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.
