Estate’s chief economist, Matthew Gardner, released his forecast on mortgage interest rates, stating that rates should continue to remain low and hover around 3% through 2020 and possibly 2021. This too, fuels an active and robust real estate market.

In addition, the rate of residential mortgage loans in forbearance is beginning to slow week over week. While it has increased slightly, the overall trend is a dramatic slow state by state, as the states begin to reopen their economies. Again, all signs of the beginning of economic recovery from the COVID-19 shutdown.

Locally in Central Oregon, we are seeing signs of the market heating up. While inventory remains low, at a two-month supply, we’ve seen an increase from the number of new listings in April. Each week the market is seeing more and more new listings. In April we experienced a 33% drop in new listings. May showed a 16% gain on that number. While new inventory is still 16% less than typical for this time of year, the listing inventory is trending upward. The median home price in Bend for the month of May 2020, holds at $445,000 and Redmond at $334,000.

The number of closed sales decreased significantly in May; a 41% decrease from May 2019. This drop is a direct reflection in the “pause” and decreased amount of inventory in April 2020. As the inventory increases, I expect this number to increase dramatically as well.

A statistic that is particularly notable is the extreme decrease in days on market. In March 2020, the average days on market was 74 days; May shows a drastic decrease to 16 days on market. This is a direct correlation with the lack of inventory. With less inventory to choose from, buyers are acting quickly to secure a home in an extremely competitive market. As an example, of the transactions I personally have worked on in the last 30 days, 85% of them involved full-price offers.

All in all, things are trending upward with the real estate market and economy as a whole. As the summer season officially kicks off in Central Oregon, good news abounds for the real estate markets.


Also, see this in The Source Weekly.

Is The Market Going To Experience A Downturn The Likes Of The Great Recession?

The question I’m asked almost daily

The weather is warming, the signs that summer is afoot are all around us and we are officially living a new “reality.” Historically, spring and summer months in the real estate market are bustling with energy and excitement. As we know, nothing about 2020 has been typical or could even be described as remotely normal. The unemployment rate is at 14%, the battle against COVID-19 is raging and has now become a political hot button. Home schooling and distance learning is a new reality, and for many workers, remote working is, and will continue to be, the new norm. Mortgage interest rates remain low and so does real estate inventory.

The one thing that we have been able to come to rely on as a constant truth, is the uncertainty of the times we are living in. One area of uncertainty that I field questions about on a daily basis is the real estate market here in Central Oregon. More specifically, the common question is: Will there be a crash and when is it coming? Unfortunately, my trusty crystal ball is out of commission. That said, market data and the new trends we are seeing emerge provide some great information on how the real estate market will survive the economics of COVID-19.

One thing that real estate industry professionals know to be true is the effect of interest rates on the market. With interest rates remaining incredibly low and forecast to remain so throughout 2020, we have and will continue to see this fuel market activity. Buyers who were preparing and planning to buy pre-COVID-19 are still active and very much a part of the market. Many buyers are taking advantage of the lower interest rates and lack of inflation, resulting in an active and competitive market. With inventory about 30% less than is typical for the spring and summer seasons, that has fueled a more competitive market and supports the pricing. As in any industry and market, demand drives the pricing. Hence why we have seen a 5% increase in pricing of 2019 and that percentage is holding steady on a national level.

Why won’t we see another major real estate crash in the near future? To begin with, lending criteria is far different from the days of 2005-2008, when one’s dog could get a loan on a stated income application. Buyers who are purchasing homes meet the much more stringent debt-to-income ratios required to qualify for a mortgage. In addition, homeowners have much more equity in their homes now than those during the Great Recession.

As we look forward to the future, the changes in the workplace, with a large percentage of the workforce now looking to continue to work remotely and many companies adopting this model, people’s homes are more important now than ever. During this crisis, people’s homes were where safe haven was created and found. People’s homes are now schools and schoolyards, and for many will continue to be in the coming seasons ahead. Thus, making real estate even more important to people than it has been in a very long while. When there is value beyond just the dollars, those markets don’t crash.


Also see this in The Source

COVID-19 Impacts On Central Oregon’s Real Estate Market

Are homes selling, and at what price?

As we are all acutely aware, the United States and global economies as a whole have been dealt a significant blow by an invisible, undiscriminating “enemy” to the human race. News cycles, government briefings, social media outlets and community conversations all invariably involve the current and projected economic situations of the market sectors and industries that make up the U.S. economy as a whole. The real estate industry and market health have been a sector carefully watched by economists, investors and community members, as the health of the real estate market is a large indicator of the overall long-term health of the U.S. economy.

What is happening Central Oregon, since the onset of COVID19? Gov. Brown deemed the real estate industry as essential during the stay at home order. Because of this, the local real estate market is and has been carrying on, business as usual in terms of numbers.

The median home price for Bend in April rose slightly from March to $468,000 and 166 sales closing for the month of April. Building permits remain nearly the same as one year ago, at 45 new building permits pulled with the City of Bend for the month of April.

The Redmond median home price also ticked up at $358,000 for the month of April, with 68 total closed sales. In addition, Redmond has seen a significant uptick in building permits issued in comparison to April 2019, at 46 permits.

The scarcity of inventory has long been an issue for Central Oregon. According to the Beacon Report, issued monthly by the Beacon Appraisal Group, Central Oregon holds less than a three-month supply of housing inventory, and Bend specifically with a two-month supply.


With the stay-at-home order issued in late March, we are just now beginning to see the data on COVID-19’s impact on the local real estate market. Looking at April 2019 data and April 2020 data for Central Oregon, new listings are down 39% from this time last year. Active listings (currently on the market) are down by 14% from 2019, and pending sales are down 34% from this time last year. The number of closed sales is down 5% from April of 2019; however, this percentage may trend lower and tend to follow the numbers above as we move further into Q2. The reason for this is that the vast majority of sales that were closed in April were under contract to purchase before the stay-at-home order was issued for the State of Oregon.

Another notable data point is the 4% increase in median sales price. This is in direct correlation to the long-term shortage of inventory that Central Oregon has been experiencing for years. With a continued shortage of inventory, the pricing increases are not surprising. This is true in any market, where there is scarcity of a product the prices are driven up—not unlike what we’ve experienced in the last two months with the pricing of hand sanitizers, disinfectants and other types of PPE.

Central Oregon is also beginning to collect data on showings since the onset of COVID-19 and the stay-at-home order. Central Oregon Association of Realtors is reporting that in-person showings have decreased by nearly 50% of what there were in April of 2019. While the number of showings has dropped significantly, buyers are turning to what is becoming the new industry normal of virtual and video showings.

The bottom line: the real estate market for Central Oregon is still very much open for business, as is evidenced by the numbers. As we continue to move through this health crisis and states begin to ease the orders, I believe we will begin to see the market bustle as it has for the last several years…it is just going to be a little later than the sales cycles that we have become accustomed to. Interest rates are still very low and are projected to remain that way for some time. The neighboring states that have traditionally fed the growth and immigration for Central Oregon, will open back up and with that, movement will continue toward our high desert region.

It goes without saying that we live a different world than we did just seven short weeks ago. While the first COVID-19 market data is emerging, it will take several more months to realize the true impact of this virus on the real estate market. That said, your local real estate professionals are working hard to ensure that our markets are as physically safe and robust as possible. If you have any questions, as always, do not hesitate to contact a real estate professional.


Also, read this in The Source

Personal Protection, Social Distancing And Real Estate

What approach are professionals in the industry taking to keep themselves and their clients protected from COVID-19?

Six weeks ago, life and the modes of human interaction took a massive turn in direction no one was prepared for or could have imagined. Not only has COVID-19 completely changed how people interact with each other for the short term, but also will have a lasting impact and quite possibly irreversible change in society’s approach to physical interactions. As an example, I personally am a believer that handshakes have become a thing of the past, and for all the “huggers” out there—well, it may be time to find a new way to express affection.

The new health and human interaction guidelines issued by the Centers for Disease Control and Prevention have not only changed our social interactions, but also the health and safety precautions in nearly every industry.

What do these changes look like in real estate? Are people looking at homes? Doing home inspections—and what about appraisers?

As I’ve discussed in previous columns, the real estate industry as a whole has done a fantastic job of turning on a dime to embrace this new way of doing business, keep business going and support their clients’ health and safety. As a result, many agents are now doing virtual tours, video tours and virtual open houses.

Are showings slowing down a bit? Yes, they are in general.

Some sellers are choosing to withdraw their homes from the market until we’ve flattened the curve and more is known about the virus. Others have opted to stay on the market and require that all showings take maximum precautions with masks, sanitizer, gloves and booties. So much varies depending on the client and the broker’s levels of comfort with interaction. Most of my colleagues have prepared a showing kit: wipes, booties, hand sanitizer, gloves and instructions for how to enter and view a home safely.

Home inspections are going about as normal, although, as with real estate property showings, several inspectors have shared with me that they too have seen a significant slow in the last six weeks. The inspectors that I have spoken with are taking extra precautions with gloves, masks, booties and asking that people maintain the 6-foot distance rule while performing the inspection.

In terms of appraisals, some lenders are not requiring interior inspections for the appraisal. Rather, they are performing only exterior inspections of the property to limit any close contact with others. The Veterans Administration is one not allowing appraisers to enter residences for appraisals.

Contrary to the State of Washington, Oregon has allowed for real estate activity to continue during the stay-at-home order, so long as social distancing can be maintained. The most important thing to remember is to be respectful of each person’s level of comfort and interaction during these interesting and evolving times. This is for both the real estate professional as well as the buyer and seller.

Take the extra care to show kindness and respect for those opening their homes for showings, as well as those who are coming to a property as a potential buyer. Buying and selling a home is a stressful process and this new world we are living in just made it a little bit more stressful. So let’s all work together to help ease concern, show kindness and regard others wishes and safety concerns.


Also, see this in The Source

Property Managers And COVID-19

Why using a property manager is crucial during a crisis

In recent weeks, life as we know it has changed. In fact, the word change is rather an understatement. For the first time in nearly 100 years in the United States, businesses have shuttered, schools are closed, the streets of cities are barren and our country is coping with one of the worst biological outbreaks since the flu pandemic of 1918. The only thing that we know for certain is that nothing is certain at the moment and in the foreseeable future.

As a real estate professional, our industry, like so many, is in a complete pivot mode. This applies to every sector of the industry, from lender to broker to property manager. It is wonderful to see how quickly and creatively my colleagues in the real estate industry are working to continue to best serve their clients both safely and effectively—all while working to help support their community in times of great uncertainty.

One sector of the real estate community that I think is even more vital today in helping to support both tenants and property owners is the property management sector. This is, in fact, an essential business to not only our economy, but also our communities. No one knows landlord-tenant law better than a property manager. And now more than ever it is crucial that landlords are up to date with the week-to-week changes in the law regarding payments of rent and forbearance of rent—and have the ability to collect said rent in a safe and distanced manner. Property managers are there to not only protect a property owner, and also the tenant. It’s a property managers fiduciary and ethical obligation to stay abreast of all emergency ordinances during this COVID-19 pandemic. By doing so, they’re able to protect their clients, tenants and landlords.

When it comes to maintenance requests and emergencies, property managers also have a stable of trusted vendors who are vetted, trusted and held to a high standard of safety and health precautions. This is particularly important during this pandemic, as we have already heard of price gouging and other unsavory behaviors occurring across many sectors taking advantage of fear and scarcity. Now more than ever it’s crucial for both property owners and tenants to have peace of mind about who they’re working with. In addition, it’s imperative that landlords know what constitutes a maintenance emergency under the law and what kinds of maintenance requests or issues are legally able to wait until such time as it is safe to address them. Again, no one knows landlord-tenant law better than a property manager.

As we have become acutely aware, specifically in the last three weeks, our society is living in a digital age—now more than ever. Property managers have tools and software that allow them to safely handle things such as rent collections and disbursement. In addition, property managers have marketing ability that runs far beyond a one-man show, as an example. Property managers are not only pivoting with virtual showings and video; so many have vast social media outlets, websites and blogs to market available properties and support the stability of the rental market. Like many realtors, property managers have made a quick and effective pivot, making what was once considered a face-to-face business, virtual and remain operational.

The last thing I believe to be a crucial role with property managers, particularly right now, is their ability to act as a mediator. Having formally worked in the management sector of the real estate industry, the one thing know to be constant is the emotional response to fear around one’s roof over their head, the ability to pay rent and a landlord’s ability to maintain the property with the income generated from the rents.

Fear becomes heightened at a frenetic pace with the uncertainty of one’s home; even more so when our country, state and local leaders and health care professionals are telling us to stay home. Property managers are skilled at mediating tough situations and are adept at finding creative and workable solutions for both tenant and property owners. Beyond that, they know how to properly document such situations according to the law and to protect all involved. They are trained to be neutral “third parties,” kind of like an escrow officer or a 1031 Exchange Accommodator.

In times of uncertainty, of which we are living in now, it is more important than ever to rely on the trained professionals within an industry.


Also read this column in The Source

COVID-19 And Real Estate

Market updates, new real estate practices & what lies ahead


Our news cycles, social media feeds and conversations are predominantly focused on the everchanging impact that COVID-19 is having on the economy, health care, social interactions, government guidelines and business. As a real estate professional, my phone and email is lighting up with questions about the impact of COVID-19 on the real estate market and mortgage rates.

As we have all heard by now, over the weekend the Federal Reserve cut its benchmark funds rate to 0% and pledged to buy $700 million in Treasuries and mortgage bonds. This sweeping act was done in an emergency to protect the already skittish economy against the long-range effects of COVID-19. This move by the Fed has been the most dramatic since 2008 and is intended to keep market stability in the face of so much uncertainty. With the dive of the stock markets around the world, it does not at all surprise me.

With the announcement of the rate cut, I had several people contact me in a panic about needing to buy now or refinance tomorrow because the rates are at zero. Let me clarify, that the Fed’s rate cut DOES NOT equal 0% mortgage rates. As I discussed in my last column, mortgage rates are guided by Treasury yields and not the short-term prime rates that are dictated by the Federal Reserve. Mortgage rates did tick back up last week, however some are forecasting that we could see fixed term rates drop again. Windermere Real Estate Economist Matthew Gardner states that the Fed’s purchasing of Treasuries and Mortgage Backed Securities will drive fixed term rates down. That said, we don’t know how much or when that may happen.

Another consideration with interest rates is capacity. With the dramatic rate drop two weeks ago, lenders were and still are working double time with those who are looking to take advantage of the lower rates. Clint Edwards of High Lakes Lending states, “With lenders quickly reaching their capacity, they began backing off on rates to try to slow the flow of new refinance loans being submitted, resulting in rates taking a jump in the wrong direction, just as many folks were initiating applications in the hope of having perfect timing.” As rates continue to move, it’s very likely that we could experience longer loan process timing, escrows and closings.

Another question I am getting a lot is how we are going to market, look at homes and show homes, all the while keeping safe from potential exposure? In a market that has traditionally required significant face-to-face, close contacts, realtors are pivoting to ensure we’re still able to provide services to our clients and do our part to maintain the stability of the real estate markets across the nation. The National Association of Realtors has issued guidelines for realtors to consider alternative types of marketing for sellers, such as video tours and other mediums for virtual tours of a property. NAR is also encouraging various open-house procedures, such as asking that people sanitize their hands before and after entering a home and also limiting the number of people in the home at any one time. Sellers should be sure to clean the property thoroughly post showings and pay close attention to disinfecting handles, faucets and surfaces commonly touched. Over the weekend, I showed a property where the occupant required that we sanitize our hands, then wear gloves and not touch anything while touring the home.

The effects of COVID-19 are far reaching. It’s incredibly important that we work together as community members, clients and professionals to move through these uncertain times with care and vigilance. This includes working with real estate professionals to make sure that we have the correct information about rates and practices, having patience with one and other as we work through this ever-evolving time together and remember that we are all doing the best we can to adjust and adapt.



Also read this in The Source.

Mortgage Rates, The Tumble Of Bond Yields And The Coronavirus

What does all of this mean for buyers and current homeowners?

In recent weeks, news of the rapid global spread of the novel coronavirus COVID-19 has dominated conversations, news cycles, social media and global economic markets. But what does COVID-19 have to do with real estate? Well, considering that mortgage rates fell last week to the lowest rates we’ve seen since 2012, it’s clear that fears surrounding the virus have a direct impact on real estate and real estate investments. When rates tumble, the real estate market feels it.

Why did rates take a huge tumble last week? Mortgage rates take cues from U.S. Treasury yields. Last week the massive decline observed with stock markets is a result of the fear that the virus will impede global economic growth, thereby pushing investors toward “safe-haven” or less-risky investments. The slow in global economic activity and the reduced outlook for inflation, due to the unknowns with regard to forecasting the economic impact of the coronavirus, have been favorable for relatively safer investments, like mortgage-backed securities. As such, resulting in large rate drops, with a 30-year fixed rate at 3.23% on Feb. 28.

What does this mean for buyers, sellers and property owners? For current property owners, the substantial drop in rates could mean a great time to refinance a current mortgage into a lower monthly payment, particularly if the current mortgage rate is north of the 4% mark.

These types of interest rates we saw last week, and should continue to see in the near future, are a buyer’s dream. The lower the interest rate, the more purchasing power a buyer has. For example, with every percentage point the interest rate increases, it decreases purchasing power by 10%. Another way to put it is, on a loan of $100,000 when the interest rates are at 3.25% the buyer’s purchasing power increases to $110,000. This essentially opens up the buyer’s ability to increase their budget and allows a buyer to have an opportunity to afford a higher purchase price when rates are low.

What does the drop in interest rates mean for sellers? When rates are low, we typically see an uptick and influx of buyers in the marketplace. The influx of buyers results in a more active market. As such, active and competitive markets tend to yield higher purchase/sales prices, fewer days on market and more competitive offers.

While most markets have been jolted from the fear generated by COVID-19 and the uncertainty of what lies ahead, the result is the real estate market will experience something different than what we are experiencing on Wall Street. It’s difficult to forecast how long rates will stay this low. What we do know is that sharp declines in mortgage interest rates result in active and competitive real estate markets.

Real estate is known to be one of the most stable long-term investments one can make. As a real estate professional, it’s my opinion that buyers take advantage of the low interest rates and use the increase in purchasing power. This is also a great time for investors, as the ability to borrow money has become far less expensive. Lower mortgage rates mean lower payments and more opportunities for cash flow on rentals rented at a market rate. All in all, with the fear and uncertainty surrounded the impact of COVID-19, the mortgage rates and real estate markets seem to be a rare source of good news in the U.S. economy.


Also read this in The Source.

Millennials’ Home Trends For 2020

The millennial generation has long been a topic of discussion among those in the real estate industry. One reason: In the last five to eight years it’s become apparent that this generation hasn’t followed the traditional homebuying trends of preceding generations.

Millennials are renting longer and purchasing homes later in life; previous generations historically purchased homes much earlier. We’re now beginning to see millennials transitioning through their “root setting” years, and as such we’re beginning to see new trends among millennial buyers.

Unlike their predecessors, we’re beginning to see a pattern in which millennials are foregoing the traditional routes of homebuying. They’re choosing to purchase smaller homes, putting less money down, purchasing in areas that may require a commute to work and asking family for help to purchase a home.

As millennials tend toward minimalism, smaller homes fit that bill. Unlike previous generations, they aren’t looking for sprawling square footage; rather, they prefer smaller homes that focus on quality over quantity. They’re also tending toward eco-friendly and energy efficient properties with a smaller footprint.

Saving the traditional standard of 20% has been a challenge for this generation, due in part to student loan debt, increases in cost of living and a lack of savings. As a result, we’re seeing more and more millennials putting a much smaller amount as a down payment and agreeing to take on private mortgage insurance in order to put less down. In taking this approach, it makes home ownership more attainable in a shorter amount of time.

Many millennials are learning of the expense of living in highly desirable/hip areas. As a local example, the median home price in Redmond is on average 25% less than in Bend. We’re finding that this generation is willing to take on daily commutes and live in an area where there may be fewer immediate community amenities in order to attain home ownership and get what they want in a type of home.

Another emerging pattern is asking family for financial help. Many studies show that millennials are three times more likely to ask for help with their down payment from family members. And, many who do get the help are getting up to $10,000 in gifts from their families (primarily from parents and grandparents).

Many believe millennials will propel the housing market in 2020. We’ll see more and more of this generation entering the housing market in the coming year and years to follow. It’s important to consider this generation’s impact and emerging buying trends, especially when considering a target market for selling a home.


Also read in The Source