Well, boy were my projections for 2015 off. Last year I said, “For 2015 I predict an amount of the same, but with a few more houses on the market. So, slightly increasing values (I’d love something like 5%), slightly increasing interest rates (to 5%?), and slightly increasing inventory. I think we’ll see a larger variety of loan products as lending eases a bit.”
Instead, We saw the average sale prices increase as much as 13.5% in North Portland, and 8.3% and 7.7% in Southeast and Northeast respectively. Our inventory shrunk to less than two month’s worth, for most of the year. Interest rates remained low, and sometimes dipped even lower. We saw more multiple offer situations and prices driven quite high by emotional, “gotta have it” buyers. We did see a larger variety of loan products available, giving buyers more choice.
But the big story this year is with regard to our rental market. Often, pre-crash, an active ownership market (people buying and selling to owner occupy) meant a soft rental market. Instead of renting, folks are buying. This year, we have had both, with a vengeance. The rental market is so tight, rents have escalated sky high, and the prices on multiple unit properties have increased accordingly. Long time landlords are selling off their rentals and getting good prices. Many out of town investors, attracted to our rising rents and tight market, are jumping in.
Wholesale evictions and exponential rent increases led the City of Portland to declare a housing state of emergency. Through this, required notice times for no cause evictions and rent increases over 5% were extended to ninety days. This is a small piece, slowing rapid fire eviction and rent increases to give beleaguered tenants a chance to catch their breath.
The CFPB Consumer Financial Protection Bureau issued new rules that took effect on October 3rd, furthering borrower protections with regard to loan costs and fees. These rules, commonly called “Know Before You Owe” assure borrowers ample notice and disclosure when the terms of their loan changes beyond certain thresholds. This is a good thing.
As for my 2016 prediction:
Seriously though. We’ll see more of the same; tight inventory, with not enough houses to satisfy demand, slightly rising interest rates if the FED makes their move and slightly longer close times to accommodate the new CFPB regulations.
We’re seeing some rumblings and action being taken by county tax collectors in efforts to include in the tax rolls, “omitted property”. That is, improvements that have been made to a property, but not included in their assessed value, such that taxes aren’t being collected on the improvement. For instance, you remodeled your kitchen and baths, and finished your basement into a family room. But your tax assessment is on the house, without those improvements.
When assessors find omitted property, they notify the owner and add the property to tax rolls. The law allows them to assess the property in previous years as well: up to five years in Oregon. Oh joy.
Some of you took me up on my offer of radon test kits. I hope you all got low results. I do have a few more kits available should anyone else want to test.
I remain honored to help folks with some of the biggest decisions in their lives, and humbled by the trust that is put in me. My business is based on referrals. I will always take good care of anyone you send my way. Be it selling or buying, or just curious, I’m always glad to answer questions and provide information.