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.