2015 stats from our multiple listing service

RMLS released the December and 2015 year end stats this past week.  For anyone working in real estate, selling, or trying to buy a house, none of this will be startling news.

Housing in the Portland area is in short supply; both for rentals and home ownership.  The number of houses available for purchase, at our current rate of sales, fell in December to 1.2 months.  This is the lowest inventory since we began keeping track in 1999.

At the same time, our average sale price (Portland area wide) rose 6.5% in the 2015 calendar year, from $333,000 to $354,500.  The average sale price in North Portland rose 14.8% .  Northeast and Southeast Portland average sales prices rose 8.3% and 9,0% respectively.

The number of days a house stayed on the market fell from 70 in 2014 to 54 in 2015.  In high demand neighborhoods, we are seeing houses sell in just a few days.  While the average days on market in some west side neighborhoods; Lake Oswego/ West Linn and Tigard/Wilsonville are at 81 and 70 days respectively.

Activity on the financial markets indicate possible increases in interest rates.  But for the time being interest rates are staying enticingly low.

This morning I'm off to show a house to some first time buyer clients. They have written countless offers, well over asking price, to the top of their price range. I continue to be amazed at the enthusiasm and fortitude of buyers in these market conditions.  I sure wish we could bring more houses to the market.

And for the record, an amount of this real estate activity is spurred by folks moving in from out of state. In my practice, those people have been mindful people, moving here to be near family.   Indeed, development is making its mark on our neighborhoods.  Keep in mind, most often, folks selling to developers and investors have been long time residents who are benefiting from the money. Some of my seller clients have used such funds to pay for a kid's college education or to retire from public service.

Please give me a call if you have a house you've been considering selling; rental, family house no longer in use?   Someone out there really wants it.  Thinking of buying?  Buying could actually be easier than renting.  Give me a call.  Considering a remodel project and want some input?  Give me a call.

Read the RMLS Portland Area Report

Leslie Jones 503-312-8038
leslievjones@gmail.com

That year end real estate report

Well, boy were my projections for 2015 off.  Last year I said, “For 2015 I predict an amount of the same, but with a few more houses on the market.  So, slightly increasing values (I’d love something like 5%), slightly increasing interest rates (to 5%?), and slightly increasing inventory.  I think we’ll see a larger variety of loan products as lending eases a bit.”

Instead,   We saw the average sale prices increase as much as 13.5% in North Portland, and 8.3% and 7.7% in Southeast and Northeast respectively.  Our inventory shrunk to less than two month’s worth, for most of the year. Interest rates remained low, and sometimes dipped even lower.  We saw more multiple offer situations and prices driven quite high by emotional, “gotta have it” buyers.  We did see a larger variety of loan products available, giving buyers more choice.

But the big story this year is with regard to our rental market.  Often, pre-crash, an active ownership market (people buying and selling to owner occupy) meant a soft rental market.  Instead of renting, folks are buying.  This year, we have had both, with a vengeance.  The rental market is so tight, rents have escalated sky high, and the prices on multiple unit properties have increased accordingly. Long time landlords are selling off their rentals and getting good prices.  Many out of town investors, attracted to our rising rents and tight market, are jumping in.

Wholesale evictions and exponential rent increases led the City of Portland to declare a housing state of emergency.  Through this, required notice times for no cause evictions and rent increases over 5% were extended to ninety days.  This is a small piece, slowing rapid fire eviction and rent increases to give beleaguered tenants a chance to catch their breath.

The CFPB Consumer Financial Protection Bureau issued new rules that took effect on October 3^rd, furthering borrower protections with regard to loan costs and fees.  These rules, commonly called “Know Before You Owe” assure borrowers ample notice and disclosure when the terms of their loan changes beyond certain thresholds. This is a good thing.

As for my 2016 prediction:     

Seriously though. We’ll see more of the same; tight inventory, with not enough houses to satisfy demand, slightly rising interest rates if the FED makes their move and slightly longer close times to accommodate the new CFPB regulations.

We’re seeing some rumblings and action being taken by county tax collectors in efforts to include in the tax rolls, “omitted property”.  That is, improvements that have been made to a property, but not included in their assessed value, such that taxes aren’t being collected on the improvement.  For instance, you remodeled your kitchen and baths, and finished your basement into a family room.  But your tax assessment is on the house, without those improvements.

When assessors find omitted property, they notify the owner and add the property to tax rolls. The law allows them to assess the property in previous years as well: up to five years in Oregon.  Oh joy.  

Some of you took me up on my offer of radon test kits.  I hope you all got low results.  I do have a few more kits available should anyone else want to test.

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 glad to answer questions and provide information.

Energy, money and the sun

Great news!   We finally have a definitive study showing the market value of solar photo-voltaic installations in Portland!  Lawrence Berkeley National Laboratory conducted a study in conjunction with appraisers to establish the value of  PV installations in these market areas:  San Diego Metro area; Gulf Coast of Florida;Raleigh metro area (NC), Portland and Bend metro areas (OR) and the southeast portion of Pennsylvania.

From the study, the average premium paid for a house with a photo-voltaic solar installation was $10,600,   Interestingly, houses with solar were seen as taking longer to sell, and it was noted that " the market might be inflating prices based on green cachet, which would occur when additional value is placed on green energy items that are scarce in the market".  This study was looking at sales from 2011 - 2013.  I'd guess if they looked at sales in 2014 and 2015, we'd see a higher premium and quicker sales.

We've long struggled with valuing houses with solar installations, and appraisers were hesitant and or unwilling to assign any value to solar installations in the absence of good data.  Now we know.

read more about the study here

Portland's upcoming rental rules and real estate transactions

I think most of you know by now, that the City of Portland declared a housing state of emergency, allowing for temporary rules with regard to no cause evictions and rent increases.  Portland has been focusing, for awhile, on homeless issues.  Instituting rules with regard to landlord/tenant issues is a new direction.

Portland's rental market is so tight, that renters, given only thirty days notice to vacate, are challenged to find a new rental.  And some landlords have been using aggressive rent increases as a way to "encourage" tenants to move.

In short, the City Council's new rules require landlords to give tenants 90 days notice when raising their rents 5% or more, and in the case of "no cause" evictions.  Landlords will still have the ability to evict tenants for "cause, if the terms of the lease or rental agreement have been violated, and may raise rents once annually with a less than 5% increase.  These rules take effect November 14th, 2015.  I believe they will be in place for one year, unless extended by the City Council.

 

In general, I'm quite supportive of these rules.  There are few instances in which a landlord NEEDS to raise rents more than 5% on short notice, or to move a tenant, in good standing, out.  But...these rules may put us in some sticky spots with regard to real estate transactions.  First though, I'll agree, this won't be the first time rules to curb egregious actions will end up compromising those behaving more reasonably. 

 

The particular sticky spot will be when a tenant occupied property is being purchased by buyers who will be owner occupying.  Keep in mind, often the buyers of tenant occupied property are first time or low income buyers.  Properties financed with owner occupied loans must be owner occupied within 60 days of closing, and our normal closing/escrow time is 30 - 45 days.   We'll most likely be asking a landlord/owner to give tenants the 90 day notice when an offer is accepted, and before a buyer is through inspection or finance contingencies.  This instance will only work if the buyer is willing to have a tenant in their new home for up to 60 days, and is confident and comfortable that the tenant will vacate on time, and leaving the property in reasonable condition.  I'm not sure that scenario is really the best for first time buyers who might be inexperienced with landlord/tenant dynamics.

 

 As a broker representing first time buyers, I'm most comfortable showing them properties that are vacant, or owner occupied.   Real estate transactions have enough foibles and pitfalls, I'm hesitant to build in any further hurdles.  Admittedly, even before the 90 day rule, I have advised my landlords who are selling, it may be best to move tenants out.  With the 90 day rule, I'll probably put a bit more emphasis on the benefits of moving tenants out prior to marketing a property.  

Tenant occupied rentals being sold to owner occupants are but a small slice of tenant occupied properties in Portland.  With careful and informed navigation, the real estate community should be able to avoid the above referenced pitfalls, while closing transactions.  An extremely volatile rental or real estate market does not benefit the overall stability or livability of our city.

If you have questions about these rules, from the tenant, landlord or real estate point of view, please do get in touch.  leslievjones@gmail.com  503-312-8038.

 

 

 

 

 

Why I care which lender you use...

There are all sorts of folks and businesses who say they can handle your home purchase loan; your credit union, a huge mega bank, a mortgage broker and so on.  Gone are the days when most anyone could get a home loan.  The underwriting guidelines and meticulous paper trail needed for a loan are incredible.    Yes, your lender does need to know what that $150 deposit was into your account last month - even if it was birthday money from your parents.  No, don't get pissy about it, these are the lenders who overlooked all that stuff in the past and got stung by it.

There are a huge variety of loan programs, for different down payments amounts, credit scores, interest rates and so on. And all  have slightly different underwriting requirements.  A good loan officer knows these specifics and stays on top of changes to programs.  A not so good loan officer looses track.

So why does that matter?  It can be the difference between you getting your loan or not, or missing the close date or not and being at the grace of the seller to extend the close date.  It can cost your more money in fees and points.  It can be the difference in you being able to buy your house, or not.

Here are a few examples of the kinds of issues we see come up in the lending on real estate purchases.

 I had a buyer client withdrawing money from an IRA and receiving gift funds for her down payment and closing costs.  She and I both asked the loan officer ahead of time if there was any special way the money needed to be handled.  No, no special anything.  This was communicated in writing an d by phone.  So imagine our dismay when THE DAY BEFORE SHE WAS TO HAVE CLOSED ON HER NEW HOME, we were told underwriting didn't like how the funds had been co-mingled.  She needed to withdraw even more money from the IRA and handle it a certain way.  Thankfully she had the additional money, and thankfully the seller was willing to delay closing by the two necessary weeks, at no charge to the buyer.  It could easily have happened that a seller would demand an increase in the sale price to extend closing, or the buyer could have lost  the lock on an interest rate, forcing a higher interest rate, or the seller could have refuse to grant the extension; losing the buyer the house and the money she had spent on inspections and appraisal.   The loan officer, in this case, either should have known there was a special way the funds needed to be handled, or should have known to ask.  I knew to ask, and even my asking should have prompted her to check with the underwriters before answering our query back at the beginning of the transaction.

A few years ago, my husband, yes, my husband, refinanced our house through Wells Fargo.  Their refinance office was in Florida, and the whole thing was done primarily by email.  The folks in Florida, a state littered with subdivisions, kept asking for the C, C & R's for the subdivision in which we live.  There's no such thing at SE 26th and Clinton.  In the absence of C, C & R's, they then required a survey of the property, because, if we didn't live in a subdivision, then clearly we must be out in the country.  Round and round we went, convincing them neither case applied.  This, in the day and age of google earth and all.

The whole loan process is a series of data requests and performance requirements.  This we know.  And if those requirements and requests are timely, that is, well in advance of closing, they are reasonable and a part of the process.  Arriving in the eleventh hour, and delaying closing can be what makes them seem unreasonable.  Many lenders collect all the data, and only submit the file to underwriting at the end of the transaction, in advance of preparing the loan documents for closing.  The files of a loan officer inexperienced and unknowledgeable about  the idiosyncrasies of particular loan products are often kicked out of underwriting, right before closing, with a myriad of requests that can take days, or even weeks to fulfill.

A "good" lender is one who is familiar with our local properties and customs (see above about subdivisions), who knows the different loan programs and stays on top of changes, and who communicates well, and promptly.  While I prefer loan officers who don't work for the large banks as they tend to be a bit more nimble and less encumbered by a behemoth process, I have seen a few very good lenders from large, national banks.  But 1-800- get-loan, or some such, scares me.  All parties in the transaction need to be able to talk to a specific person, who's job it is to work on your loan.  A loan number, and a phone or email answered by a general staff person at the institution doesn't bode well for getting your loan done on time, and to the terms to which you think you have agreed.

I'm glad to give suggestions for lenders, whether you are purchasing or even just re-financing.  Get in touch: leslievjones@gmail.com or 503-312-8038

Fast and Decisive

Last year, we were quite busy, and having a banner year. Somehow, this year, we put 23.8% more transactions together in August 2015 than in 2014.  How did we do that?  Primarily, I think with more decisive buyers and sellers.

More decisive buyers and sellers also contributed to our still low inventory (1.9 months as compared to 3.0 months in August 2014) and to our quicker market time; 41 days as compared to 63 days in August 2014.

Though not a scientific sample, the great majority of my buyer clients this year, actually looked at fewer than ten houses before making their purchase.   And some as few as four.  But...before you jump to conclusions, they all did TONS of online research in advance of and during our in person shopping.  So that is the other part of what has changed...technology and research.

And, of course, prices are up.  The year to date median price is $305,000, compared with $285,000 year to date in August 2014.

We are though, seeing some seasonal slowing, and even priced reductions.  Some of the sales with prices driven high by emotional multiple offers are now closing.  I'm not sure those houses would have sold at those high prices, had we actually priced them there to begin with.

So for fall, the market will continue at a fast pace, with more decisive buyers and sellers (fall is NOT a time for looky loos).  While interest rate increases may occur, I doubt we'll see anything drastic. Remember, we had a boom market with interest rates at five and six percent.

Let me know if you have questions, or are feeling decisive :)  leslievjones@gmail.com 503-312-8038

See the full RMLS report

Songwriting with Soldiers

Not a real estate post.  I'm just back from a great trip with Roots on the Rails. Sort of a moving concert to amazing places with a bunch of best friends you've never met before.

As always, there were incredible musicians on this trip.  One musician, in particular,  has been working on a project that really grabbed me.  Mary Gauthier, along with several other noted song writers, has been working with soldiers, talking with them about their experiences and putting their word into song.

The Songwriting with Soldiers  website's description of the project,  " The words of our participants, put to melody and rhyme, tell of combat, loss, joy and pride.  The songs convey a deep sense of what it means to serve, and the struggles our veterans face upon returning home. The soldiers talk, The songwriters listen. Together they create the songs."

Mary Gauthier played a few of these songs on the trip, and shared the stories of the soldiers with whom she had written.  The songs and stories were beyond touching, and had the group of us wiping away our tears.

I'm hoping you'll check out Songwriting for Soldiers, and consider supporting their work.