Tag Archives: legislative updates

House Representative Bill Kennemer speaks to the community

Last night was our monthly Beavercreek Hamlet community meeting, and our guest speaker was Bill Kennemer. Bill spoke at length about real estate issues that are important to me.

Regarding the proposal to limit mortgage interest deduction (links to the bill can be found here) he said that there is currently about 50/50 support and feels that it could pass.

Beyond limiting deductions on primary residences, a huge question exists on how this bill impacts rentals. One of the first lines of the bill states that mortgage interest deductions will be disallowed except for primary residences (which will be limited). Here is the current wording: “Disallows, for purposes of personal income taxation, mortgage interest deduction for residence other than taxpayer’s principal residence.”

My concern regarding this line in the bill is that if mortgage interest is disallowed for rental homes, those rent prices are likely to skyrocket. But those organizations who favor the bill, say that this rule doesn’t apply to rental homes – its just “second” homes (I’m not seeing clear definition on this). Even tax professionals have agreed on this interpretation.

I’ve learned over the years to be skeptical and verify information as much as possible – even when there is a broad consensus – and last night Bill validated my concern that this could impact rentals. He told me that the wording is pretty explicit in disallowing mortgage interest for deductions on anything other than primary, but that behind the scenes amendments are taking place. Some of the revisions include exceptions for rentals, and some of the revisions make it clearer that landlords cannot deduct interest. So… what really passes we won’t know for sure until it goes through.

I’m going to remain somewhat neutral on whether or not the deduction should be granted to landlords. But, what does concern me is that this could have an enormous impact on rent prices, and the public hasn’t had a chance to weigh in.

The good news out of the meeting last night was a discussion on the savings account bill for first-time home buyers. He said that this is getting bipartisan support and is expected to eventually pass once they work out all the information.

The last thought on the deduction: removing these deductions can be passed through the legislature without being voted on.

Representative Bill Kennemer can be reached at repbillkennemer@oregonlegislature.gov for more questions.

Oregon Legislature Proposals: Remove Mortgage Interest Deduction, Remove Ban on Rent Cap and Implements Moratorium, Disallow No-Cause Evictions

3 bills are currently submitted to Oregon State Legislature regarding the real estate industry to bring to your attention.

House Bill 2006 puts extreme limits on the mortgage interest tax deduction for home residences.

House Bill 2001 repeals a statewide ban on rent control, implements an immediate statewide moratorium rent control increase no more than 5%.

House bill 2004 disallows no-cause evictions without significant penalty to the landlord.

I’m all signed up to  attend Realtor day at the capitol to learn about the bills and discuss concerns about the implementation of these bills. I will post additional info as it comes available.

FHA Mortgage Insurance Premium Reduction Suspended

The federal government had decided early this year to help lower income home buyers afford to get in the market by reducing their PMI (Private Mortgage Insurance) on FHA (Federal Housing Administration) loans. This is a type of insurance that is currently required for borrowers who have less than 20% equity in their homes. This mortgage insurance wasn’t necessarily required prior to the recession, and Realtors applauded the effort to reduce the cost burden to (usually) first-time home-buyers since the real estate market is in vastly better shape than it was prior to the downturn.

However, effective January 20th, 2017, the US Department of Housing and Urban Development suspended the program. We’re hoping it will be picked up as a priority again soon!

New City of Portland Requirement: Home Energy Audit Required to List Home for Sale

Effective at the turn of 2017, the City of Portland is requiring that home owners who wish to list their home for sale obtain a Home Energy Audit Report for disclosure to potential purchasers. Implementation will begin in 2018.

According to the Portland Metropolitan Association of Realtors, the new requirements state that:
-Homeowners must obtain a home energy performance report.
-Provide said report to their listing Realtor.
-Include the energy score in the listing showing the home for sale.
-Provide a copy of the performance report to the City of Portland.

The rule does not apply to distressed properties, new construction, and there are some low income exemptions. For more specifics on the rule, see the City of Portland’s website.

New City Rules re: Rental Fees Could Impact All of Portland Area Real Estate Market

Portland City Commissioners are currently debating a mandatory fee to landlords who issue “no cause” evictions. If the fee passes, the effect could impact not just the rental market but the housing market in Portland and surrounding areas.

It’s no secret that Portland and surrounding area rent prices are increasing at an alarming rate, pushing rental prices well beyond affordable means for many families. The main driving force, it appears, is the lack of housing supply for tenants, coupled with all of the amenities that Portland has to offer, creating a strong to desire to live in this area.

In addition to rising rent prices, there is concern over a trend of “no cause” evictions submitted to tenants by their landlords. What’s the motivation for the landlord to do this? Often, they simply want to sell the property. Or, they may want to renovate the home, perhaps so that they can increase their rent prices and increase their profit margin.

When faced with an eviction, Portland area tenants are often faced with scrambling to find another place to live with very little homes available. when they do find one they have to come up with a first, last, and deposit fees. After paying the inflated rental prices at their last home, they don’t have the resources to move. All of these issues are leading many to homelessness or pushing them further into debt.

Portland City Commissioners are being hammered by tenant unions to do something about the rising rent prices and the evictions. One proposal that was submitted recently: mandating that landlords forgive February rent for those who recently lost wages during our recent snow storm. Though this gained a lot of traction among officials, it appears to have subsided.

The newest proposal: in the case of no-cause evictions, the city is debating whether to force landlords to pay all of the moving costs of tenants. The estimate is between $2,900 – $4,500 for every tenant evicted. While tenant unions are largely excited by the proposal, the real estate industry is up in arms.

Many of my clients and colleagues have multiple rental properties. The buzz among them thus far: if the proposal passes, they feel that they”ll be forced to raise the rent to cover the fee. So, it appears that the proposal could have the opposite effect of what it is intended to do – pushing the rent prices even higher.

And there is large concern over those landlords who are still under water after the recession. For example, I’ve come across homeowners who were faced with a need to move several years ago for work purposes or to be closer to family. When they needed to move, these homeowners did not have enough equity to sell their home and chose to rent until they had enough equity to sell. Sometimes the rent doesn’t even cover the mortgage. Now that the market is improving, they’re once again considering off-loading their home, but with a new fee of removing the tenant so they can put the home on the market, they may not make ends meet in order to sell.

If you aren’t located within the City of Portland limits, or own your own home, you may be wondering why this would impact you. Remember that the majority of cities – even an hour driving time outside of Portland – are largely influenced by rent prices that landlords can get within the big city. For example, Oregon City or Beavercreek rent and real estate prices may not be as high as Portland, but they are still considered a suburb of Portland and are strongly impacted by what happens there. Rising rental prices in Portland creates rising rental prices across the entire region.

And how could this rule impact real estate sales? I’ve read many landlords simply saying that they will sell their rentals prior to the implementation of the new rule. Certainly this will deplete the supply of rentals, which could impact the rental market poorly. On the flip side, it will increase the supply of homes for sale. This would spur a lot of sales and could be of short-term benefit. However, as the law of supply and demand shows, the more supply, the lower the prices will become. Thus, our market may slow.

The new rules could offer some relief to the families that are renting in Portland.  But it begs the question: will this regulation actually help, or do more harm than good?

I would ask the city commissioners to please consider this proposal very carefully – looking at how it could impact the real estate market on the whole – and to explore alternative solutions that would benefit both landlords and tenants. Surely there has to be some other options to look at and other ways to help the families that really need it.

What’s a concerned Portland-area resident to do? Express your concerns to the City. If you have any ideas on legislative changes that could benefit both tenants and landlords, by all means bring them forth.

If you are a renter and have been sitting on the sidelines thinking you aren’t able to buy, lending regulations have relaxed considerably in the last few years for those who couldn’t buy a home during the recession. There are even very low and no down-payment options to consider. I have a first-time home buyer course coming up that will be taught at the Oregon City Library on February 18th. More details are located here.