Thursday, October 25, 2018

Attics; is that living space or what?

I sell a lot of older homes in Portland's close in neighborhoods.  Many of these houses have had various increments of work done over time.  When a house was built, it may have had stairs to an unfinished attic, used for storage or maybe as a sewing room.

Over time, subsequent owners may have added wall board, a few outlets, and maybe gotten some heat up there.  Perhaps another owner added some insulation, and decided it was reasonable to use the space as a bedroom. 

In some cases, someone added a half bath; no big deal, just to avoid going downstairs in the middle of the night.  And then another owner added a shower to that half bath.

While not all of a sudden, it was actually over decades, the unfinished attic became a finished attic with bedroom and bath.  Or is it?

Over the same decades, buyers have gotten pickier about wanting permitted work, municipalities have become more sophisticated about the permitting process and permit records, and insurance companies may have gotten stricter about paying claims in unpermitted spaces.

How is a buyer to know?   In the City of Portland, many permits are on, but not all.  Other jurisdictions also have pretty good portals for checking permits;  Clackamas County , Washington County  It is best though, for the buyer to go to the permit office and ask to see the records.  Checking the usage or property description in municipal databases can also be informative.  Is the house considered a one story with attic?  With finished attic?  What is the ceiling height like in the attic?  Are the stairs crazy steep and narrow? 

Many of our building codes have to do with fire and earthquake safety.  The city isn't just being picky when requiring a decent stairs way.  Can people safely get up or down?  Are there sturdy handrails? Could a fireman, with full gear, get up the stairs and maneuver in the attic?   When the space was "finished' was the proper fire blocking done to prevent the spread of fire? 

Why should a buyer care?  I'd prioritize safety concerns first.  Questionably finished space is probably best not used as sleeping quarters; when we are most vulnerable.  Next, I wouldn't spend money on pretty, fancy finishes in unpermitted space as buyers won't value it to its fullest.  If future building permits come into play, the unofficial finished space may need to be brought into compliance.  And, some buyers may not even consider buying a house with questionable, or unpermitted space.  Perhaps you plan to stay in the house forever, and are only using that upstairs for storage, and the occasional hobby project.  Maybe its okay to leave it as is? 

And then there are appraisals, as completed for the loan process.  While appraisers may not (or may) want to see building permits, they may enlist a set of criteria for considering a room a bedroom, or finished space.  Appraisals do use square footage calculations, so this can matter.  Maybe the buyer and seller agree on a price, even if that attic is funky.  The appraiser may not be willing to include that space in their consideration of value, resulting in a low appraisal.

The City of Portland has a pretty good piece on converting attics and basements to finished space

My advice; if you are considering finishing an attic or basement, do so with building permits from the municipality with jurisdiction.  If you have a semi-finished basement or attic, don't over improve it until you know if it is considered "legitimate" space.  Consider going back,and getting previously finished spaces permitted.  Buyers are getting pickier on this.  Addressing these issues before putting your home on the market will give you time to do the right thing, make decent decisions an be far less stressful

Tuesday, October 23, 2018

Times, they are a changing

Okay then.  iInterest rates are up, inventory is up (highest since February of 2015), the rate of increase in the median sales price is down, the number of pending sales is down, and market time is longer.  Those are all signs of, or contributors to, a slowing market.

Most buyers have more power in the market place than they have in years.  A slowing market, combined with seasonal slowing, leaves sellers who need to sell before the end of the year, in a tight spot.  Sellers currently under contract would do best to stick with that sale, and agree to repairs being negotiated from the home inspection.  It could be hard to go back on the market after a failed sale, and do any better.  I can't say this with enough emphasis.

What IS selling, are houses that have been very well prepared for the market.  While I'm not usually a fan of doing a lot of work before selling, this may be the time to do just that.  Houses that have good mechanicals, are aesthetically pleasing and priced below $400,000, are still in high demand.  Some sellers of these properties are seeing multiple offers, and competitive bidding.

Is this a good time to buy?   Should buyers wait until spring?  Those are tricky questions.   While I don't think home prices will go up so much as to price current buyers out of the market, rising interest rates could lead to less buying power. 

Just as I don't think a college education is for everyone, home ownership doesn't always make sense.   For now, buyers should plan to stay in a house at least three years, and a five year plan would be better.  For sellers, if you're planning on moving in the next year or two, you might consider selling now, and renting until you move on.  We know the market we have now.

If you've got questions about your particular neighborhood, property or situation, I'd be glad to talk with you.

Wednesday, October 3, 2018

Convenience vs. customized service

I've been doing a lot of thinking about this.  Call me old fashioned, but there are certain services which I'd rather be provided by the same person or team, in the interest of consistency and a personalized experience.

In the age of convenience, "get it now" seems to carry the day.  And sometimes you can have both; the convenience and speed of a drive through coffee place, combined with the ability to make your personalized order; the half sweetened mocha, no whip cream etc.  Zoom Care (and other clinics) offer speedy service, available at a variety of hours.  But you won't always have the same provider, and the cost may be higher.

In health care, I want to see see the same provider who has been treating me.  The exception would be for urgent or super routine care, where the issue is clear and easy; stitches, flu shot, other immunizations, strep throat.  This is a pretty clear case for me, where personal service is important.  And sometimes it may take me longer to get an appointment with a specific provider; the wait being a price I am willing to pay.

Similarly, most veterinary care for my pets, needs to be with the same vet.  In a rush, I once dropped my cat at the vet as she seemed to be in pain and was crying out when touched.  She is the most good natured cat ever, so this was alarming.  Because of my schedule and timing, I was not with her when she was examined, and she was examined by a vet  not familiar with her demeanor.  He was a good vet, mind you.  Talking with him later he said she seemed fine. When asked if she had vocalized during the exam, he said yes, but no more than any other cat might.  But here's the thing.  She would normally purr and snuggle during an exam.  You know, the kind of cat where the vet has trouble listening through the stethoscope for all the purring.  Had her regular vet been available, or had I been there, it would have been clear the cat was in pain.

Aside from health care, where else is the customized experience important?  Certainly for some, myself included, hairstylists might also fall in this category.  For Don, the buzz cut of his quickly disappearing hair can probably be done by most any stylist.  So is it personal care?

I suppose, if one had a vintage, finicky car,  the same mechanic would be important.  Or an old, quirky house; you'd probably want the same contractor working there and knowing the idiosyncrasies.  So, if we all lived in tract homes and drove recent model, mass produced cars, would service be easier, cheaper and still high quality?

What about professional services;  Lawyers, accountants, financial planners, and yes, real estate agents?  Certainly the more specialized the need, the more specialized the service should be.  And the need may not just be personal, it could also be location based.  So I don't just need an attorney who knows me, I need them to know the local laws AND me.  I need a property manager familiar with Portland's tenant protection rules, not just Oregon statutes.

Hotels are an interesting example.  They endeavor to provide customized options to an everchanging client base, at a reasonable or at least predictable cost. But hotels tend to provide choices, by which we can have a customized stay. Some hotels provide both foam and feather pillows, control over HVAC and/or openable windows, coffee set up in the room or at breakfast, room service or a dining room, valet parking or self-parking.  So here, the hotel doesn't know me, nor my preferences (and they don't need to), but tries, within reason to provide choices such that I can customize my stay.

Where are you willing to potentially compromise a customized experience vs convenience?  For me, I don't need the same car mechanic, do want the same providers for most all personal and veterinary care.  I'm fine being served by different folks at the pet supply store I frequent, and certainly don't need or expect customized service at the grocery store.  Though I don't use a dog walker, I think I'd want the same one.    And for professional services, yeah, I want personalized.

An aside about convenience and artificial intelligence.  Auto-fill in online stuff, is that a bonus or a pain?  On your phone, do you have auto-correction and "predictive" set to on? Do you let a program store passwords and credit card info?

Monday, August 27, 2018

Can I paint that vinyl siding?

I have an active listing with vinyl siding.  The color is kind of blah; not offensive, just ahem, shall we say, low profile.

So, the question comes up from potential buyers; can I paint the siding?

The answer is yes, kind of.  Vinyl siding expands and contracts with temperature and humidity changes, more than other sidings (wood, fiber cement).  Because of this, it is important the new paint contain acrylic and urethane resins; that is a latex urethane paint formulated for exterior use.

And, it is suggested the color be lighter, as dark colors retain heat, which can warp vinyl siding.  Hmm.  With a drab, light grey, I'm not sure a lighter color will do much for the aesthetics of this particular property.

As for all exterior paint jobs, cleaning the surface is essential for a good paint job.  Usually, vinyl siding is in decent shape, so primer is most likely not necessary.  And then, its best to do a few good, but not gloopy coats, rather than fewer thick coats.

A bit about vinyl siding. The great thing about vinyl siding is you don't have to paint it.  It is easier to care for than wood; doesn't rot and doesn't need painting.  Usually, when installed, it has a layer of foam-like insulation behind it - makin the property more energy efficent than wood or fiber cement siding.  

Sometimes, trim paint and architectural enhancements can be another way to help a low profile building.  A snappy trim color can go a long way.  Here the property, its the unit on the unit on the right, with the red door.  I think, if a buyer wanted to add pizazz, a fun trim color (in the red family?), would go a long way.

What do you think?

Wednesday, August 15, 2018

When my values and work clash

I'm thankful.  I enjoy my work, and rarely does my work challenge my values, or vice versa.

It happened this week.  I have a new listing in a close-in eastside neighborhood.  In the first days,  I noticed a homeless camper up the street.  This is not news.  Portland's neighborhoods have lots of homeless campers these days.  Even if we are used to it, homeless campers aren't exactly a selling point for a property.  This particular camp was very neat and tidy, self-contained.  I was thankful for the considerate campers, and paid it little mind.

A few days later, I arrived to hold an open house for brokers.  The camper had moved right in front of the listing. This really wouldn't be a selling point.  I have fiduciary duties to my seller, to work in their best interest.  But man, was I really going to ask this camper be moved just because we're selling a property?!  On the other hand, how in the world would I get this listing sold, with a homeless camper right out front?   ugh.

Later that afternoon, a neighbor to my listing called me, as she was upset by the camper. She had contacted the Portland Police, sent me the link to report the camp and contacted other neighbors.  I did submit a report of the camp on line, and notified the seller (he wasn't occupying the property).  The seller is a good guy.  He did report the camp on-line also.  He also spent some time talking with the gal who was camping; learned a bit about her situation and her resources.  It sounded like she was in a queue for transitional housing and had some support and resources.  He gave her a little money for bus fare.

A day or so later, she was gone, as was her stuff.  Word has it she did successfully get into transitional housing.  While this was not an ideal situation for any of us; homeless gal, seller, neighbor, me, I am thankful for what feels like a decent resolution.

I'm guessing most of you run into situations where your work and your values aren't in sync.  Care to share?

Tuesday, July 31, 2018

Some finer points of Portland's rent stabilization rules

Portland has had three different iterations of the rent stabilization rules.  The most recent rules are now permanent, and not based on a temporary housing emergency.  Like it or not, effective or not, unintended consequences or not, they are here to stay.

The basics are rent increases of 10% or more per year, or a "no cause" notice to a tenant to vacate, trigger landlord obligations to pay relocation costs to the tenant, should they move.  There are specifics about when the money must be paid, and what tenant obligations are around the money.

Landlords owning only one property are no longer exempt.  Landlords renting out a room in their own residence, or a unit in a multi-unit building in which they reside, are exempt.

Many folks owning one property they are renting out don't think of themselves as landlords, and didn't seek to become landlords.  Often, a life change will have the owner living somewhere else, with the intention of moving back in, or selling in the not so distant future. Think job transfer, or moving in with a partner; temporary job posting abroad, graduate school, sabbatical and so on.  Often, owners like this haven't taken landlord training classes, don't have a go to landlord/tenant attorney, and may or may not have used a property manager.

 In such a cases, a landlord can, at the time a fixed term lease is signed, put in the lease that they will be returning to live in the property, and the tenant is on notice that they'll need to move at that time.  It is required that this be in the original, fixed term lease.  Merely coming back to town and giving tenants notice to vacate as you want to live there, will not provide an exemption from the relocation costs.  In theory, this method also works if you plan to sell, though I've heard differing opinions on this.

 In any case, the relocation assistance fees are as follows:

Studio ...................................................$2,900
One-bedroom....................................... $3,300
Two-bedroom..................................... .$4,200
Three-bedroom (or larger).................. $4,500

These fees must be paid to the tenant 45 days on advance of the move out, or rent increase date.  So,  the required 90 days notice is given, and then 45 days later, the relocation assistance is paid.  This gives the tenant funds with which to place deposits on a new rental.  Since landlords have up to 30 days after a tenant vacates to refund deposit (or provide cost accounting for retained deposits), it can be hard for tenants to pay new deposits without access to funds on deposit with the current landlord.

This is just an overview of the rules, with a focus on the unintentional landlord.  I am not a property manager, nor an attorney.  I have paid attention, taken several classes, and done some reading.  Please consult a property manager or attorney for specific advice about your individual situation.

Late breaking news: the City of Portland is moving toward a registry of rental properties.  Many cities do register rental properties, including Seattle, San Francisco, Eugene and Gresham. I'll write more on this later.

Tuesday, July 17, 2018

Mid-year market update

RMLS released the market statistics for June.  This gives us a mid-year glimpse at the market.

I usually keep track of three factors, and feel these can give a pretty good sense of the market; median price (and percentage change), market time, and inventory.

The June's median price was $417,900, with the year to date median price at $400,000.  From June 2017, this is up 7.2%, up 2.2% from May 2018, with the year to date percentage change of 6.7%.    In 2017, the median price was $390,000, and the year to date price was $375,000; year to date change of 10.3% .  Its really that year to date percentage change on which I keep my eye.  When I talk about a slowing market, I'm talking about the speed at which our median price is increasing

Market time can also be seen on the chart above.  There isn't much change here; May and June 2018 had the same market times, 2017 and 2018 year to date are the same at 48 days.

Our look at inventory is calculated by dividing the active residential listings by the number of closed sales for the month.  So far inventory in 2018 has been equal to or greater than the two previous years.  Our market usually sees a summer slow down in July and August, and even into the fall.  It looks like that slow down came early this year.

The rate of increase in prices is slowing, we have more houses in relation to sales, and our market time is holding steady.  I'm glad to see a slowing in that rate of price increases.  6.7% is still a healthy rate, and outpaces the increase in wages in our area.  The price increase, combined with rising interest rates can make it hard for buyers to save as quickly as the cost of buying is going up.

Is it still a good time to buy?  I think so.  But, don't buy thinking you can sell in a year, without doing any work, at a profit. If you're buying today,  plan to stay for three years or more.  Is this a good time to sell?  Yes.  But don't bank on multiple offers and bidding wars.  Yes, we do still see multiple offers and bidding wars.  But we also see overpriced houses sitting, lowering their prices while buyers stay away.  Buyers worry about what is wrong with that hasn't been snapped up.  Sometimes, the only thing wrong is the price.

As always, I'm glad to answer any question you might have, or to talk about your specific situation.  503-312-8038.