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