Tuesday, June 19, 2018

Getting a handle on this varied market

Oh man.  This market is so inconsistent, its hard to find any over arching trends.  I'll try.

The market is definitely slowing.  The Portland market often slows in the summer.  Its a beautiful time in the Pacific Northwest, and folks are out playing.  We've also become a vacation destination, so we  see lots of out of town folks falling in love with our city.  Do they all want to buy houses right  now?  I don't think so.  We'll see them back on subsequent long weekends.

We are seeing LOTS of price reductions, and some rather steep and rather quick.  If it doesn't sell now, it may not sell until the September/October market flurry we usually see in advance of the holidays.  For builders, flippers and move-up sellers, that fall flurry may be too far away, hence, the price reductions.

So what do I mean by slowing?   May 2018 saw 6.3% more new listings hit the market, than May 2017.  Closed sales fell 3.2% from May 2017, pending sales decreased 6.8% from May 2017, and the median price through May 2018 has risen 8.0% as compared to 10.7% through May of 2017. 

But, that puts our year to date,  median sale price at $399,500 in 2018, as compared to $370,000 in 2017.   So, still going up, but at a slower rate.   And those price reductions?  Some of them aren't due to "dropping values", so much as aspirational pricing by sellers.

 I think Realtors are reluctant to talk about a slowing market (as with many financial markets, does talking about it change it?).  Sellers are often basing their pricing expectations on what they've heard about the market from friends and neighbors.  This anecdotal evidence can be a few months behind reality.  The expectations of every house generating multiple offers, bidding wars and sales prices well above the list price are unrealistic.  Are we still seeing some multiple offers?  Yes.  Are some houses still selling well over list price?  yes.

Here are the frustrating parts:
1) We, the professionals, are having a hard time predicting what houses will sell quickly and which won't. 
2) With such a varied market, buyers might be able to look at houses priced above their top price range, as some sellers are accepting offers below their list price. 
3) Some houses are still going well over list price, so buyers should be shopping below their top price.
4) Though the stats look like a slowing market, May 2018 market time was 37 days, compared to 39 in 2017.

Here are a few things we do know:
1) Interest rates are increasing, and will continue to do so.
2) Portland is still seeing significant in migration from other states.
3) With a slowing market, it can be possible to get an offer accepted, subject to the buyer selling their current home.  These "contingent" offers have long been a favorite approach for move up buyers.
4) In a slower market, buyers can make better buying decisions.  Now, buyers might be able to think about making an offer on a house for as long as they can think about that new pair of shoes, or where to eat dinner this weekend.
5) Houses that are priced too high, and stay on the market, will eventually sell for less than than had they been priced properly at the beginning.  Sellers who say they'll "wait to get the price they want" are misinformed.  Who ever paid more for a house because its been on the market so long?

There you have it.  To buyers, you may have a bit more buying power than you did previously.  This means, you might be the only offer on a house, and might have the luxury of negotiating with the seller, or not.  Sellers, be careful about over pricing.  We have seen very good appreciation in Portland in recent years. Don't get greedy.

If you have questions about your particular property or situation, get in touch.  I'll be glad to help.  and as always, let me know if there are questions I might answer.  Here's the link to the most recent RMLS stats.

leslievjones@gmail.com   503-312-8038

Thursday, May 24, 2018

Interim market update - are we in a buyers' market?

There was a one liner in a KGW piece a few nights ago, where Zillow said the Portland market , "is a buyers market right now".  That caught my attention.  Zillow's article about the national market also points to slowing.

The RMLS report for April can show some hints of this.  For the first four months of the year, our inventory was equal to, or higher than the inventory for the same months in 2016 and 2017.

The market time for listings that sold in that same time period was also equal to, or longer than 2016 and 2017.

And pending sales are down 2.6% from April 2017.

Zillow's report for Portland shows our annual home value change increased 6.2% as compared to a 9.1% increase in national values.

Anecdotally, we're still seeing multiple offers on certain properties.  We're also seeing more and more houses on the market and price reductions in a variety of areas.

What does this mean for you?

If you've been in the market to buy, while prices are still going up. the pressure is easing.  While the list price used to be a starting point, with prices going up from there, it now can be possible to buy a house at or below the list price.  Some buyers stay out of the market, while they save money to buy.  In the past few years, prices have been rising quicker than most people can save.  We may be entering a time when you can actually save faster than the market increases.

If you are thinking of selling, you might want to get your property on the market sooner than later.  While we're seeing some slowing now, we often see a bit of a lull in the summer months, especially July and August.

Let me know if you have questions about your specific situation.  I'm always glad to talk.

Leslie Jones  503-312-8038   leslievjones@gmail.com

Monday, April 16, 2018

New heights of energy nerdism

My husband told me the other day, he tries to limit the number of times he opens the refrigerator, in an effort to preserve the cold air.  There is a bit of context...a glimpse into my world.

I'm driving an electric car these days, and we REALLY wanted it to be truly powered by the sun.  In 2010, we installed a system with 10 solar panels, that generated about 80% of our electricity.  The electric load in our house, is plugs, lights, fridge, washer and small appliances (toaster, coffee pot) and the electricity needed to power the electronic parts of the stove and dryer.  And now, the car charger.

ImagineEnergy, who did our original system, helped with the upgrade.  We removed the old panels and inverter (and sold them to a friend), and had 30 new panels (more efficient) installed.  The panel technology has improved so much, merely upgrading the 10 existing panels would have given us a nice bump.  The load of the electric car can be hefty and the panel upgrade alone wouldn't generated enough to power the house and the car.

With the 30 panels and new inverter, we also get a fancy web interface through which to monitor our system.  The monitoring system just got turned on in late March, so we don't have a bunch of data yet, and we've not even gone a full billing cycle since installing the new panels.  But we are excited and optimistic!

The monitoring system is by Solar Edge.  I can see, today, we have generated 33.71 kWh, so far. I can see today's weather, along with the forecast. Switching to a different screen, I can see a physical layout of the panels, and which panels have produced how much power today, or this week, or month, or year. And once we have more data, there's a plethora of reports to be run. 

Portland's Home Energy Score requirement is driving more awareness of energy efficiency into the market.  Portland was one of a handful of cities benefiting from an in depth study of the value of solar power in certain markets.  In that 2015 study, solar panels were seen to add a premium of 1.97% - 3.25% (median and mean) to the price of a house.  The sales in that study were from 2012 and 2013.  I'd guess that premium, as a percentage of price, has increased since then.

If you have questions about navigating solar systems (ha ha), I'd be glad to chat.  You can reach me at 503-312-8038 or leslievjones@gmail.com

Friday, April 13, 2018

A look at Q1 2018 in Portland real estate

We receive monthly market statistics from the multiple listing service.  Looking at those numbers, a month a time, doesn't necessarily give the full picture.  Now that we've got three months of statistics, let's take a look.

In my annual report, I predicted an increase in the median price of around 8%.  Right now, looking at the percentage change of the 12 month sale price with the previous 12 months, the median price has increased 8.8% from $353,800 to $385,000 (this is metro-area wide).  I expect to see this come down a bit as the year progresses.

We are seeing the number of new listings creep up a bit.  Our inventory in months, calculated by dividing the active residential listings at the end of the month by the number of closed sales that month, has been (averaged for Q!) 1.9.  In 2016 and 2017, that three month average was 1.63.

On a similar trend, year to date listings are 3.8% higher than the same period in 2017, and closed sales are down 3.8%.  And market time, measured in days has increased 3.1% from 59 to 61 days.  Keep in mind, real estate always has a bit of a slow start in January, as many buyers and sellers are not focused on real estate through the holidays. 

While the general Portland market is slowing a tad, and prices are not increasing as quickly as in recent years, some neighborhoods remain hot.  Properties are still receiving multiple offers, and selling for well above asking price.  Anecdotally, it seems well priced properties are drawing lots of attention (as it should be), along with properties that have been well taken care of and prepped for sale.  Sellers wanting top dollar are best to put a lot of effort into preparing their property for sale, AND price properly.  An overpriced property, sitting for weeks or months will not bring top dollar.

From here, I expect we'll continue to see more properties on the market, a decline in the rate of price increase and a bit saner market for all.  Buyers, there are lots of good properties on the market in most neighborhoods and price points.  While you aren't in the driver's seat, you may be less disadvantaged than you've been in recent months. Sellers, you still have a desirable product, but you'll need to pay attention to condition and price. 

RMLS report

Get in touch if you have questions or would like additional information.  Leslie Jones leslievjones@gmail.com 503-312-8038.

Tuesday, March 20, 2018

The makings of a good flip

No, I'm not talking gymnastics.

The house on the corner of our block recently sold.  It was a classic situation; elderly gal had moved out several years ago.  The house went on the market this last fall.  It  was a big, old, run down bungalow in disrepair.  It had large, gracious rooms, great light and a decent floor plan, but only one bath, and that one needed work.  It was the kind of house neighbors hope will be saved, and not torn down.

In my work, I often see these houses.  And I often see the results, when the work has been done and they are ready to be sold.  The trick of doing a flip is doing good work, to maximize the value and profit of the project. Doing too much work slows the project, eats into profit and is a direct route to a different line of work.  Not doing enough work, good enough work or the right kind of work will cause you to miss the higher end buyers.

An aside, my husband can build or fix just about anything. and he has VERY high standards.  He can't do a B+ job.  he just can't.  We have never done a flip, and never will.  He'd take too long and would do way too much work, taking away any gain.

But, the folks who bought, and are currently working on the house on the corner seem to be doing a good job.  Clearly, they've done this before, and have access to crews available to work (that is a challenge in Portland right now).  They've put on a new roof, decommissioned the buried oil tank, brought in a gas line and installed a high efficiency gas furnace.  They've brought in a new electric service.  They are adding a bath upstairs, and are currently prepping the house for a new coat of exterior paint.  The prep work is being done using lead safe practises, as required by law.

They are not putting in new windows...that is expensive to do.  But they do appear to be re-glazing the old widows and fixing the sash cord/weight system so the open and close easily.

By contrast, I regularly see houses of a similar caliber where they've left the oil tank and old furnace, along with the sub-par electric service. A new coat of paint has been quickly sprayed on with little or no prep (a sure way to shorten the life of a paint job, but who cares?  Its cute for the sale. ).  Fancy bath and kitchen finishes are added to aged and failing plumbing and electrical.  Buyers and home inspectors can see right through a crappy flip, extending the market time and the lowering eventual sales price.

A good flip also addresses items sure to come up on inspection. For instance, the standard is that hot water heaters will have two seismic straps, securing the tank in case of an earthquake.  This is known, and easy and inexpensive to do.  A flip that neglects this, is probably neglecting other things we can't see.

And then there are permits.  Building permits are required for most any but purely cosmetic work.  Basically, touching electric, plumbing or structural triggers the need for permits.  There are LOTS of flips done with few or no permits.

Back to the house on the corner.  They have pulled permits.  They're using licensed and bonded crews and the people working on the house are friendly and courteous to neighbors. Yes, they are working quickly, and at times have different crews working on different parts of the house.  I know nothing of the finishes they'll be putting in, but expect they'll be higher end.  I hope they re-finish the hardwood floors, rather than laying engineered wood floors over them.

Neighborhood the neighborhood rumor mill says the house will be on the market in about three weeks.  I'll be curious to see at what price.

The company is Portland City Homes

Are you thinking of doing some fix up work to your place, or taking on a flip?   Or are you curious to see the above mentioned house when its completed?  I'd be glad to talk with you, just get in touch.
503-312-8038  leslievjones@gmail.com

Saturday, February 10, 2018

The 2018 federal tax changes and Portland real estate

It was hard to miss the changes to federal tax code that were quickly enacted in December 2017.  Previous tax overhauls entailed months of committee work and hearings, which vetted out most of the inconsistencies and grey areas.  The December 2017 tax changes left more room for interpretation and fine tuning.

I don't expect to see much effect on Portland real estate as a result of the changes.

 Limiting the property tax deduction to $10,000 per year on a personal residence won't hit many of us. While we do see some property taxes over $10,000, that's pretty high value house.

The interest on home equity loans and lines of credit will no longer be deductible.  But, it is thought that if such loans are used to invest in real estate, including remodeling or adding to your existing property), that interest may be deductible  This is one of the grey areas in which we may see some rule making in the months to come.  In any case, I'm not sure that lack of interest deduction will change behavior.  And if home equity interest IS deductible for real estate (and improvement) investing, it really won't change behavior. 

I talk with many clients deciding whether to add on/remodel their existing home, or move.  My advice is always this: if you like where you are,and the finished product will be the home you want, stay and remodel.  If you want a different area, or even with work, your house won't be what you want, consider selling and moving.  Will the lack of deductibility of the home equity to do the work change this?  I doubt it.

As we saw, the tax changes seemed to hit hardest, those states with high income tax; of which Oregon is one.  High net worth folks, especially moving toward retirement, tend to avoid such states.  We may then, see fewer very wealthy folks moving here, or choosing to stay here. 

So maybe, with the combination of the property tax deduction limit at $10,000 and the hit to states with high income tax, we might see that upper end of the real estate market soften a bit.

Certainly, there were other changes to the tax code that will change household financial pictures.   So much of this depends on your specific financial situation.  As far as our local real estate market, I don't anticipate much effect. 

If you have questions about your specific real estate situation, get in touch.  I'd be glad to talk with you.  leslievjones@gmail.com   503-312-8038

Friday, January 12, 2018

2017 Year-end housing stats - Portland

RMLS just released the housing stats for 2017.

Focusing on the Portland area, our year to date median sales price was $379,900, up 9.5% from $347,000 in 2016.  I expect we'll see the rate of increase slow a bit in 2018, to something like 8%.

In 2017, we had 31,624 closed sales, down 3.6% from 32,798 closed sales in 2016.  The year has started off quickly.  I'm guessing, at the end of 2018,  we'll be similarly close.

Our year to date market time was 45 days, as compared to 42 days in 2016.  Toward the end of 2017, we were definitely seeing buyers a bit more relaxed at not having  to race out immediately to see a new listing.  Some buyers even had the luxury of seeing a house a second time, before choosing to write an offer.  I welcome this wee bit of slowing, and think both buyers and sellers make better decisions when not acting in a pressure cooker. 

And we finished the year with 1.6 months of inventory, up a tad from December 2016's 1.3 months of inventory.  This slight bump in inventory was also a welcome change, giving buyers more properties to consider.

These numbers bear out what I had been feeling.  We did slightly less business, still saw prices increase a bit.  Personally, I did 3 fewer transactions in 2017 than in 2016, but made slightly more money.

The Portland market remains a sellers' market...to an extent.   With the extreme frenzy of 2015 and 2016 gone, sellers do have to price according to comparable properties, usually have to do an amount of repairs as a part of selling, and often don't have a plethora of offers from which to choose.

We're in a funny spot, where it is a good time to buy or sell.  As the year progresses, we expect to see interest rates edge up. as high as 5% toward the end of 2018.  This increase will decrease buying power for buyers getting loans, and could put a bit of downward pressure on pricing. 

If you're thinking about making a move, or just curious, get in touch.  I'd be glad to talk!  leslievjones@gmail.com  503-312-8038.