New heights of energy nerdism

My husband told me the other day, he tries to limit the number of times he opens the refrigerator, in an effort to preserve the cold air.  There is a bit of context...a glimpse into my world.

I'm driving an electric car these days, and we REALLY wanted it to be truly powered by the sun.  In 2010, we installed a system with 10 solar panels, that generated about 80% of our electricity.  The electric load in our house, is plugs, lights, fridge, washer and small appliances (toaster, coffee pot) and the electricity needed to power the electronic parts of the stove and dryer.  And now, the car charger.

ImagineEnergy, who did our original system, helped with the upgrade.  We removed the old panels and inverter (and sold them to a friend), and had 30 new panels (more efficient) installed.  The panel technology has improved so much, merely upgrading the 10 existing panels would have given us a nice bump.  The load of the electric car can be hefty and the panel upgrade alone wouldn't generated enough to power the house and the car.

With the 30 panels and new inverter, we also get a fancy web interface through which to monitor our system.  The monitoring system just got turned on in late March, so we don't have a bunch of data yet, and we've not even gone a full billing cycle since installing the new panels.  But we are excited and optimistic!

The monitoring system is by Solar Edge.  I can see, today, we have generated 33.71 kWh, so far. I can see today's weather, along with the forecast. Switching to a different screen, I can see a physical layout of the panels, and which panels have produced how much power today, or this week, or month, or year. And once we have more data, there's a plethora of reports to be run. 

Portland's Home Energy Score requirement is driving more awareness of energy efficiency into the market.  Portland was one of a handful of cities benefiting from an in depth study of the value of solar power in certain markets.  In that 2015 study, solar panels were seen to add a premium of 1.97% - 3.25% (median and mean) to the price of a house.  The sales in that study were from 2012 and 2013.  I'd guess that premium, as a percentage of price, has increased since then.

If you have questions about navigating solar systems (ha ha), I'd be glad to chat.  You can reach me at 503-312-8038 or leslievjones@gmail.com

A look at Q1 2018 in Portland real estate

We receive monthly market statistics from the multiple listing service.  Looking at those numbers, a month a time, doesn't necessarily give the full picture.  Now that we've got three months of statistics, let's take a look.

In my annual report, I predicted an increase in the median price of around 8%.  Right now, looking at the percentage change of the 12 month sale price with the previous 12 months, the median price has increased 8.8% from $353,800 to $385,000 (this is metro-area wide).  I expect to see this come down a bit as the year progresses.

We are seeing the number of new listings creep up a bit.  Our inventory in months, calculated by dividing the active residential listings at the end of the month by the number of closed sales that month, has been (averaged for Q!) 1.9.  In 2016 and 2017, that three month average was 1.63.

On a similar trend, year to date listings are 3.8% higher than the same period in 2017, and closed sales are down 3.8%.  And market time, measured in days has increased 3.1% from 59 to 61 days.  Keep in mind, real estate always has a bit of a slow start in January, as many buyers and sellers are not focused on real estate through the holidays. 

While the general Portland market is slowing a tad, and prices are not increasing as quickly as in recent years, some neighborhoods remain hot.  Properties are still receiving multiple offers, and selling for well above asking price.  Anecdotally, it seems well priced properties are drawing lots of attention (as it should be), along with properties that have been well taken care of and prepped for sale.  Sellers wanting top dollar are best to put a lot of effort into preparing their property for sale, AND price properly.  An overpriced property, sitting for weeks or months will not bring top dollar.

From here, I expect we'll continue to see more properties on the market, a decline in the rate of price increase and a bit saner market for all.  Buyers, there are lots of good properties on the market in most neighborhoods and price points.  While you aren't in the driver's seat, you may be less disadvantaged than you've been in recent months. Sellers, you still have a desirable product, but you'll need to pay attention to condition and price. 

RMLS report

Get in touch if you have questions or would like additional information.  Leslie Jones leslievjones@gmail.com 503-312-8038.

The makings of a good flip

No, I'm not talking gymnastics.

The house on the corner of our block recently sold.  It was a classic situation; elderly gal had moved out several years ago.  The house went on the market this last fall.  It  was a big, old, run down bungalow in disrepair.  It had large, gracious rooms, great light and a decent floor plan, but only one bath, and that one needed work.  It was the kind of house neighbors hope will be saved, and not torn down.

In my work, I often see these houses.  And I often see the results, when the work has been done and they are ready to be sold.  The trick of doing a flip is doing good work, to maximize the value and profit of the project. Doing too much work slows the project, eats into profit and is a direct route to a different line of work.  Not doing enough work, good enough work or the right kind of work will cause you to miss the higher end buyers.

An aside, my husband can build or fix just about anything. and he has VERY high standards.  He can't do a B+ job.  he just can't.  We have never done a flip, and never will.  He'd take too long and would do way too much work, taking away any gain.

But, the folks who bought, and are currently working on the house on the corner seem to be doing a good job.  Clearly, they've done this before, and have access to crews available to work (that is a challenge in Portland right now).  They've put on a new roof, decommissioned the buried oil tank, brought in a gas line and installed a high efficiency gas furnace.  They've brought in a new electric service.  They are adding a bath upstairs, and are currently prepping the house for a new coat of exterior paint.  The prep work is being done using lead safe practises, as required by law.

They are not putting in new windows...that is expensive to do.  But they do appear to be re-glazing the old widows and fixing the sash cord/weight system so the open and close easily.

By contrast, I regularly see houses of a similar caliber where they've left the oil tank and old furnace, along with the sub-par electric service. A new coat of paint has been quickly sprayed on with little or no prep (a sure way to shorten the life of a paint job, but who cares?  Its cute for the sale. ).  Fancy bath and kitchen finishes are added to aged and failing plumbing and electrical.  Buyers and home inspectors can see right through a crappy flip, extending the market time and the lowering eventual sales price.

A good flip also addresses items sure to come up on inspection. For instance, the standard is that hot water heaters will have two seismic straps, securing the tank in case of an earthquake.  This is known, and easy and inexpensive to do.  A flip that neglects this, is probably neglecting other things we can't see.

And then there are permits.  Building permits are required for most any but purely cosmetic work.  Basically, touching electric, plumbing or structural triggers the need for permits.  There are LOTS of flips done with few or no permits.

Back to the house on the corner.  They have pulled permits.  They're using licensed and bonded crews and the people working on the house are friendly and courteous to neighbors. Yes, they are working quickly, and at times have different crews working on different parts of the house.  I know nothing of the finishes they'll be putting in, but expect they'll be higher end.  I hope they re-finish the hardwood floors, rather than laying engineered wood floors over them.

Neighborhood the neighborhood rumor mill says the house will be on the market in about three weeks.  I'll be curious to see at what price.

The company is Portland City Homes

Are you thinking of doing some fix up work to your place, or taking on a flip?   Or are you curious to see the above mentioned house when its completed?  I'd be glad to talk with you, just get in touch.
503-312-8038  leslievjones@gmail.com

The 2018 federal tax changes and Portland real estate

It was hard to miss the changes to federal tax code that were quickly enacted in December 2017.  Previous tax overhauls entailed months of committee work and hearings, which vetted out most of the inconsistencies and grey areas.  The December 2017 tax changes left more room for interpretation and fine tuning.

I don't expect to see much effect on Portland real estate as a result of the changes.

 Limiting the property tax deduction to $10,000 per year on a personal residence won't hit many of us. While we do see some property taxes over $10,000, that's pretty high value house.

The interest on home equity loans and lines of credit will no longer be deductible.  But, it is thought that if such loans are used to invest in real estate, including remodeling or adding to your existing property), that interest may be deductible  This is one of the grey areas in which we may see some rule making in the months to come.  In any case, I'm not sure that lack of interest deduction will change behavior.  And if home equity interest IS deductible for real estate (and improvement) investing, it really won't change behavior. 

I talk with many clients deciding whether to add on/remodel their existing home, or move.  My advice is always this: if you like where you are,and the finished product will be the home you want, stay and remodel.  If you want a different area, or even with work, your house won't be what you want, consider selling and moving.  Will the lack of deductibility of the home equity to do the work change this?  I doubt it.

As we saw, the tax changes seemed to hit hardest, those states with high income tax; of which Oregon is one.  High net worth folks, especially moving toward retirement, tend to avoid such states.  We may then, see fewer very wealthy folks moving here, or choosing to stay here. 

So maybe, with the combination of the property tax deduction limit at $10,000 and the hit to states with high income tax, we might see that upper end of the real estate market soften a bit.

Certainly, there were other changes to the tax code that will change household financial pictures.   So much of this depends on your specific financial situation.  As far as our local real estate market, I don't anticipate much effect. 

If you have questions about your specific real estate situation, get in touch.  I'd be glad to talk with you.  leslievjones@gmail.com   503-312-8038

2017 Year-end housing stats - Portland

RMLS just released the housing stats for 2017.

Focusing on the Portland area, our year to date median sales price was $379,900, up 9.5% from $347,000 in 2016.  I expect we'll see the rate of increase slow a bit in 2018, to something like 8%.

In 2017, we had 31,624 closed sales, down 3.6% from 32,798 closed sales in 2016.  The year has started off quickly.  I'm guessing, at the end of 2018,  we'll be similarly close.

Our year to date market time was 45 days, as compared to 42 days in 2016.  Toward the end of 2017, we were definitely seeing buyers a bit more relaxed at not having  to race out immediately to see a new listing.  Some buyers even had the luxury of seeing a house a second time, before choosing to write an offer.  I welcome this wee bit of slowing, and think both buyers and sellers make better decisions when not acting in a pressure cooker. 

And we finished the year with 1.6 months of inventory, up a tad from December 2016's 1.3 months of inventory.  This slight bump in inventory was also a welcome change, giving buyers more properties to consider.

These numbers bear out what I had been feeling.  We did slightly less business, still saw prices increase a bit.  Personally, I did 3 fewer transactions in 2017 than in 2016, but made slightly more money.

The Portland market remains a sellers' market...to an extent.   With the extreme frenzy of 2015 and 2016 gone, sellers do have to price according to comparable properties, usually have to do an amount of repairs as a part of selling, and often don't have a plethora of offers from which to choose.

We're in a funny spot, where it is a good time to buy or sell.  As the year progresses, we expect to see interest rates edge up. as high as 5% toward the end of 2018.  This increase will decrease buying power for buyers getting loans, and could put a bit of downward pressure on pricing. 

If you're thinking about making a move, or just curious, get in touch.  I'd be glad to talk!  leslievjones@gmail.com  503-312-8038.

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.