Leslie’s annual real estate report 2017

In December 2016 I said, we’d see easing of lending restrictions and consumer protection measures in lending, inventory would remain low, and the median price wouldn’t increase more than 10%. I said we’d see interest rates rise, that the small, expensive newly constructed apartments would become over-supplied, Portland would probably see some rent control measures, and President Trump would ease lending restrictions.

The Trump administration is easing some lending regulations, and pulling back on some of the consumer protections of the CFPB.  We are seeing the return of “no doc” loans; loans to those with good credit ratings and sizeable down payments, who don’t have W-2 income with which to qualify for a loan.  We’re also seeing “desk appraisals”, that is, an actual site visit and appraisal report are not done by a licensed appraiser, but rather a computer program/algorithm assesses the value of a property.  Combined, this means people who might not qualify for loans are, and property values aren’t being scrutinized.    Hmm.  I don’t love this, even if being right feels good.

Our median price increased by 9.5%.  I was right! Interest rates rose, but not significantly.  I was right! Small, expensive apartments do appear to be over built as they now offer a variety of move in specials.  The rental market has slowed a bit, with rents not escalating as quickly.

Portland continues to be in a housing crisis for low income tenants, and the houseless.  The City of Portland extended the “housing emergency”, restricting landlord’s ability to move tenants out, without a lease violation.  The City is proceeding to put together an office of Landlord-Tenant affairs.  Landlords (myself included) are wary of the city further regulating rentals.  I’d much rather see the City make it easier and cheaper to build low income housing and pursue non-conforming Airbnb “hosts”.

Beginning in January of 2018, properties being marketed for sale, in the city of Portland, will be required to have a Home Energy Score, with an assessment, done by a provider so licensed.  We’re guessing they’ll cost around $300.  Sellers will need to get the assessment and score BEFORE putting their house on the market.  “For sale by owners” are also subject to this rule, if they are to publicize their property for sale.  The score is on a scale of 1-10, and is a product primarily of the soundness of the building envelope, combined with the efficiency of heating and water heating.  Our house, built in 2003, got a score of 9!  As it is newer, it is well insulated.  We don’t have a fancy furnace, nor fancy hot water heating (though both are gas).  We do have solar.  Without the solar, our score would have been a 7.

This year’s market was a bit like that of last year, but that our busy times were not quite as crazy, and our slower time, perhaps a bit slower.  While multiple offers still exist, there are usually 2-5 offers, if there are multiples at all.  In 2015 and 2016, some houses were seeing 15 – 20 offers.  Aspirational pricing is still a problem, with sellers slow to accept the news of a slightly slowing market.  This leads to price reductions and longer market times as properties sit, and suffer from the “there must be something wrong with that one” phenomenon.

My crystal ball is still blurry!  At this writing, the house and senate have both passed tax reform bills, that are now being reconciled.  Without getting into the minutiae of the yet to be agreed upon bills, here are a few highlights.  There is talk of lengthening the time a homeowner must own their home, to claim the tax exemption (when selling) of $250,000. The rule has been one must live in the home two of the last five years, with the proposed rule would requiring a full five years of occupancy.  The other change being discussed would limit the mortgage interest tax deduction.  The National Association of Realtors projects: “If both mortgage interest and real estate taxes deductions will be eliminated, home prices expect to fall from 9% to 13%.  A decline in value as projected could mean a loss in home value of $28,130-$42,200 for the typical homeowner.”

Whatever the case, I do expect we’ll continue to see a slowing on the rate of appreciation.  Look for our median sales price to increase around 8% in 2018.    This is still healthy appreciation, and far more sustainable than even the 13.1% we saw in 2016. 

Portland continues to be the “affordable” option for the west coast, and a popular destination for people from a variety of demographics.  We’ll continue to see considerable cash purchases as baby boomers secure their retirement homes and transfer their wealth to the younger generations. 

With a slightly slowing market, we’ll see some real estate agents leave the business – mostly part time agents who have a harder time closing enough transactions to cover the costs of doing business.  We’ve seen a few mergers and buy outs of real estate companies this fall, and may see more of those, especially the consolidation of smaller companies. 

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.

Home energy scores, part two

It is still early days for Portland's home energy scoring program, taking effect January 1, 2018.  To be in compliance, homeowners planning to sell early in the year are getting the homes scored now.  There are sure to be some bumps along the way.

Here are a few random facts, ideas and thoughts.

Square footage: The home energy score is looking at conditioned space.  That is, within the thermal boundaries where there are dedicated heat sources.  Square footage in property listings includes ALL space, finished or unfinished, heated or unheated.  There will be discrepancies between the square footage listed in the RMLS and that on the home energy score.  This okay and expected.  these differences do not have to be reconciled, but are sure to drive some folks crazy.

Bedrooms:  Similarly, what it takes to consider a room a bedroom varies.  A newly permitted bedroom through the city is probably the highest standard.  Bedrooms, listed in the multiple listing service vary a lot; attics with super steep stairs and very little headroom, basement bedrooms without sufficient fire egress, a loft etc.  For the purposes of the energy scores, the certified evaluators are given some license.  If a room is being used as a bedroom, but doesn't fit the rigorous criteria of the city, for purposes of the score, it may be considered a bedroom. But...even if  the energy scorer calls it a bedroom, it may not be a bedroom for purposes of selling.  This too may drive some people crazy.

ADUs: In obtaining a home energy score for a home with a detached ADU, only the actual house need be evaluated.  The ADU does not need its own score.

Outside of Portland: The certified evaluators can do assessments and provide home energy scores outside of Portland, though this is not required.  If done, the scoring will be done using the Department of Energy's scoring rubric, not the City of Portland program,  They are quite similar.

That is it for now.  There is sure to be more information on this program as it comes into use.

If you have questions on home energy scoring, please feel free to contact me.  I've made a point to educate myself and may be able to help.  lesliejones@gmail.com  503-312-8038.

Home Energy Scores...coming soon

The City of Portland is adopting new rules requiring homes listed for sale (not just with Realtors, but in any public way; craig's list, facebook etc) have a Home Energy Score done by a certified provider BEFORE listing.  This will take effect for any new listings starting January 1, 2018.

This is an effort to give houses something similar to the miles per gallon rating we use in evaluating cars.  There is proprietary software using an algorithm somewhat similar to that used by the Department of Energy.  The evaluation is primarily of the building envelope, and does not consider appliances, nor variations in human behavior.  It does look at the efficiency of furnaces and hot water heaters.

The certification for providers is rigorous, with I believe nine providers certified to date, and more in the pipeline.  They'll be busy, getting all those houses rated by January 1, 2018.  Some providers are home inspectors, adding this to their menu of services.  Others are folks who have been doing some sort of energy efficiency work already.  Prices have yet to settle out, though it sounds that most will be charging between $200 and $300. 

Houses will be rated on a scale of one to ten, one being less efficient and ten more efficient.  Houses with scores of five or lower will get recommendations for improving the score, along with an estimate of the new score, should the recommendations be implemented.  The report includes estimates of how much energy the home is likely to use and the annual cost.

Since my husband and I are kind of energy nerds, we've already had a Home Performance study done a few years ago.  This is a more involved process, using a blower door test and other evaluation methods.  For kicks, and so I'll be familiar with the process, I had a Home Energy Score done last week.  Our evaluation was done by PDX Hive.  The process took about an hour, and they needed access to both our crawl space and our attic.

WE GOT A NINE!!!  This was just a draft as the final software product isn't quite finished yet.  Our house is a bit over 2000 square feet, built in 2003, with an average gas furnace and gas hot water heater.  Being built in 2003, we do have plenty of insulation and double paned windows.  In addition, while we have plenty of windows, their placement and size are reasonable.  We do not have air conditioning, and we do have 3.36 kW of solar panels on our roof.  Once the software is ready, PDX Hive will give me an updated score.  I've also asked for what our score would be without the solar panels, as I'm curious.

I'll blog more on this in the near future.  If you are selling your house in the new year, you will need the energy score before listing.  This is not part of the buyer's home inspection process.  Some sellers may choose to complete some of the suggested work to increase their score.  I am hopeful the providers will have an efficient way to complete a re-evaluation quickly and at a reduced cost. 

Contact me for more information, or with questions.  leslievjones@gmail.com  503-312-8038

A much needed market update!

Despite what your friends and neighbors might be telling you about Portland's active real estate market, it really is slowing down a bit.  Slowing down a bit means, the rate that prices increase is slowing, market time is getting a tad longer, there are slightly fewer sales, and slightly more houses on the market.

Here are a few numbers to help tell the story.  The year to date, median sale price in the Portland metro area is $379,900.  That is up 8.5% from September 2017, and up 10.1% year to date from last year at the same time.  Closed sales are down 3.2% year to date, from the same time last year.  Our market time, year to date this year, is 43 days.  Year to date last year was 41 days.    And inventory, (active residential listings at the end of the month divided by the number of closed sale for that month) is at 2.3 months.  Up from 2.0 months in August, and up from 2.0 months in September of last year.  Right now, prices aren't falling.  The rate of increase is declining.

The other part of the story can be seen in the price reductions on current listings.  From October 1 to October 17, 2017, in the 97202, 97206, 97214 and 97215 zip codes, there were 116 residential properties (detached and attached) that had price reductions.  Does that mean prices are falling?  Not necessarily.  Many sellers have been pricing, shall we say, "aspirationally", and not in relation to the sales data in their neighborhood. 

Anecdotally, we are still seeing a very active market in the more affordable price ranges; under $350,000.  Good houses in this price range are seeing multiple offers, and offers over list price.  In the higher price ranges, buyers have gained a bit of power in the market place.  As we near the holidays, sellers may be more willing to take lower offers, pay some of the buyers closing costs, or take on more issues that come up on an inspection. 

These numbers don't look like a crash, nor a bursting bubble.  They do feel a bit like a reality check; a reminder that buyers won't just pay ANY price. 

Sellers, if you are needing to get your home sold before the end of the year, now is the time to lower that price and get your property noticed by buyers in the market place.  Buyers, if you got tired of losing out in the busy spring, you just might find a decent house to purchase at a reasonable price.

Get in touch of you have questions about your specific property, neighborhood or situation.  leslievjones@gmail.com   503-312-8038.

The RMLS report.

Change

I'm pretty good with change, or at least I like to  think so.  My work is about helping people with change.  Almost by definition, people buying real estate are in a state of change.  Minimally, buying or selling an investment property is a state of financial change.  Buying or selling an owner occupied property is a pretty big change.

For some, buying or selling is the change itself; moving.  But for some, the real estate transaction is both a result of change, and the change.  Many real estate transactions start with a life change.  Some life changes are happy: marriage, cohabiting, birth of a child, new job.  And some life changes are less happy: death, divorce, financial hardship.

Physicists think of Newton's first law of motion: an object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.  In our personal lives we often hear the advice not to make any big changes after a large event in our lives. hmm.

I work in an industry full of change. Technology, interest rates, housing trends, environmental changes, government regulation, climate change, political climate and many more factors effect the real estate business.  We are also an industry that is a target for disruptors.  Just as the taxi (Uber, Lyft and car sharing) and hotel (air bnb) industries have been disrupted, there are LOTS of innovators and entrepreneurs trying to figure out how to disrupt, or get a piece of the real estate industry.

Lately, there has been a ton of change around me.  Any one thing isn't so big.  But wow.  We have a new agent services coordinator at our office, we have a new (returning) leader at RE/MAX equity group, RE/MAX is doing a big re-branding this month (which means we'll be changing logos and marketing materials).   My yoga studio closed, my personal trainer is moving out of state, my daughter is moving out, we have two new tenants in our rentals and so on.

Taking a page from Newton's book, I'm planning to harness the energy around all of this change to make some changes myself.  Resisting change just might be the "unbalanced force" of which Newton speaks.

Do you smell smoke?

Our sale agreement is eleven pages long, with options for a variety of addenda that can make it much longer. 

One of the important things the sale agreement says is: at the earlier of possession or closing date, the dwelling will have one or more operating smoke alarms, smoke detectors and carbon monoxide detectors as required by law (see http://www.oregon.gov/OSP/SFM/).

We all pretty much know and agree that smoke alarms and detectors save lives.  But many of us  have gotten a bit complacent keeping up on current some alarm/detector laws, and on keeping our actual devices up to date.  MANY real estate transactions get bogged down and slowed down while the correct devices are negotiated and installed.

Sometimes the issue comes up on the home inspection.  Sometimes an appraiser notes a missing device, and sometimes a sale closes without anyone noticing a missing alarm or detector,  EVEN THOUGH BOTH PARTIES SIGNED THE AGREEMENT SAYING THEY’D BE THERE.

The City of Portland has its own smoke and carbon monoxide detector rules, as distinct from the State of Oregon.

Anyone looking for a business idea?  I think there is market for the following service:  be familiar with the prevailing code, perform an inspection of  a property before it goes to market or sometime in the inspcetion process, and update or install the required devices.  Inventory woud be inexpensive.  There would be some sort of inspctor or contractor's license involved, and probably a chunk of liability insurance.  Oh, and putting seismic straps on water heaters is another service often needed, that can be inexpensively done.  Anyone?

June Market Stats

RMLS just published the stats for June, 2017.

We've been feeling a bit of slowing in the market; its been discussed 1n Realtor facebook groups and in offices around the city. These new numbers show slight slowing, but not much.  Yes, there is usually some slowing in the summer, while folks are busy vacationing.  Comparing to previous years normalizes for seasonal changes.

Our inventory, which we count by the number of months it would take to sell the current inventory at our current rate of sales, is 1.6 months.    This is every so slightly up from 1.5 months.  It is thought that a balanced market, favoring neither buyer nor seller is somewhere around 5-6 months.  Clearly, we've got a way to go.

Our market time, the average number of days it takes to get a pending sale, is 38 days. This time last year, it was 48 days.  That's pretty quick, as this includes sale fails and over priced properties.

Our year to date median price is $375,000, as compared to $339,000 year to date at this time last year.  Year to date closed sales are indeed down 3.9%.

What does it mean?  It means the market is good.  For sellers, you can still get a reasonably quick sale on your property at a good price.  But don't count on a frenzy driving the price up far above comparable properties in your area.  Sellers often hope for that "California buyer who will pay over the value".  While folks from out of state may have an amount of money to spend, and find our properties reasonably priced, they too will look at neighborhood values.  For buyers, things are easing a bit.  You may be able to buy a property at or even slightly below the list price.  And we are seeing some contingent offers accepted (where a buyer must first sell their current house before being able to purchase a new property).

If you have questions about the market, or want more information.  Please get in touch. leslievjones@gmail.com  503-312-8038.

Some ways to think about investment property

In addition to owner occupied housing, I work with a few folks investing in residential real estate.  No, these are not huge conglomerates buying up large apartment buildings.  My clients are primarily buying single family homes, or multiple units, usually up to four units.

Different people invest for different reasons, have varying resources (time and money), and differing investment goals.  Even the financial goals can vary. Yes, everyone wants some return on their investment, but for some a longer slow growth is fine.  For others, access to some tax deductions are the priority.  I'm not delving into the financial side here.  If you'd like to talk about your specific situation and investment priorities, I'd be glad to do so, one on one.

Aside from financial, how do people decide what kind of property to buy?  Should you buy the most you can afford, either in price or number of units?  Newer?  Older?

The first decisions, I think, are if you'll be managing the property yourself, or paying a property manager.  And if the place needs some work, will you be hiring that out, or doing (what you can) yourself?  These questions lay the ground work for what I think of as "the capacity" question.  That is, do you have time and room in your life to take on managing another thing?  If you lead a busy life, what are you going to stop doing, in deference to your new investment? If you'll be hiring things done, perhaps a newer property, in better repair might be best.

A lot of investors favor multiple units, as even with a vacancy here and there, you'll still have income.  With a plex, usually comes more turnovers (management time or fees), and sometimes intra-tenant disputes.  Yes, sometimes landlords can feel like parents.  We had tenants who squabbled about every little thing; who took the garbage cans down to the curb, unhappiness at the shared back yard.

 In general, a plex will always be investment property. when it comes time to sell, you'll be selling to investors, and dealing with whatever the current investment and rental climates.  Changes to tax structure and rental housing laws can affect your investment.

Some folks buy only single family rental houses.  These tend to be more simple to own, and often can have longer term tenancies.  In addition, when it is time to sell, a bit of spiffing can turn that rental into a" must have" for a first time buyer.

I'm working with an out of town investor right now,  who has been grappling with these questions.  For a remote landlord, professional management and simplicity can be important, so they're leaning toward a single family home.  Earlier in the year, I sold a four plex to local clients.  It was their first investment property, so they were thrilled to find a property in good repair, with rents at, or close to market, and fully rented.  They'll be managing it themselves, but having things pretty well squared away, was a good way to start out.

When Don and I were in a buying mode, we looked for things that needed work.  Don has crazy construction and mechanical skills (and really enjoys it) so it was a great way to add value.  And managing our rentals (I'm not a property manager, and don't manage other people's rentals) isn't all that different from my regular work.  We also liked vacant properties so he could get in there and work, and then, we'd find tenants.

One plan doesn't fit all.  Part of investing is very personal, and should mesh with your skills, risk level and capacity.  Our time is a valuable resource, pay attention to how you want to spend yours.  Get in touch if you have questions about investing in real estate.  I'm always happy to talk.  Leslievjones@gmail.com  503-312-8038

Rats and Mold: the glamorous life of a realtor

Or the other title might be, Welcome to Portland.

The reality of urban living is that rats are everywhere, ideally everywhere outside.  Our temperate climate, plentiful restaurants ( and dumpsters), high backyard chicken population and so many people feeding birds and squirrels, make Portland a destination resort for rats.  As a matter of fact, a study showed that Portland rats are happier and healthier than New York rats.

So what to do?  Stop feeding the birds and squirrels, don't feed your pets outside, don't have chickens, pick up your dog's poo promptly, be sure your crawl space (if you have one) is well sealed, but for screened foundation vents.  If you have a basement, don't keep food nor yummy garden supplies down there.  If you do any backyard composting, use a sealed composter.  Be sure your attic doesn't have any accesses for rats.

Once you have rats, get a good, local pest company out.  Rats have rather predictable behaviour, and a knowledgeable pest company can save you lots of time, money and anguish.  Most likely, they'll do both some trapping and some baiting, and will have to come back for follow-up visits.  Invest in the follow up visits.

And the mold...
In general, Portland does not often get the scary, toxic, black mold that was alarming folks several years ago.  That stuff grows in damper and warmer climates.  But we do get mold, and folks can have allergic reactions to it.  Most often, we find mold in attics, and sometimes in basements.  Mold is usually caused by poor ventilation.  A well insulated attic will have soffit vents at the bottom of the roof line, and roof vents toward the upper part of the roof.  This allows air to come in the soffit vents and go out the upper vents.  In addition, bathroom, kitchen and laundry room fans should have their own roof vent or opening, and be directly vented there.  Use your bathroom fan when you bathe; best if you have a timer on it so it continues to run at least 15 minutes after you bathe.  I've been told that through our cooking, bathing, breathing and laundry, we each create about two gallons of water vapour a day!  The more of that we can direct out of the house, the better.

Finished basements can also be a place where mold grows.  Basements are, after all, a hole in the ground.  And in Portland, Oregon, a hole in the ground can be pretty damp.  Often, in finishing a basement, walls and flooring can trap the moisture that naturally comes through the concrete walls.  Before finishing a basement, , do as much waterproofing as possible.  As part of the finish project, look at ways to leave space for air flow behind walls and under floors.  And if you know of a damp spot, consider leaving that unfinished.

If you're having some of these issues, er, I mean if you have a *friend* with these issues, I'd be glad to suggest a few contractors and tricks that might help.  leslievjones@gmail.com  503-312-8038.

This cool listing

I get to list all sorts of houses in my work.  I love the variety, and the variety of people who are drawn to the different properties.

This spring, I've listed a big fixer in NE, a sweet little ranch on Mt. Tabor, a classy ranch in Reedwood,  a fab condo on SE 44th and Division, and a big traditional beauty in Hawthorne.  Now, I've just listed a sweet bungalow in Roseway (think where NE Fremont crosses NE Sandy).  Click for a map of a few good spots.

The sellers are friends of ours, so I've seen this house over the years (didn't we play Cards Against Humanity once at that dining room table?).  With lots of hard work; packing away stuff, cleaning and prepping, I think the place looks great!  

One of the sellers is an artist and furniture maker.  He has done some truly beautiful work here.   The kitchen was re-done with some incredible finishes:

That backsplash is subway style marble with racked glass details.  The cabinets are maple veneered apple ply and zebra wood.  And the counters are stainless steel and zebra wood.

The master bedroom has custom built-in dressers and bed of Wenge and reclaimed Honduran Mahogany. The ceiling is woven maple.  Plus there is a walk-in closet built with cherry wood.

Then there's the master bath with a copper (!) shower and slate floor with radiant floor heat. 

Oh year, and lest I forget the dining room with bamboo floors and traditional built-ins:

There's lots more; photo voltaic solar, on demand hot water and a high efficiency furnace.  The back yard has a deck (with wiring for a hot tub), outdoor shower, grill shack and bike shed.  

I enjoy every property I list.  But this one, has SO many cool features and so much whimsey.  I feel like we need more whimsey these days.  I'll be holding this open on Sunday, May 14th from 12:00 noon to 2:00 pm.  3207 NE 71st Ave.  $449,900. Two bedrooms, two baths, plus bonus room and partially finished basement.  Come see me!

Latest Portland Market Stats

Hmm.  I've been feeling like the market has slowed just a tad, and the latest stats from RMLS, released this week, may back me up.

All of the year to date numbers, that is, comparing April 2017 to April 2016, show slowing.  New listings are down 7.9%, pending sales are down 10.0 %, and closed sales are down 15% .

Inventory crawled up a bit, from 1.3 months in March 2017, to 1.7 months in April 2017.  April 2016 had 1.4 months of inventory.  Remember, this is how long it would take to sell all the properties on the market, at the current rate of sales. The 1.7 months of inventory is still VERY low inventory.  We consider a balanced market, when neither buyer nor seller have an advantage, to be around 5 or  6 months.  We're a heck of a long way from there!

Prices are still going up; comparing the median price of homes sold in the 12 months ending April 30th 2017, with the median price of homes in the twelve months preceding April 2016, we have seen an increase of 11.6%,  Market time is shortening; 42 days on April 2017, down from 58 days in March 2017.  Increasing pirces are often attributed to a shortage of inventory.

What are the factors that could be at play?  Elliot Njus, at the Oregonian, attributes the slowing to a lack of inventory.  But our inventory is a bit higher than last month, and higher than it was last year at this time.  Slightly increasing interest rates?  Political unrest? Rent stabilization measures by Portland and Milwaukie?

What's to come?  We usually see a bit of slowing in the summer, Its so gorgeous here in summer, I feel like a significant percentage of buyers and sellers are vacationing at any given time.  I expect that will be the case this summer too.  That will mean fewer houses on the market, and fewer buyers looking.

If you have questions about the market, or are thinking of buying or selling, give a call, text or email.  leslievjones@gmail.com 503-312-8038.

That rent control debate

My not unbiased take on the X-Ray Rent Control debate held last night at the Alberta Rose Theater.

First off, in general, I am not a Jefferson Smith fan; something about anger management and a date rape accusation.  But, he did a very good job as moderator of such a hot button topic. 

As you might imagine, the room (Alberta Rose Theater) was about 2/3 pro-rent control to 1/3 anti.  Tenants and tenant’s rights groups were out in force,  I’m not sure why landlords were so under represented.  So, lots of landlord bashing, and a strong sentiment that housing is a basic right, profit from housing wrong and that people should be able to live where they want in the kind of housing they want.

I’m not sure about housing as a right.  We do live in a capitalist society. Housing does cost money.  Our economy is set up such that the majority of housing is owned and provided by private entities.  Those owners take financial risk and contribute significant financial resources to own or develop housing. That is just plain reality.  Right, wrong, good, bad, it just is.  Similarly, different neighborhood and different types of housing vary in price.

I was rather appalled at the disrespect shown, even by “pro” debater Margot Black, and Commissioner Eudaly.  I don’t think eye rolling, grimaces and thumbs down signs are appropriate in a debate.  And I didn’t think Commissioner Eudaly (remember, that is how we are to refer to her) should have taken question time to make a speech.  Doesn’t she have enough of a bully pulpit?  And wasn’t that question time for people to be heard?  And of course a good amount of hisses, talking over, etc. 

There was a fair amount of mis-information.  Margot Black, with Tenants United, gave many an impassioned speech, one talking about how we have no rent control and landlords can raise rent 100%.  Last I checked, we’re under a 10% cap, have lost the “no cause” eviction option, and can, under certain circumstances, be required to pay thousands of dollars to tenants we want to move out.  That kinds feels like rent control, to me.  She was not corrected.

Both debaters were pushed to cite examples of housing markets they thought were working well.  Gerald Mildner (anti) believes in no rent control, and thinks bringing more land into the urban growth boundary, would address some of the supply issues, thus driving down costs. He, when pushed, gave Atlanta, GA as an example of a more balanced and healthy housing market (note, healthy does not mean hugely appreciating).  Margot Black cited Vancouver, BC.  And a questioner cited Amsterdam.  No one mentioned that housing markets in other economies will behave differently.  For instance, real estate finance is VERY different in Canada.  How their rental market acts is also bound to differ.

Landlords seems to be separated into two groups; large, corporate non-local owners, and local slumlords.

The “pro” argument was about stabilization, both of rent and communities and neighborhoods.  There are varying numbers showing the in migration to Portland, and some mention that stabilization does nothing to house all the folks moving here.  Margot Black failed to provide any provision for housing all those people.  The focus was on protecting and stabilizing those already here.

I was surprised at, what I heard as, xenophobia.  Portland first can sound a bit like America first, but somehow Portland first is cooler.  I don’t have numbers to back it up, but I’ve had the sense that a good amount of Portland’s diversity is from the recent surge in folks moving here.  So, I hear Portland first as perhaps a bit racist.  And yes, the room was pretty white.

There was some talk, and concern for vulnerable populations, elderly, mentally ill, addicted, LGBTQ etc.  I think all agreed, pro or anti, that these populations can be more greatly impacted by a rapidly appreciating housing market.

Talk of rent control focused on limiting rent increases, limiting deposits and limiting landlord profits.

What I should have asked is this, “We bought our properties long ago, we have aggressively paid down our mortgages (that’s money not spent on vacations or other luxuries), we manage them ourselves, and do much of the work on them ourselves, including yard work.  Are we not entitled to greater profit than someone who bought at 2-3 times the price we did, carry higher mortgages, pays a property manager and pays for all maintenance and improvements?”  I don’t view us as making our money at the expense of our tenants, but rather making our money through diligence and hard work.

 

The housing crisis in Portland, and other cities, is a huge, multi-faceted problem.  I do believe landlords, developers and real estate agents do need to be part of the solution.  We need many solutions.

I can see bringing more land into the urban growth boundary (and creating more neighborhoods like Orenco Station, a walking neighborhood with good access to public transportation and close to employment).

I do think we need to incentivize development of affordable housing, and ease some development costs for affordable housing.

I would be open to an annual, per unit fee on rentals to go to a fund for low income renters.

I don’t mind a cap on rent increases during a tenancy. 

I might be okay with the 90 day noticing for no cause evictions and rent increases.  

I’d love to hear other thoughts.

What if the seller leaves a mess?

This is part two (of two) on how clean a house should be when the buyers take possession.

It can happen that a seller leaves a house an absolute mess; trash and debris, old paint and chemicals in the basement or garage, rubbish in the yard, old food in the fridge, and so on.  This is NOT how it should be.  Every once in awhile, in a competitive situation, and if the buyer is planning to have a bunch of work done before moving in, a buyer will stipulate in an offer, that the seller may take what they want and leave the rest.  This is an exception.

While some offers contain the provision for a walk through of the property prior to closing, our standard sale agreement does not provide for this, and the closing is not subject to the buyer's satisfaction with the property before closing.  AND, the  seller wouldn't yet have vacated the property, so a buyer walk through wouldn't show the what the property would look like after closing.

So, what remedies are available to the buyer?  If the seller merely ran out of time, the buyer might agree to get the house a day or so late; giving the seller time to clean it up. The seller must be a willing participant in this scenario.

Sometimes the buyer's and seller's agents will combine forces to deal with the situation themselves, or one or the other of them will deal with it.  This is the glamorous side of real estate; you know, hauling some one else's rubbish up from a creepy basement, or cleaning spoiled food from a refrigerator.

Often, in these cases, the seller is not a willing participant.  The buyer may be stuck dealing with it themselves, and would use the dispute resolution systems to recoup their cost. This most often would be a small claims court procedure; no lawyers and pretty quick.

Having a seller leave the property in less than good condition is not how  we, as agents, want the transaction to end; leaving a sour taste for everyone.  We set expectations early, and offer a variety of resources to help a seller vacate on time and properly.  We're also realistic with buyers, and encourage all buyers to give themselves at least a few days between occupying their new home and vacating their previous abode.

Those market stats

RMLS released the February numbers this week, and they look a bit mixed.   By mixed, I mean, busy, but not the craziest we've been.

I tend to put to most stock in looking back to the same month of the previous year,  as this helps normalize for seasonal slowing and surging.

So, when compared to February 2016, our pending sales are down 15%.  That is significant.  And closed sales are down 7.9%.  It's taking 45-60 days in escrow to get a sale closed, on average, so maybe some of that slowing can be attributed to the January snowpocalypse.

We're at 1.9 months of inventory in February. Meaning, at our current rate of sales, it would take us 1.9 months to sell everything currently on the market.  February 2016 was 1.8 months, a barely discernible difference.

In looking at the percentage change in the 12 month median sales price, compared with the previous 12 month period, we see a median sale price of $350,000 as compared to $310,000.  This early in the year, I prefer the rolling 12 month numbers as year to date calculations don't have  much meaning.

And lastly, our market time is a tad longer 62 days for sales closing in February 2017, as compared to 60 days on the market, for sales closing in February 2016.

Out in the market, it feels kind of like those numbers show.  We're still busy.  Buyers are out in force, and making aggressive offers.  But it doesn't feel crazy, for which I am thankful.  Perhaps we're all learning how to be in this kind of market.  Maybe listing agents have learned how best to communicate with regard to offer review timelines, and maybe buyers, and their agents are accustomed to offer deadlines, multiple offers and needing to offer highest and best offers?

Whatever the case, I welcome this feeling of sanity, while being busy.

See the full RMLS report.

How clean?

After all the flurry of buying and/or selling a house, as closing and moving nears, I am often asked, how clean the house should or will be.

In the early stages of a real estate transaction, we negotiate both the close date, and the possession date; that is when the sellers must be out of the home and the buyers are entitled to the keys and possession of the property.

Even super organized people, with the best of intentions, can come up short on time at the end.  And often what "gives" is condition in which the house is left.

The sale agreement is pretty silent on this, saying only," Seller shall remove all personal property (including trash and debris) that is not a part of this transaction, and deliver possession of the property to the Buyer...".So this basically says all the "stuff" needs to be gone.  From this, we have gotten to the "standard" that a property should be "broom clean".  That is, the seller need not have done, or hired, a deep cleaning, but the place should be swept up and empty.

The reality, is the condition in which properties are left varies greatly.  Some sellers take great pride leaving their property sparkling and clean for the new buyers; either hiring professional cleaners or doing a spiffy job themselves.  Many sellers do a fine job of removing all the "stuff" and doing a quick wipe down of surfaces.  And, as you might imagine, some sellers leave all sorts of messes.

While you might generalize about pricier properties being left in better condition, you'd be wrong.  Time pressed and inconsiderate sellers are found across all price ranges.

And whether we are representing buyer or seller, we try to set the expectations of how a property should be left.  But moving is hard, and the cleaning comes at the very end.  Sometimes buyers are greeted with a mess, and given the option of taking the property as is, or waiting a day or so to give the seller a chance to clear it out.  And sometimes real estate agents, representing buyer or seller, will pitch in to make sure a property is at least broom clean.

My advice, whether you are a buyer or a seller, is to allow more time for cleaning and moving (in or out) than you think you'll need.

See Part 2 next week for information on the remedies available to the buyer.

Some thoughts on "rent control"

So here is the thing about the “rent control” proposal recently adopted by the city.  The one that has us paying relocation costs for tenants if the rent is raised over 10% per year, and if tenants are given notice to move for “no cause”.

I work in the housing industry, both as a Realtor and landlord, along with volunteering for and contributing to community development groups.  Through my hard work, I have made decent money in the housing industry and am glad to give some back and be a part of housing solutions.

You know the argument that says we can’t change PERS, even though it’s killing our state budget, because public employees made the choice to forgo higher salaries in the interest of the pension? The same could be said for landlords.  My husband and I made the choice to forgo evenings and weekends, affording vacations, investing in pensions etc, in the interest of our rental properties. We invested in real estate under non-rent control rules.

Now, the rules under which we entered into being landlords, are being changed by the City of Portland, and perhaps the State of Oregon. 

We work hard and strive to be good landlords, are responsive to repair issues and requests, are understanding when a tenant needs to pay late here and there.  We’ll move the rental due date if a tenant’s pay schedule makes paying on the first hard.  Only in the past few years have we raised our rents during tenancies, and started doing so to not get caught with low rents should rent control come along.

Renting out one’s property is a bit like letting someone live in your bank account.  Take properties we have invested lots of money and time in, and hope the tenants don’t mess it up.  Yes, this is our choice.    Much like the PERS employee who gets the delayed gratification of a pension over higher current wages.

I want control of my properties.  I want to be able to use a no cause eviction if I need to. 

I would be willing to pay an annual, per unit fee, into an emergency housing fund, for low income tenants.  I’m fine with the 90 day noticing rules and the cap on rent increases above 10%.   I don’t quite understand why I should pay moving costs of a high earning tenant, because I want control of the property I own and for which I have sacrificed.

Recent Market Stats

RMLS released their numbers for January 2017 earlier this week.  As you might remember, January was a bit of a funny month, with all that winter weather.  We see some effect of the weather in the numbers.

But first, inventory remains quite low, at 1.7 months.  That means, at our current rate of sales, it would take 1.7 months to sell all the properties currently on the market. We started 2016 with 1.8 months, and 2015 with 3.4 months.

New listings in January were actually up from December (no surprise as many folks don't want to market their property during the holidays),  but were down 12.2% from January 2016.  Pending sales in January 2017 were 11.3% cooler than January 2016 - I think this is at least in part due to the winter weather and road conditions.  Similarly, closed sales were down ever so slightly from January 2016, also probably due to weather, as title companies and even county recording offices were closed a few days in January.

Looking at the percentage change of the 12 month median sale price, compared with the previous 12 months, we see a 12.9% increase from $309,900 to $350,000.

Market times were a bit longer in January, that darn weather again. Area wide, houses that sold in January, were on the market an average of 58 days.  But some of Portland's hotter areas saw shorter market times, with North Portland at 28 days, and Northeast and Southeast Portland at 49 and 50 days respectively.

Anecdotally, the market is quite busy.  We're right back in multiple offers, with selling prices well above list price.  If you're thinking of buying, get in touch so I can give you some tips on buying in a seller's market.  And if you're thinking of selling, I'd love to help you navigate the process.

Committing to a lender

 I have written before about the importance of working with a reputable, local lender.  We are still in a seller’s market, and who your lender is can affect whether or not your offer is accepted.  A local lender understands the mores of our real estate market, knows the ins and outs of buried oil tanks, party sewers and radon. 

Many buyers really want to shop for a lender and a loan.  The Consumer Financial Protection Bureau has taken steps to make comparing loan programs and lenders more approachable. 

If you are planning to start the home buying process, talking with a Realtor and getting started on the loan process are good first steps.  These days, sellers and their agents expect an offer to purchase be accompanied by a pre-approval letter.  This letter states the buyer has submitted the necessary paperwork, the file has been through underwriting and has been approved for a loan at a certain amount.

In the past, some buyers have gotten pre-approved, but waited to really shop for a loan until their offer has been accepted.  As the lending process has become more complicated, and closing timelines have lengthened, it has become important for the actual loan file for a buyer, on a specific house, to be started right away.  The buyer really doesn’t have a few days to talk to potential lenders, submit paperwork to a variety of places and make a choice.

The time to shop for a loan is BEFORE your offer is accepted.  In Oregon, the standard forms Realtors use now bind the buyer to the lender who provided the pre-approval letter that got the offer accepted.  Switching lenders requires seller approval, and can put the transaction in jeopardy.  Switching lenders or loan programs in the middle of a transaction makes the buyer look flakey and causes the seller and listing agent to question the buyer’s ability to perform. 

A real estate transaction is a complicated process with various stages of negotiation.  Any delays put the buyer at risk of not performing by the close date, leaving the buyer at the seller’s mercy when asking for an extension of a close date.  Delays can also cause a buyer to lose their loan lock, and perhaps push them to a higher interest rate.

So, shop for your lender and loan program before you start making offers.  Compare, not only, interest rates, but also fees.  A good lender will help you evaluate different packages; does it make financial sense for your situation to buy down the rate?  Is minimizing the down payment a priority, or is keeping the monthly payment low more important?  Is the lender familiar with the market in which you are buying?  What are their strategies for getting the appraisal back in a timely manner?  Where is the underwriting done?   That on line lender may look like a great deal, but if they can’t get the loan closed, and you lose the house, that great deal isn’t so great any more.

I'm glad to answer questions about lenders and the loan process, along with queries about the real estate market in general.