Last
December I said, “We’ll see more of the same; tight inventory, with not enough
houses to satisfy demand, slightly rising interest rates and slightly longer
close times to accommodate the new CFPB regulations.”
Most of this
was correct, Inventory remained mostly tight, though I didn’t predict the
slight slowing that hit in July. Interest rates did creep up and closing times
did lengthen (not so much because of the then new CFPB rules, but due to a
shortage of appraisers).
This year, had
a variety of markets. The year started VERY
strong, with quickly rising prices and a shortage of inventory driving
demand. Multiple offers, well over list
price were the norm. Buyers grew weary
of the scramble, and missing out.
But by
mid-July we saw the market slowing a bit. Aspirational pricing saw many
listings sitting, and eventually reduced prices. The public is often a few months behind
active agents with regard to knowledge of the market place. Sellers were still expecting escalating
prices, bidding wars and prices substantially over list price.
We do still
see multiple offers and sale prices well over list price. It is very hard to predict what listings will
attract this attention. Yes, well priced
is essential. But we’ve seen plenty of
very good, well priced houses, sit on the market. The unpredictability of what is hot and what
is not can be frustrating.
And
perceptions of market times are interesting.
Even in the hot fast markets, our average market time was around 35
days. But if a listing sits for more
than 10 days, it has the stigma of being overpriced and having something wrong
with it. Only the really, new-to-market
properties can have that “on fire” sense.
The big
story this year has been about appraisal.
A shortage of real estate appraisers (due in part to steep entry
requirements to becoming an appraiser) has slowed our closing times
considerably. Close-in, easy to appraise
properties still take up to 60 days, but rural properties, unique properties
and properties outside the metro area can easily take up to ninety days to
close. In the short term, we’re
increasing the cost of appraisals to entice appraisers to take our specific
files. What used to be in the $500 range
is now well over $1000.
Overall, the
median sale price (year to date) increased 13.4% to $347,000, region wide.
My crystal
ball for 2017 is pretty blurry. The
surprising election of Donald Trump as President, and apparent inconsistent
adherence to campaign promises makes prediction challenging. Trump is a “real estate guy”, but his real
estate work is pretty far from older homes in Portland, Oregon. Downsizing government and easing regulation
was a tenet of the campaign. Loosening
Dodd Frank regulations around lending and doing away with the CFPB could open
the market to more buyers, but not many.
It also could allow questionable lending instruments back in the
market. The National Association of
Realtors conjectured that downsizing could reach as far as Fannie Mae, Freddie
Mac and FHA. Dismantling these programs
could have a chilling, if not devastating, effect on the local and national
housing markets and economy. I just
can’t see that happening, and doubt that stifling the housing market will be
part of “making America great again”.
In light of
the election and subsequent cabinet appointments, I can imagine even more folks
from around the country being drawn to Oregon, and Portland, in search of a
liberal town, with a strong economy, in a blue state. So, inventory will remain low, and demand
will remain strong. I’d guess the median
sale price won’t rise more than 10%. Interest rates will rise (they already
have) as a result of the improved economy, and in part due to the election
(interest rates were set to rise, in any case).
I do expect, in 2017, the small, expensive,
close-in apartments will be over supplied.
Larger apartments, plexes and rental houses will be more popular than
ever.
Pressures on
rentals and affordable housing will probably bring some form of rent control to
the City of Portland. This may cool
slightly, the avid purchase market for rental properties. The City of Portland will be instituting a
home energy scoring system, much like a miles per gallon for cars, requiring
sellers to obtain an energy audit and score before putting a property on the
market. This will start January of 2018.
I doubt this will deter anyone from buying or selling, but might slow things
down a bit. In general, homeowners
aren’t very price sensitive to energy costs.
So while the data will be informative, I’d be surprised to see much of a
change in consumer behavior.
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 here to help, answer questions and provide information.
