New Portland Area Market Stats

The latest market data for Portland was released by RMLS today.   Remember that history lesson from last month's stats.  In June of 2010, the home buyer tax incentive transactions had just closed, July of 2010 being the first month with no home buyer tax program for 18 months.  So now, looking to July of 2010, we see the first backward look at a normal market.  Or kind of a normal market, as there was probably a slight dearth of closed sales since so many closed in June of 2010.

In any case, now, when we look back, we see that from July 2010 to July 2011, both closed and pending sales are up.  Closed sales grew 21% in July 2011 compared to July 2010 and pending sales grew 18.4%.  That is good.  Prices though, are still down from July 2010 to July 2011, with the average price declining by 7.4%  from $297,000 to $275,100.

 Month to month though, June 2011 to July 2011 we saw a slight increase of 3% in the average prices from $267,100 to $275,100.   Sales activity from June 2011 to July 2011 is down a bit, with closed sales decreasing by 12.7% and pending sales decreasing  down 3.7%.  I'm not surprised by this decrease as we expect seasonal slowing  in the summer.  I guess we'll see similar slowing in sales activity from July 2011 to August 2011, with an uptick from August to September once folks get back from vacation and start shopping again.

We won't know we've reached the bottom of the market until we can look backwards and see improvement.  Consistently.  So for now I'll ask the question.  Does increased activity year over year and increased prices month over month constitute a hint that we bottomed out?

Check here for the full Portland area report.

Privitization of Water?!

I know there is a whole world of water politics to which I am not privy.  Let me just get that out on the virtual table.  Oh yeah, I saw Chinatown and read The Cadillac Desert.  My dad has a cabin up above the Owen's Valley in California,  and has watched Los Angeles water politics in that area for awhile.  Hydroelectric power is no longer considered a renewable energy source as the water to provide that power is disappearing.  And of course, there have long been private contractors building water treatment plants and such.

I recently read though, an article in Smart Money, Water World,  on Aqua America, which runs water treatment facilities and utilities in several states in the U.S. Wait, what?  A private company is running water bureaus around the country?  Wow.  Where have I been?  It is not a surprise that water and sewer infrasturctures are old and failing.  And cash strapped cities and municipalities do not have the resources to invest in important upgrades. What I didn't know, but might have realized if I'd thought about it, is that not only is the issue aging water treatment plants, but aging pipes.  In the interview with Aqua America's CEO, Nicholas De Benedictis, he says some cities lose 30 to 40 percent of their water through pipe leakage.  That is a lot of water to treat and not use.

Private companies like Aqua America are buying utilities from municipalities.  Yes, they increase rates.  Not only do rate increases pay for fixing the systems, but  private sector utility owners pay tax, where as utilities owned by municipalities don't.  Hmm.  I wonder what would happen if municipal utility owners raised their rates by that 20 percvent and used it to make needed repairs?  It must be more complicated than that. 

De Benedictis says about 15 percent of water utilities are currently run by the private sector.  With hard economic times for cities and towns, combined with tighter rules from the EPA, he expects this percentage to rise.  And, Aqua America also expects their business to increase from  the natural gas extracting in Pennsylvania. All that fracking takes lots of water.  Interesting though is that Aqua America's focus is smaller towns.  De Benedictis says towns of 10,000 and under are their area of expertise.  I guess there are some French firms who specialize in larger towns; Veolia and Suez.  I'll find out about them for a future post.

Prices up and foreclosures down!?

S&P Case/Shiller and RealtyTrac released some interesting stats this week. 

The S&P Case Shiller Indices showed a second consecutive month of price increases for their 10 and 20 City Composites.  16 of the 20 market areas watched showed some increase, month on month.  Detroit, Las Vegas and Tampa showed decreases and Phoenix was unchanged.  Looking at annual numbers, Washington D.C. was the only area with a positive change and Minneapolis showed the worst decline at 11.7%.  As the spring and summer are usually busy real estate months, seasonal adjustments can decrease the impression of these housing gains.    Portland shows an increase from April to May of 1.2%, but an annual decrease of 9.1%  Though I don't see it in print, I remember hearing the NPR story on this data earlier in the week where the Case Shiller folks said something like, " Hey, seasonal adjustments or not, any increase is good".  I feel the same way.  The Report

RealtyTrac, tracks, among other things, notices for defaults , scheduled home auctions and home repossessions, all signs of impending foreclosure.  Their stats show that in the first two quarters, a majority (84%) of metropolitan areas saw a drop in their foreclosure rates as compared to 2010.  At first blush this is encouraging.  Industry insiders, like me :) attribute this less to the health of the economy and more to issues of unlawful or at least questionable foreclosure practices. 

Remember "robo signing"?  Where bank employees were supposedly approving legal paperwork without actually reviewing it?  That kerfuffle resulted in a slowdown of procedure and paperwork.  So in those instances, foreclosures are down because proper procedures are being followed.  Something to celebrate, I guess. 

Oregon is a non-judicial foreclosure state, which means, as long as proper procedures have been followed, lenders can foreclose without going through a court of law.  As long as proper procedures have been followed, there is the catch.  With the securitizing of mortgages, and the frequent resale of mortgages, lenders created MERS, the Mortgage Electronic Registration System.  This is a mechanism allowed the sale of mortgages, without recording those documents in the county in which the property is located. Thing is, a non-judicial foreclosure in Oregon is predicated on the recording of transfers of titles and liens.  There is at least one court case where a foreclosure was overturned due to this exact issue.  This MERS issue is slowing foreclosures down a bit too.

So it isn't that fewer houses are subject to foreclosure this year compared to last.  The situation is more that questionable practices surrounding foreclosures have mucked up the foreclosure machine.    Though in the spirit of the comment above regarding any market increases being a good thing, I suppose any slowing in foreclosures is a good thing also.

Solar Power and Home Values

We're closing in on a full year with our "photovoltaic energy system". I call it our solar system, but that keeps being misinterpreted.  We've had a few luxurious months where we have used less power than we have generated, resulting in the sale of power back to PGE.  Hooray!  So, we are starting to be able to calculate the day in, day out value of our "solar system".  This then, leads the Realtor in me and the real estate magnate in Don, to wonder about the effect of our solar power on the value of our house.

Conveniently, the smart folks at Lawrence Berkeley National Laboratory, along with some funding for the Office of Energy Efficiency and the U.S. Department of Energy, recently concluded a study on this exact question.  Well, almost this exact question.  They looked at homes in California, 72,000 to be exact, including 2000 that had solar power installed at the time of sale.

The data was spliced and diced a variety of ways; best for you to refer to the report and summary for the particulars.  The study found pretty convincing evidence that houses in California, with solar systems (believe me, the Lawrence Berkeley Labs folks don't refer to them that way) sold for a hefty chunk over homes without such systems: nearly $17,000 for a newish and averaged size system.

Do Don and I think our system added that much?  Not quite.  California has more sun, so a similarly sized system to ours will produce more power throughout the year.  And real estate markets value different amenities differently; swimming pools in Arizona vs. Alaska, for instance.  The Lawrence Berkeley Labs study tells us how the California market values solar power...  A similar study was conducted in 2010, that looked at homes in the San Diego area.  This study arrived at a similar conclusion, still in California.

I would wager the Portland market values solar power a lot, probably as much as the California market, when adjusted for less power generation due to less sun.  We aren't selling anytime soon, so the question is a bit academic anyway.

As an aside, I've been feeling our house is a bit cooler since we  installed the solar panels on the roof last summer.  Don scoffs, but it makes since to me that something else, not our roof, is absorbing or at least intercepting, the suns rays on the most exposed face of the roof, the house just might not get as hot.  Speculation anyone?

Read the research report summary here.

And remember, the work on our project was done through Solarize Portland and the great folks at Imagine Energy.

Decision Paralysis; why I'm having such trouble buying shampoo

I am a decisive person.  I make decisions quickly and well, rarely revisiting or regretting a decision I have made.  In my work, I help other people make decisions; buyer and seller clients, agents in my office I counsel on their business, my daughter etc.  Most of you who know me, know I don't dither and wring my hands over making a decision.

So why, the, am I having so much trouble buying shampoo? 

I try to live in accordance with my values, with a practical approach.  I have few absolutes in my life and manage to find the line that works for me.  For example, while I am an animal welfare advocate, I am not vegan, and I do wear leather here and there.  But I don't need animal products in my shampoo.  And in general I buy organic when possible, but am plenty comfortable getting groceries in small town USA with not an organic vegetable in sight.

So why am I having so much trouble buying shampoo?

Up until a few months ago I had a purple streak in my hair.  It was adviseable to use shampoo gentle on colored hair.  I bought it at the salon.  It was not tested on animals, had no animal products and was expensive as hell.  I got tired of the purple streak and was freed from the designer shampoo.

So why am I having so much trouble buying shampoo?

Here are the priorities and thoughts that come into play in the shampoo buying decision (I'm sure there are more at play, but these are the obvious ones); no animal products, no animal testing, phosphate free, larger bottles as wasteful packaging drives me crazy, I want my hair to look good, I get sucked into the media message that I need special things for my hair to look good, I understand the active ingredients in most hair products are the same but for texture, color and scent, so anything will work, buying local would be good.  And then I walk in the store and see a kajillion different products.

The last stuff I bought came from the "nutrition" section at Fred Meyer.  Smaller bottles, no animal testing or products, cheaper than the fortune I'd been paying at the salon, phosphate free.   I am not fulfilled and look forward to the day those bottles (shampoo and conditioner) are empty.

I was at my Dad's mountain cabin recently and REALLY liked his shampoo; Pert all in one .  Nice big bottle, must be phosphate free as he is quite strict about phosphates up there.  And since it is shampoo and conditioner, it is one less bottle and one less product!  But Pert does contain tallow (an animal ingredient), doesn't claim not to have been tested on animals and certainly isn't located locally.  hmm.

Now you might see why I am having such trouble buying shampoo.  An associate of mine at work, who I think has great hair, tells me she uses a bar of soap for shampoo and "body wash' and uses no conditioner.  Maybe I don't need to buy shampoo at all?  Inaction, not buying shampoo, could be a decision in itself.  That Trader Joe's bar of  oatmeal soap may be just the thing.

Market Update

RMLS, our regional multiple listings service, released their statistics for June on Friday afternoon.  The numbers are interesting. 

A bit of history.  Remember that last year, the homebuyer tax credit was sunsetting and we were in the midst of closing all the transactions that had been put together under that incentive.  So for months now, the closed sales for this year have been diminished by the numbers of last year.  We are almost able to look back and compare normal market to normal market, not incentivized market to normal market.

So, as expected, closed sales were down when compared to the closed sales in June of 2010.  But...pending sales jumped by almost 24% from June 2010 to June 2011.  Wow.  And in a closer look, closed sales increased 12.4% from May 2011 to June 2011. 

Another way we look at the market is by inventory; how many properties are on the market.  At our current rate of sales, how many months would it take to sell all those properties?  It is thought that six months of inventory or less signifies a seller's market, and more than six months is a buyer's market.  June's statistics show six months of inventory, our lowest point since July 2007.  Does this mean we are in a seller's market?  Not quite, though we are seeing some multiple offers and sales prices over list prices in well priced, well cared for and staged properties in the close in neighborhoods.  I am also reminded that a major reason inventory is so low is that we, Realtors, are telling you, homeowners, that this is not the time to sell.  We could be wrong.  And, many homeowners, who bought in the last six or so years, with 100% financing, don't have enough equity to sell and buy up.  Until the housing market tumbled, homeowners sold and bought every seven years. 

Prices do continue to decline.  So the pressure we might see from low inventory is not reflected in the price increases one might expect from normal, supply and demand economics.  The average year to date sales price at the end of June 2011 for the Portland metro area was $260,000, compared to $280,000 in June of 2010.  The median year to date sale price at the end of June was $219,100 compared to $239,900 at the end of June 2010.  These numbers show decreases of 7.8% on the average sale price and 8.7% on the median sale price.

We are nearing the tine of year when we see seasonal slowing in the market as the "before school starts" transactions wane, and folks go on vacation.  There is though always ( but for fall 2001, after 9/11) a bump in the market from the "before the holidays and the end of the tax tear" transactions.  In 2010, the fourth quarter was my busiest.  You never can tell.

See the full Portland area report from RMLS.

Those Darn Party Sewers

I have written about these lovelies before, but want to keep this subject top of mind, or at least not buried below the surface.

Portland's sewer system is old. And much of it was cobbled together over the years.  In the city's close in neighborhoods, not all houses have their own direct connection to the city sewer.  Many houses then, have some sort of joint/cooperative/party line, that heads to the city main.  Many streets have NO sewer main in them, leading sewer connections to join with neighbors to get to a connection on another street.  In the past, the city required, when a line on a party sewer failed, that the "guest" on a party sewer install their own distinct connection.   In the past few years, this requirement became more stringent; requiring that once discovered (even if the party line were in good working order) the guest must install their own line.

It has been suggested that home buyers "scope" sewers as part of home inspections for five to ten years.  As with many new inspections, it can take a few years for such an inspection to become a norm in the marketplace.  "Really", a buyer might ask, "you are suggesting I pay $100 for someone to send a little camera down the sewer?".  Yes, That is what I'm suggesting.  In those early years of sewer scopes, we were only concerned with the functionality of the line, as the party sewer was only an issue when the sewer failed..  And a failed line needed work anyway, so the extra cost of the distinct connection was nominal.

There are many folks out there who bought their homes in the last ten years, diligently paid for a sewer scope, found a good sewer, and yet are in danger of having to pay for a new sewer connection.  There are also lots of folks out there, minding their own business, but who are on a party sewer with a house being sold.  Chances are 50/50 that they'll be the guest and will be required to install a new sewer connection.  Make note, if you are the "host" and yours is the dominant line, you usually are unaffected as it is the guest who is forced to leave the party.

  I had a listing this year where not only was it a party sewer, the required abandonment of the party sewer would effect a total of four dwellings on three different streets!  The City of Portland has proscribed noticing and waiting periods, but inaction is not an option and having no sewer connection is not an option (than goodness).

I had another listing where both the house being sold AND the neighbor were required to install new connections.  My seller clients were quite friendly with their neighbor (this is Portland after all).  The neighbor had been unemployed for two years and was quite financially strapped.  My seller clients were horrified that their move to their dream home would cause such a financial hardship for their friend and neighbor. In this case, my clients worked with a contractor on both sewer connections, thereby getting the lines at a slight discount, and even paid for some of the neighbor's connection...this is Portland, after all.

Also in many of the close-in neighborhoods, the lack of a city main in the street caused some folks to (way back when) pay to have a private line installed in the city right of way.  These connections are also seen to be non-conforming, and the work to make these "proper" can be quite a bit more extensive and expensive.  Many neighborhoods are affected by these issues. 

I have had transactions in Brooklyn, Richmond, Buckman, Sunnyside, Hillside and Arbor Lodge all with party sewer issues.  The Southeast Examiner had a recent article by Reuben Deumling on sewer issues, especially as it affects the Sunnyside neighborhood.  Is your sewer a party sewer?  Are you having hosting a party?  Or merely a guest?