Out-of-staters are buying Oregon homes with cash and remodeling sight unseen

Bend homes for sale

Listen to some real estate agents this spring and you hear the song over and over: Out-of-state buyers have been driving up prices and demand in Oregon’s scarce housing market.

Digital workers, set loose to live anywhere during and likely after the coronavirus pandemic, have discovered they can get more for less here, especially compared to high-priced Seattle and the San Francisco Bay area. They are adding pressure to already tough buying conditions, agents add.

historically low inventory of homes for sale, escalating prices and bidding wars are frustrating a backlog of local buyers, some of whom have had offers rejected for a quicker cash sale.

But are residents of other states bigfooting Oregonians? Anecdotes abound, but hard data hasn’t been released yet.

The real estate marketplace Redfin recently issued a 2021 “migration report” in which its economists found a record number of home shoppers – 31.5% of Redfin users nationwide – concentrated their searches on a metro area where they did not live.

In the Portland area, the average maximum budget for people moving here was 14.9% higher than the average maximum budget for locals ($758,573 vs $660,581), according to Redfin.

“Out-of-towners are driving up home prices and making it difficult for local residents, first-time buyers and people who don’t have big down payments to win bidding wars,” stated Redfin’s analysts, who have been tracking migration since 2017.

But saved Redfin searches are not actual moves, and there is no real data yet to confirm that the pandemic is altering traditional movement patterns except in dense, high-cost San Francisco and Manhattan, said economist Josh Lehner of the Oregon Office of Economic Analysis.

“People are always moving to Oregon and Californians represent about 30% to 40% of those people in an average year,” he said. “Migration was not wildly different in 2020 compared to 2019.”

He is waiting for new data from the U.S Census Bureau and post office change of address requests.

What is known: Demand for home ownership has increased tremendously because of record low mortgage interest rates, incomes rising for some and Millennials entering the housing market, he said.

Out-of-state competition

Real estate agent Dustin Miller of Windermere Realty Trust in Lake Oswego has recently worked with only one out-of-state buyer – a Nike worker who transferred from Atlanta last year. Miller has heard that people from outside of Oregon are impacting sales, but no one knows to what degree.

United Van Lines’s migration study for 2020 found that Oregon had two households moving to the state for every one household that hired the company to leave. Health and lifestyle were primarily reasons to move here, according to the study.

The American Community Survey data will be released in September and December, which could provide more details. Portland State University’s 2021 mid-year population estimate report, which will be available in November, will offer a total count but no information on where people came from, Miller said.

Miller hears other agents talking less about migration and more about the increase in cash transactions that allow deeds to change hands faster and without a lender’s appraisal or other demands. “It very well could be people are migrating here with cash,” he said.

Kim Parmon of Living Room Realty meets out-of-state buyers searching for land who are “enchanted” by the Pacific Northwest’s natural beauty. “They have cash in hand to play with,” she said.

Fewer people wanted to downsize to condos with a shared elevator and communal spaces during the pandemic, according to condo sale reports.

Overall, due to pent-up demand to buy, homeowners are not willing to sell their property until they find a replacement. No one wants to join the back of the line, said Parmon.

Adding to what she called “the crazy multiple offer situation” are first-time buyers hoping to take advantage of mortgage interest rates around 3% and people from out of state shopping virtually and being advised to make strong first offers.

Parmon tells her local clients, some of whom have lost out after a dozen offers to buy, that if they can stick with it, they will eventually purchase a home.

Parmon, who has been selling real estate for six years in the Portland area, attributes the limited number of homes for sale to a longtime housing shortage compounded by the coronavirus pandemic.

“The shift during COVID was people wanted land and to be further out, but I’m seeing more people being OK with a smaller, urban lot and they are more hopeful that things will be opening up and life will get back to normal,” she said.

Interest in suburban living, with larger homes on larger lots, had been growing for years, said real estate professionals, but the coronavirus amplified the desire for more size, comfort and livability as well as space to entertain outside and replace vacation getaways while remaining socially distant.

“The coronavirus has fundamentally changed how you view your house,” said Israel Hill, the office leader of John L. Scott Real Estate’s Portland Northeast office. “Before COVID-19, people wanted to walk to get coffee, delicious food, and join activities like movies in the park. Now that people are working, homeschooling and cooking at home, they wish they had a backyard to hang out in.”

He said less populated areas, including suburbs and second-home markets like Bend, continue to tempt people who can work remotely.

More space, better lifestyle

Danielle Snow, a broker with John L. Scott in Bend, said an influx of out-of-state buyers willing to make a fast offer and pay over asking price have made a tight market more difficult for locals.

She ticks off recent Bend deals:

  • A four-bedroom townhome listed at $699,000 sold for $774,277 ($75,277 over the asking price) after six days on the market. Snow’s clients, who are Oregon residents, were in the back-up position for the home, but they didn’t get it.
  • A three-bedroom townhouse with riverfront and Cascade mountain views was listed for $2,175,000 and sold for $2,260,000 after four days on the market, $85,000 over asking price. Snow’s clients from Seattle couldn’t get to Bend fast enough to make an offer, she said.
  • A 2,715-square-foot, single-level house on the eight fairway in the Awbrey Glen golf community was listed for $1,149,000 on March 24. It went pending three days later and closed on April 9 for $1,200,500. Buyers from California paid $51,000 over asking price, Snow said.
  • Another of Snow’s out-of-state clients bought a house in Bend after a video walkthrough; they have yet to see the property in person even though it’s now being significantly remodeled.

    Snow calls Bend the “Aspen of Oregon,” and said it’s attractive to city “stress cadets” who want to be closer to nature and enjoy a less hectic lifestyle.

    Bend was once a place where people retired, she said. Now more tech company employees are moving to Bend, Redmond and Prineville, which was a “cow town,” she said, before Apple and Facebook invested billions of dollars in data centers there.

    But not every residential property is selling fast. The price has to be right, said Snow, who has been selling property for 40 years but said pricing a property is challenging in the current market.

  • Her approach: “Start at a number and the market will tell you if it’s too much.”

    Snow and her daughter and colleague, Nicole Fitch of John L Scott Bend, first listed a 4,000-square-foot luxury house on a half acre in Bend’s Awbrey Glen at $1,395,000.

    When it didn’t get a quick offer, they suggested the owners reduce the price every two weeks, first by $50,000 then $45,000, until they found the “magic number” at $1.3 million. They received two offers and the property closed after 39 days on the market.

    Snow and Fitch’s advise sellers to make repairs but not cosmetic fixes. One of their clients remodeled the kitchen and the out-of-town buyer ripped it out, said Snow.

  • Their advice for home shoppers: Make your offer as strong as possible, remove contingencies, and if needed, allow the seller to rent the house after escrow closes until they find a replacement property.

    The agents tell their clients to ask themselves, “How bad do you want this house?”

    — Janet Eastman | 503-294-4072


It’s Good to be a Seller

With mortgage rates below 4% since May 2019, you would think that most people would have already refinanced but according to a recent Lending Tree survey, 49% of homeowners say they are considering a mortgage refinance in the next year.  The report estimated that over a third of homeowners are have mortgages above 4% and 11% didn’t know what their rate was.

Slightly more than a third of the people surveyed regretted missing the opportunity to refinance in 2020 when rates did hit their historical low.  Homeowners should not beat themselves up on this issue because the only way to know to tell that it hit bottom is after it has started going up again.

The current rates are very favorable to borrowers and some economists believe that when inflation is factored in, the rates are close to zero effectively.

While there are nine specific reasons people choose to refinance their homes, two are among the most prevalent: to lower the payment or take cash out of the equity.  Most reasons include:

  1. Lower the payment
  2. Lower the rate to pay less interest
  3. Shorten the term to pay off the loan sooner
  4. Take cash out of equity to pay off higher cost debt
  5. Take cash out of equity to improve their liquidity
  6. To remove a person from the loan as in a divorce
  7. To combine a first and second mortgage
  8. To replace an adjustable-rate mortgage
  9. To consolidate debt

There are some commonly held myths about refinancing among homeowners such as:

  • You can only refinance your home once.
  • You must refinance through your current lender.
  • There should be two-percent difference in the rate to justify it
  • You need 20% equity to refinance
  • Applications require a lot of documents
  • You need cash to cover closing costs
  • You won’t save that much by refinancing
  • It’s free to refinance

If your current mortgage is a FHA, there is limited borrower credit documentation and underwriting program.  The mortgage must be current and not delinquent, and the refinance must result in a net tangible benefit to the borrower such as a lower rate, lower payment or better terms.  For more information, see Streamline or contact an FHA approved lender.

VA has a similar program if your existing mortgage is a VA-backed home loan. The purpose is for a borrower to reduce their payments or make their payment more stable.  They must certify they are currently living in or did live in the home covered by the loan. The Interest Rate Reduction Refinance Loan, IRRRL, may be available.

USDA also has a program for current USDA direct and guaranteed rural homebuyers who have been current on their payments for 12 months prior to requesting the loan refinance.  No appraisal or credit review is required.  There must be a minimum of 40% net reduction to the PITI payment.  More information is available.

Before refinancing your home, determine how long you plan to keep the home.  If the reason for refinancing is to save interest by getting a lower rate, you may accomplish that immediately.  However, if you plan on selling soon, you may not be able to recapture the cost of refinancing.

There are costs associated with refinancing regardless of whether you pay for them in cash, or they are rolled into the cost of the mortgage.  These costs can range from two to five percent of the mortgage.

Check out the Refinance Analysis to determine your breakeven point and savings.

Call me at 971-337-9396 and I’ll refer you to a trusted advisor.

What it means to be in a Sellers Market

The latest Existing Home Sales Report from The National Association of Realtors (NAR) shows the inventory of houses for sale is still astonishingly low, sitting at just a 2-month supply at the current sales pace.

Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market in which there are enough homes available for active buyers (See graph below):What It Means To Be in a Sellers’ Market | Keeping Current MattersWhen the supply of houses for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. As a result, competition among purchasers rises and more bidding wars take place, making it essential for buyers to submit very attractive offers.

As this happens, home prices rise and sellers are in the best position to negotiate deals that meet their ideal terms. If you put your house on the market while so few homes are available to buy, it will likely get a lot of attention from hopeful buyers.

Today, there are many buyers who are ready, willing, and able to purchase a home. Low mortgage rates and a year filled with unique changes have prompted buyers to think differently about where they live – and they’re taking action. The supply of homes for sale is not keeping up with this high demand, making now the optimal time to sell your house.

Bottom Line

Home prices are appreciating in today’s sellers’ market. Making your home available over the coming weeks will give you the most exposure to buyers who will actively compete against each other to purchase it.


Home Buyers and Sellers Generational Trends


Since 2013, the National Association of REALTORS® has produced the Home Buyers and Sellers Generational Trends Report. This report provides insights into differences and similarities across generations of home buyers and sellers. The home buyer and seller data is taken from the annual Profile of Home Buyers and Sellers.

Millennial buyers 22 to 30 years (Younger Millennials) and buyers 31 to 40 years (Older Millennials) continue to make up the largest share of home buyers at 37%: Older Millennials at 23% and Younger Millennials at 14% of the share of home buyers. Millennials have been the largest share of buyers since the 2014 report. Buyers 41 to 55 (Gen Xers) consisted of 24% of recent home buyers. This group continues to be the highest earning home buyers with a median income of $113,300 in 2019. For the report, buyers 56 to 65 (Younger Baby Boomers) and buyers 66 to 74 (Older Baby Boomers) were broken into two separate categories as they have differing demographics and buying behaviors. Buyers 56 to 65 consisted of 18% of recent buyers and buyers 66 to 74 consisted of 14% of recent buyers. Buyers 75 to 95 (The Silent Generation) represented the smallest share of buyers at 5%.

All generations of buyers continued to utilize a real estate agent or broker as their top resource to help them buy and sell their home.


April 2021 Market Review


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