The thing about using price per square foot

When looking at pricing of houses, many of us revert to the price per square foot to compare homes.  Sites and apps such as zillow and realtor.com prominently display the price per square foot, and it sure feels like an easy way to gauge pricing.

But here is the thing.  What square footage is being used in the calculation?  Our local RMLS requires we use all square footage, finished or unfinished.  Garages, even attached or tuck under, are not included.

Most likely, we've all seen a HUGE swing in the level of finish in basements and attics.  There are plenty of old houses with funky, slightly damp basements; best for storage, work shop and messy projects.  We've also seen lovely basements with nice stairways, egress windows, waterproofing has been done, concrete floors polished and so on.  Both these basements will show up as basement square footage.

If I'm comparing a home on a crawl space, only the living space shows in the square footage.  A house with the same above ground living space, on a funky basement, will show as much as twice the square footage, and a MUCH lower price per square foot.  Is there value to the basement?  Yes, some.  But that funky basement square footage is not worth anything near what the above ground living space is worth.

What if that house on the crawl space had a nice, attached garage; drive right in.  Laundry in the garage (instead of down those steep basement stairs), and an entry to the kitchen from the garage.  One might argue that garage space is worth more than the funky basement.  Oops.  The garage isn't included in the square footage calculation   The crawl space/garage house still looks smaller and has a higher price per square foot than the house with the funky basement.

Attics play out similarly, though in general, folks value above ground square footage higher than basement square footage.  Attics can have plenty of challenges; steep, narrow staircase, low or limited ceiling height, little or no insulation, limited outlets etc.  Many of these attics weren't meant for occupancy.  But over the years, someone started using it for storage, and then project space, and then a den or study, and then a bedroom.  These attics may not have the necessary clearance for fire safety, and the added outlets, or even bathrooms, probably weren't done with permits, and may not be to code.

So, yes, using price per square foot is an easy, handy tool.  More important though, is how the space feels to you.  How will you and your family use the space?  For some, that funky basement is perfect! Others won't ever use it, and would value that attached garage over the basement.

In any case, buyers should be careful about excluding houses from their search because of what looks like small square footage or a high price per square foot.  You might pass by the right house because of the "easy button".

If price per square foot is really important to you, your real estate agent may be able to eke out a more accurate way to evaluate homes with different basement, attic and garage configurations.  If you have more questions on this, do get in touch, I'd be glad to help.

Have you had a chance to hang out in Montavilla?

I've got two listings coming up in the Montavilla neighborhood, and thought I'd start with a bit about the area.

In 2017, Lonely Planet named the Montavilla neighborhood one of the top neighborhoods in the country to visit.  The compact commercial district, including the Country Cat, Academy Theater and my favorite, Redwood, are just a few of the businesses and watering holes that benefit the area.  The farmer's market at SE 76th and Stark makes the place quite active in the summer.   The vibrant Montavilla Business District contributes to the thriving business community.

Officially, the neighborhood boundaries are I-84 to the north and SE Division to the south, I-205 to the east, and SE 76th (with a jog to SE/NE 68th) to the west. NE Glisan Street has a bit of a  commercial district too.

The area was originally farmland, producing vegetables and berries.  Many early settlers were of Japanese descent; farming the land and taking it to Portland to market.  The neighborhood also served as a stopping point for travelers going from Hood River to Portland.  Streetcar service started in 1892.  Originally named Mt. Tabor Village, the streetcar abbreviation was Mt.Ta. Villa, which over time became, Montavilla.  That streetcar service ended in 1948.

The current Milepost 5 artists' community pays homage to the stone milepost marker P5 marking a distance of five miles to the downtown courthouse.  It is a housing community for creative folks and hosts a variety of openings, shows and performances throughout the year.

In addition to the commercial districts, Montavilla also has a fabulous park and community center at  8219 SE Glisan.  The community center houses an outdoor pool, Portland Parks Pre-school, multi-use room rentals and kids party packages.  Its a busy place!

Click here for market details in Montavilla.   I'll be listing a sweet three bedroom, one bath ranch at the end of the week.  This house is graced by an incredible Sequoia tree, originally planted from seed.  The other listing is a newer two bedroom, one bath home that will hit the market in a month or so.

And I'll post details of the listings once they are on the market.  And as always, if you have questions or want real estate advice, please get in touch.

Government shutdown and home loans for government employees

Hmm.  First, some context; most low down payment loans (and other types) require the buyer have some savings, called reserves, in the bank when the loan and purchase close.  This assures the lender, who basically owns the house because of the low down payment, some security should the buyers' circumstances change.  No one wants the low down buyers to lose their home because of a few months of unemployment, or to be thrown into a tailspin if the hot water heater and furnace happen to break at the same time.

Ironically, the government affiliated Fannie Mae and Freddie Mac loans have added in, for loans to government employees, required two months of full mortgage payment reserves, or whatever the automated underwriting program requires ; which ever is greater.  The concern is that the lengthening shutdown may affect buyers' ability to make payments. 

Home buyers with government jobs used to be considered rock solid borrowers as their employment was considered quite secure.

If you are a government employee in the process of buying, or know someone who is, be sure to check in with your lender to see if this change will affect your loan eligibility or closing costs.

If you have questions give me a call. And a shout out to Eric Newman at Guaranteed Rate for this info.

2018 Year end market stats

Our multiple listing service just released the market information for 2018.  Here are a few highlights.

The year to date median sale price was $400,000;  a 5.3% increase over 2017.  December's median sale price was $390,000, so that $400,00 clearly had some lift from earlier in the year. 

While the year to date market time for a listing was 48 days, year to date market time for 2017 was 45 days, so not much of a difference.

2018 saw more new listings hit the market, and the number of closed sales decreased by 5.9%.  Consistent with this,  the inventory calculated in months was higher every month in 2018 than the corresponding months in 2017.

This means, buyers have more houses from which to choose.  Houses are staying on the market a bit longer, perhaps giving buyers more than a millisecond to make a buying decision.  Sellers have more competition, with more houses on the market.

Looking at the change in average sale price, there are some suburban areas seeing higher than average increase.  Gresham/Troutdale saw an increase in the average sale price for 2018 of 7.7%.  Oregon City/Canby increased at 7.1% in 2018, and Beaverton/Aloha increased at 8.6%.  Oh, and West Linn/Lake Oswego, increased by 0.6%. 

If you are thinking of making areal estate move, get in touch.  I'd love to help.

Things I learned from animal trainers

Most of you know, I'm quite the animal nut.  Over the years, I've had the opportunity to attend training presentations, watch trainers in action and have used a few trainers with my own dogs.  Dog training can be a bit like parenting, but that is a different blog.

I've been struck, a few times, at how training theories or methods can be used other places in life.  Here are a few.

Train with an open hand.  Keeping a tight leash (or rein) on an animal doesn't allow them the room to grow, nor the space to learn to make their own good choices.  To reward the good choice, there needs to have been a good choice made.  And many animals will react negatively to force, restriction or confinement. 

In human life, I do believe too tight of control (on others, on projects, on goals) will have similar ill effects.  I have a bit of a rebel in me, so try to control me too tightly and I will react strongly against you.

 Living with an open hand can also seen in being giving with kindness and the benefit of the doubt.

Always keep the goal in mind.  This is more subtle than always moving toward the goal (which is  good too).  We adopted a dog who was pretty much feral.  She hadn't been properly socialized with people, and was quite fearful  (some of you will remember Dutchy).  We really couldn't, especially early on, always move toward the goal.  But we could sure keep the goal in mind.  When she first came to us, she was very afraid of Don (men).  The goal was for him to be able to touch her, and approach her.  To get there, we started with him lying down on the floor bed, or couch. So she could safely approach him.  In time she approached him, then he could pet her once she approached him, then he could lean on one arm, later, sit up and so on.  Over time she became quite comfortable with him, and loved to snuggle with him.  But we couldn't have gotten there(I don't think) if we'd just started with him approaching her. 

Sometimes there are steps we must take to prepare, that don't look like the goal at all.  Ground work and preparation often don't feel like you are approaching the goal, and can feel like a waste of time, and even humbling.  But...plenty of people can hide behind "getting ready" forever.  Always keep the goal in mind, even if you aren't moving straight toward it.

Use the power of distraction or re-direction. There are lots of reactive dogs out there; barking at other dogs on the walk, at the door bell, at the mail man and so on.  One method is to distract them from the event, so they don't react. And then, over time, use distraction less and less, so that they are tolerating the stimulus, without overly reacting.  And, for instance, if they get enough treats during the "event", they may even look forward to the event.  I used this method with a food motivated cat too.  Eva wanted to kill Clyde when we first adopted him. So I'd let her be around him for a short while, and would give her treats while he was in her presence.  Over time, she cared less about his presence, even with treats, and as they treats went away, she was still fine with him.  Over the years, she came to like him, would sleep by him and groomed him.

Isn't this kind of like finding something fun to do, that happens to be exercise?  You don't notice you are exercising, because you are having fun.

Do you notice any "life lessons" in other places in your life?

I'm not an animal trainer, and have NO education or training as such.  I've undoubtedly bastardized some tried and true training theories and methods.  These are just my thoughts and musings.

Leslie's 2018 year-end report

 In December 2017, I said we’d see a bit of easing in the market, with the median sale price increasing around 8%.  I said we’d see some agents leaving the business, and some consolidation of real estate companies as the market slows. 

I was right, kinda.  Our market as eased considerably.  We are still seeing some multiple offers; though only on properties that have been very well prepped for sale, priced properly and in desirable locations.  The year to date median price has increased at 5.3%, so I was wrong about the 8%.    That 5.3% is much closer to wage growth of 3.1% (national, local is assumed to be higher).  When housing and wages grow at similar rates, we have a much more sustainable housing market. 

We did see the introduction of the Home Energy Scores, required by the City of Portland, on homes being marketed for sale.  The price of these quickly came down from $300ish to $150 or so.  As often happens with new programs, there have been some bumps and of course, resistance.  Portland’s housing stock is pretty idiosyncratic, making standardized evaluation a challenge.  Nevertheless, buyers do now have more information about the energy efficiency of the homes they are considering.  I expect we’ll see some fine tuning to the program and over time, buyers placing more value on energy efficiency.

Voters approved a hefty housing bond for Metro ($652.8 million), in addition to funds already at play from the 2016 City of Portland housing bond ($258.4 million).  The housing crises continues, especially for those with very low incomes.  Opinions vary greatly on how to best address the houseless population with regard to how resources should be spent and what kind of housing or shelters is best.  It seems we need all the help we can get, from temporary shelters to transitional housing, construction of energy efficient permanent housing, resource centers with support services, laundry and showers and so on. I do hope we can find a path that makes a difference.  An aside, I’ve noticed lots of successful programs in Clackamas County of late…

Interest rates have crept up.  Earlier this fall, rates were over 5%.  Rising rates are a sign of a healthy economy; remember, the government was keeping rates artificially low to stimulate the housing market.  Expect more rate increases; maybe two increases by the FED in 2019.   Rates probably won’t get above 5.5%, and may dip below 5% now and then.  But remember, we had a housing boom with rates over 5%.

Buyers have more power in this market, than they have in a few years.  This might only mean they can actually get an offer accepted.  Or, they’ll be able to negotiate for more inspection repairs than in the recent past.  Along these same lines, we are seeing more “contingent offers”, where a buyer has to sell their home in order to purchase a new home.  If you’ve been sitting on the sidelines waiting for a bit more buyer friendly market, we may be there.

I am often asked what the “hot” spots are these days.  We’re seeing lots of activity in St. John’s, Gresham, Milwaukie and out by the tech companies on the west side.  These areas have desirable housing stock, and tend to be more affordable.  Certainly, Portland’s close-in neighborhoods remain desirable…if buyers can afford them.

So, for 2019; slightly slower market, with market times closer to 60 days (currently 53).  Buyers will have a bit more power, and more houses from which to choose.  The median home price in the Portland area will rise 5%.  The Portland area will continue to be a desirable place, with folks moving here from out of state.  The volatility in the stock market, and slower growth in the global market will cut reduce the number of cash sales.

I remain honored to help folks with some of the biggest decisions in their lives, and humbles 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, buying, or just curious, I’m always here to help.