Help to get into the competitive Bend housing market

The Rudolph family’s rented townhouse on Sierra Avenue seemed small, even though half-empty on Wednesday, moving day.

After 6½ years on Sierra Avenue in northeast Bend, the Rudolphs, Kat and Cameron and their 2-year-old son, were moving to northeast Redmond. It’s the first home of their own, and while it’s not the one they envisioned, it’s one they can afford.

“It’s a good learning home,” said Cameron Rudolph, a teller coordinator at U.S. Bank, in Bend. “There’s stuff to work on. And we can do what we want, paint one wall red if we want to.”

Like many middle-class families with moderate incomes, they discovered that buying a home, any home, is difficult. In Bend, especially, finding a home in their price range was “next to impossible,” said Cameron, 31, “if not impossible.”

The median price for a single-family home in Bend rose to $332,000 in February. More than 1,300 homes listed at $300,000 or less sold in Bend in the last year, although fewer than 200 were listed for sale in February, according to the Beacon Report.

Options exist to assist first-time homebuyers with outright grants and low-cost loans they may apply to their down payments and use to lower their monthly mortgage payments. Demand for these programs outstrips the available funds, but the Rudolphs found they made the difference between continuing to rent the townhouse and owning their own home.

Oregon Housing and Community Services has low-cost mortgage programs and NeighborImpact, a nonprofit agency in Central Oregon, provides financial assistance and education for prospective homebuyers.

“Our target market at NeighborImpact is low- to moderate-income wage earners, so that is extremely challenging right now,” said Shelley Nelson, of HomeSource, a homebuyer education and coaching program at NeighborImpact. “So we talk about other options. Maybe right now isn’t the right time for some people and that could be due to credit or income, maybe looking at other areas to purchase. There are affordable homes still in Prineville and Madras; we’re seeing activity going out into those directions.”

NeighborImpact runs two parallel programs that assist qualified, prospective homeowners. Through HomeSource the agency provides classes in budgeting, credit management and homebuying. HomeSource also accepts applications for Individual Development Accounts, which provide $3 in matching funds for every $1 the client saves. Qualified clients who save a maximum of $3,000 over three years may reap another $9,000 to put toward a home purchase or rehabilitation, higher education or starting a business.

“Oh yeah, it’s a 300 percent return on what you put in,” said Cameron Rudolph. Said Kat Rudolph, 28: “Everything that we saved we put into the IDA.”

Through a separate NeighborImpact program, Down Payment Assistance, qualified, first-time homebuyers may borrow up to 20 percent of the purchase price at an interest rate slightly higher than their home loan. That allows homebuyers to sidestep the mortgage insurance required of anyone who makes a down payment of less than 20 percent. The interest rate on the down-payment loan, coupled with the home mortgage payment, typically results in a monthly payment between $50 and $100 less than one that includes mortgage insurance, said Michael Hinton, NeighborImpact lending director.

Homebuyers need only have enough cash to pay their closing costs, he said. While demand is high, NeighborImpact expects to approve about 25 down-payment assistance loans in the coming fiscal year, which begins July 1. The program has a $900,000 budget, which includes $100,000 it received in November from the state.

“Those are the two benefits of down-payment assistance,” Hinton said. “One, it reduces how much you have to come in with and, two, reduces your monthly payment. In our market, when you have 50 percent-plus of the population of renters are burdened, it’s dang near impossible for families to save up for a down payment.”

Money going to rent

In Bend, 27 percent of renters pay more than half their income in rent, according to NeighborImpact. Another 28 percent pay between a third and half of their income in rent. The agency considers renters burdened if they spend more than a third of their income for housing.

“I think we’re getting a lot of inquiries because people’s rents are getting so out of control that they think, ‘Why am I paying rent? I should be buying a house,’” Nelson said. “You can see what people pay in rent, and that is a mortgage payment, but unfortunately they don’t qualify.”

The Rudolphs said they found themselves in a similar predicament when they decided to buy. They had put their dream of homeownership aside for years. Then came notice of an increase in rent for their 1,200-square-foot, two-story, two-bedroom townhome.

“Our rent was getting raised by $200 to just over $1,000,” Kat Rudolph said. “I’m like, that’s a house payment.”

Income guidelines

Her sister once worked for NeighborImpact and co-workers and friends went through its homebuyer assistance program, so Kat Rudolph, a customer service representative for industrial gas supplier Norco Inc., in Bend, contacted the agency. Applicants for the down-payment assistance and matching savings accounts must earn no more than 80 percent of the $59,400 area median income, a bar set by the U.S. Department of Housing and Urban Development. For fiscal year 2015, the income limit in Deschutes County stood at $42,750 for a family of three. The income limit in Crook and Jefferson counties is $37,550. Similar guidelines apply to loan programs offered through Oregon Housing and Community Services.

Additionally, applicants for the financial assistance programs must take part in eight hours of homebuyer education, either in class or online.

“So usually somebody hears about the (Individual Development Accounts) program and they call us,” Nelson said. “The first thing they do is sit down with one of our coaches and start going through budgets, their plans, to see if they qualify.”

Participants in the savings program must commit to six months, minimum, and saving $25 each month, Nelson said. Counselors help clients identify potential savings but don’t make value judgments, she said. If somebody wants something bad enough, they’ll find the $25, she said.

“It can be as simple as taking a brown bag to lunch every day,” Nelson said. “Or, instead of going to Starbucks every morning, maybe go on Fridays.”

Examining spending

Kat Rudolph, knowing the cost, said she cringed each time her family ate out. Cameron Rudolph said that once they broke down their spending habits, he saw how little things add up. They scaled back; Kat bought a crockpot and they packed their lunches. They still eat out, but less frequently and with a greater appreciation of the experience, they said.

“When I actually saw the amount of money we spent on frivolous stuff,” Cameron said, “we could have bought a house a lot sooner if we’d saved all that money.”

The Rudolphs found a home that fit their needs and their budget, a 1,454-square-foot, three-bedroom, three-bath home built in 2005, with a two-car garage. They were pre-qualified for $230,000, but paid $210,000, Kat Rudolph said. The lower mortgage payment left room for the cost of day care. The monthly payment was just a bit more than their higher rent payment.

“We got our house for 210 and that was about where I wanted to keep us at,” she said.

The Oregon Bond Loan program, which provides below-market rate financing and cash assistance, closed on 19 loans in 2015 in Central Oregon and three so far this year, said Alison McIntosh, spokeswoman for Oregon Housing and Community Services. NeighborImpact programs, including counseling, education and financial assistance, played a part in 52 home sales last fiscal year, said Lynne McConnell, deputy director of housing and assets at NeighborImpact. She expects the agency to assist 55 this fiscal year.

“Our goal is to be the tipping point for those folks,” she said. “And, yes, (with) down-payment assistance, with credit building and down-payment savings, (we’re) really trying to educate clients to make sure they are totally prepared when the time comes so they can compete with the rest of the market, even if they do have income limitations. That’s our goal, to really sort of help move those folks who are right on the edge and probably couldn’t do it without us.”

— Reporter: 541-617-7815,

jditzler@bendbulletin.com


Source: BB Real Estate – listStories2

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