Thursday, July 18, 2019

Combo OHCS VA Loan Offers An Expanded Home Loan Choice for Oregon Veterans.

The OHCS/VA combo loan that I recently posted about HERE provides an alternative to the Oregon Department of Veterans Affairs home loan program. [The post notes that a veteran does NOT have to be a first time home buyer to use the OHCS bond loan program, so long they have not previously used a bond loan program or Mortgage Credit certificate program in Oregon or elsewhere].

The downside to the ODVA loan program is the 5% minimum down payment, which then triggers the need for private mortgage insurance. Also, condos, townhouses, and manufactured homes all require a minimum 20% down payment for the ODVA loan program.  [ODVA's loan origination guide is HERE].

ODVA's lowest note rate of 3.125% IS below the lowest 3.25% OHCS note rate but that rate is only available to veterans whose loan reservation occurs within 25 years of discharge. The ODVA lowest rate for all veterans is 3.875%, higher than the OCHS/VA combo rate. 

The VA loan program also waives the federal funding fee for veterans with more than 10% disability; the ODVA program has no similar cost savings for disabled veterans.

The first table here shows my comparison of ODVA and OHCS/VA combo loan features. 

The second table below shows that for a $425.000 purchase price the OHCS/VA combo loan would actually have a $18 lower monthly loan payment (before taxes and insurance) by avoiding the $178 monthly mortgage insurance expense the ODVA loan program requires. This is despite a higher total loan amount ($434,138 vs $403,750) and even when the lowest ODVA loan rate (not available to all veterans) is used.  

While the lower monthly expense using the combo OHCS/VA loan provides a benefit, the bigger benefit is that a veteran using a combo OHCS /VA loan would not have to make a $21,250 minimum down payment required by ODVA program.

To summarize:

The OHCS/VA Combo loan may be the better choice IF
  • The veteran does not have the funds available for 5% minimum down payment OR
  • Discharge is greater than 25 years from fund reservation OR
  • Veteran has service-connected disability of 10% or more OR
  • Veteran is purchasing a condo, townhome, or manufactured home OR
  • Veteran wants to avoid monthly mortgage insurance cost.

The ODVA loan may be a better choice IF
  • The veteran has at least 5% of the purchase price available for a down payment AND
  • Discharge is within 25 years of fund reservation OR
  • Income or purchase price is above 0HCS limits.

Originally created and posted on the Oregon Housing Blog

Monday, July 15, 2019

OHCS Confirms VA Loans Can be Combined with OHCS Bond Program, Even if Vet is Not a First Time Homebuyer.

Good news for Oregon veterans.

OHCS staff recently confirmed with me that IRS rules allow non first time homebuyer veterans to use the OHCS bond program, so long as they have not previously purchased a home using ANY state (including Oregon's) home loan bond program or mortgage credit certificate. 

This can combine the best of both programs: VA NO downpayment loans (with NO on going mortgage insurance expense) AND OHCS low rates: currently 3.25% "Rate Advantage" OR 4.25% (with 3% available for closing costs) "Cash Advantage".  

While VA loans include a funding fee (which varies by loan to value and whether veteran was regular military or in national guard/reserves) that one time fee can be included in the mortgage amount AND is waived for veterans with a VA disability rating of 10% or more. 

If a veteran has previously paid off a VA guaranteed loan they CAN get another VA home purchase loan--the VA funding fee is increased slightly for loans with less than 5% down.

OHCS loans do have income limits and OHCS maximum purchase prices MAY be below the $484,350 Oregon conforming loan limit that is used to determine the maximum zero down VA loan limit. 

I have pasted a chart below that shows the qualifying income required for different purchase prices ranging from $275,000 to $475,000.  Assumptions used are at the bottom of the chart. 

Note that VA or OHCS loan limits by county may not permit the purchase prices shown or the income required could be above the OHCS county income limit. 

For the Portland metro area the OHCS non targeted purchase price limit is $427,462 while the conforming limit of $484,350 statewide would prevent a VA zero down loan above that limit in any county. (For targeted areas the Portland metro OHCS purchase price limit is $522,554). 

The Portland metro 1-2 person  OHCS income limit for non targeted areas and 1-2 persons is $102,783 which is above the $97,136 required for a $475,000 home purchase. 

One example from the chart. A Portland metro veteran with an income of $88,526 (in red in the chart), and $500 in monthly reoccurring debts could use a 4.25% OHCS Cash Advantage loan to purchase a home at $425,000. That purchase would require NO downpayment AND provide $12,750 to help pay for buyer closing costs. 

  1.  HMDA data shows 5,571 VA home purchase loans were made in Oregon in 2017; 1,661 loans were in the Portland metro area. (OHCS reports fewer than 10 veteran loans in last year). The 2017 Portland (Oregon) metro VA home buyer had a median income of $83,000. 
  2. According to a recent ApartmentList report the home ownership rate for Post 9/11 veterans in Oregon was only 46% (vs a 62% overall Oregon homeownership rate).
  3. The most recent ACS data shows more than 291,000 veterans in Oregon, with more than 57,000 with VA disability ratings of 10% or more. [The VA funding fee is waived for veterans with a service connected disability of 10% or more].
  4. OHCS purchase price limits may be lower (or higher) than VA guarantee loan limits (map). The lower of the two limits would apply.  
  5. VA loans have no income limits but downpayment requirements increase for loans above $484,350. OHCS recently published updated their 2019 income limits HERE
  6. The City of Portland Mortgage Credit Certificate program uses the same IRS rules as OHCS, so the City of Portland MCC could also be used to help veterans buy homes in Portland, even if the veteran is NOT a first time hone buyer. (The MCC cannot be used in conjunction with the OHCS bond program, so the interest rate will be higher and any cash for closing costs would have to come from other sources). Portland has also yet to update their income limits, which could match those recently adopted by OHCS. 
  7. VA loan underwriting includes a consideration of residual income not used by other loan programs. This insures the veteran has enough income remaining after paying for debt service, property and income taxes, reoccurring payments (car loans, student debt, etc), and housing related energy costs. DTI income ratios above 41% may require additional residual income above standard calculations. With more than 5,500 home purchase VA loans made in Oregon in 2017, many lenders are familiar with this VA loan underwriting requirement. 
Originally created and posted on the Oregon Housing Blog

Monday, July 8, 2019

Processing Times, Construction Costs, and Sales Prices for Jan-June City of Portland New Construction Duplexes.

From Portlandmaps I extracted data on all new construction duplexes in the City of Portland with a final inspection date from Jan 1 to July 4 2019.  I then combined that data with sales/listing prices from Redfin and created the 2 page PDF file HERE, and embedded below. [The PDF file includes a hyperlink to the Redfin sales/listing price for each address when available]. 

  1. On average for 21 new construction duplexes (42 units) it took 525 days (17 1/2 months) from initial review to final inspection.  
  2. Construction valuation at final permit averaged $478,555 per duplex/ $239,228 per unit. Per sq. ft. valuation averaged $108, with a high of $114 and a low of $100.
  3. For the 13 duplex properties with available Redfin list or sales prices, the average price per duplex was $795,720 /$397,860  per unit.  Redfin shows the average price of all Portland metro sold properties in the last month was HIGHER at $442k. Unlike these new construction duplexes the $442k average sales price is heavily weighted toward existing homes (but the square footage and bedroom counts may be different than these duplexes).  
  4. I calculate that the average sales price for all properties in the 4 City of Portland areas in the RMLS year to date through May was an even higher $481K, with the lowest average sales price of $420k in SE Portland. 
  5. For those 13 duplex properties on average the final construction value was 60% of the average Redfin sales/list price for these properties. 

Originally created and posted on the Oregon Housing Blog

Thursday, June 6, 2019

HB 2001: Missing Middle and SF Detached Housing Units for All 60 Oregon House and 30 Senate Districts.

Cleaned up references to detached and attached in original text and PDF. 
HB 2001 has a public hearing and work session scheduled for June 11th.   

I thought it would be instructive to see counts of missing middle and SF detached units for all of the Oregon House and Senate Districts.   

I constructed a PDF HERE and embedded below with that 2017 data from ACS table B25024, Units in Structure. 

Notes on the PDF file: 
Grey shaded member names in the PDF are members of the House Ways and Means Economic and Transportation Subcommittee. 

Columns to the right shaded in red indicate missing middle percentages below the statewide average (12%) or above the statewide single family detached percentage (64%). 

Counts of "Missing middle" here include attached one unit properties, duplexes, triplexes, and fourplexes. 

I added member names (and party) to district numbers earlier this year; if you find any errors, please let me know.

There are more than 1.1 million detached single family units in Oregon and more than 202,000 missing middle units. That's 64%/12% of the count of total units in Oregon. 

I count 32 House districts and 13 Senate districts where the missing middle % of all units is lower than the statewide average.

I count 39 House districts and 17 Senate districts where the single family detached % of all units is higher than the statewide average.

Among the 8 members of the Joint Ways and Means Transportation and Economic Development subcommittee  4 members represent districts where the missing middle % of all units was lower than the statewide average and 6 are in districts where the SF detached % of all units is higher than the statewide average.

Originally created and posted on the Oregon Housing Blog.

Tuesday, May 28, 2019

Oregon Land Use Law History, 1969,1973: Hat Tip to OPB; I Created Folder with Searchable Text Files.

OPB's Anna Griffin recently tweeted about the availability of MP3 files from legislative hearings on Oregon's land use bill SB10, enacted in 1969.
After seeing her tweet I went to the Oregon SOS land use legislative archive and found PDF files with the legislative text and history for SB 10 (1969) and SB 100 (1973).  There are 1,250 pages in these archive files, and as posted they could not be text searched.  

[As it turns out Wednesday May 29th is the 46th anniversary of the date that SB 100 was signed into law]. 

I used Adobe to OCR these files to allow text searches, and have posted 4 files in a folder HERE.

You won't find the word "affordable" in these files but Section 50 of SB 100 requires that comprehensive plans must find that zoning regulations/ordinances are not preventing "adequate housing for persons of low income". 

(Difficult to see why a substantial percentage of land zoned exclusively for single family only housing wouldn't fail this standard). 

ADD ON: I also ran across a nearly 500 page 1978 Portland State master's thesis on the long history of SB 100 from Kathleen Joan Zachary and created a searchable PDF file that I added to the same folder; look for "Politics of land use _ the lengthy saga of Senate bill 100". (The original PSU posting is HERE). 

Originally created and posted on the Oregon Housing Blog