Portland Real Estate Blog

I thought the following was interesting because it is not what I had expected in the Katrina aftermath:

(September 30, 2005) — Freddie Mac reports a boost in the 30-year mortgage rate to its highest level in five months, as the benchmark bumped up to 5.91 percent from 5.8 percent over the past week.

Meanwhile, interest on 15-year loans surged to 5.48 percent from 5.37 percent. The one-year adjustable mortgage rate climbed to 4.68 percent from 4.48 percent, and the five-year hybrid adjustable rate moved up to 5.44 percent from 5.31 percent.

Freddie Mac chief economist Frank Nothaft attributes the increases to concerns about inflation, weaker consumer confidence and higher energy prices—which will combine to lower consumer spending and further drive up mortgage rates during the fourth quarter.

Source: Detroit Free Press (09/30/05); Crutsinger, Martin

There is no simple or necessarily correct answer so I hope people will comment. Some ideas are pure conjecture or maybe better put an educated guess. There is no doubt that the devistation caused by Katrina is horific but the real estate market (and the economy as a whole) may benefit in the coming years.

Interest rates were already at a historic low. The Feds are unlikely to push rates up as the need for low cost money will help drive the economy as it rebuilds the south. The dent in the current economy will be boosted by the jobs, goods and services created by the rebuilding in future years. Low interest rates should continue to support our rapidly appreciating economy. Throughout the ecomomic recovery of the last few years, low interest rates pushed the real estate market to levels never seen before.

We already have a tight housing market and some people who lost everything in Katrina will relocate out of the south. We have already seen this starting to happen on the local news and with an agent in our office.

New construction home prices will rise. The cost of building materials and their transportation will drive prices up. Qualified contractors will not be short of work. We saw this on a smaller scale in San Deigo after the fires. While the victims moved out, the construction workers moved in.

I had a long conversation with a client a few days ago that started with his view of an likely crash. I think that changed as we talked.

The John Ross sold over 200 units the first week they were on the market. Who are these people and where do they come from? The Oregonian answered the question in Sunday’s paper:

52% are between 20-30 years old
20% between 30-39
20% between 40-49
6% between 50-59
2% 60 and older

54% are local to the Portland area
11% are from Portland suburbs
18% from Oregon, outside of the Portland area
9% from California and Washington
7% from the rest of the U.S.
1% international

I was surprised at the high percentage of 20 somethings. $240,000 gets you 823 sqft in the John Ross. The same money gets you a 1581 sqft three bedroom house in Hilsboro 13 miles from downtown.

Location, Location, Location.

In Portland, most major (and some minor) projects require a permit. Do I need a permit? If you are doing the job yourself or are doing lots of things at once, it may make the most sense to head down to the city and get the permit yourself. On Thursday nights, from 5-7PM, the Bueau of Development Services host Residential Permit night. I arrived at 4:45 and was eighth in line. I felt like a proud parent when I discovered one of our past clients at the front of the line with his remodel plans for the kitchen in hand. When you go to sell you home, a savvy buyer needs to look no further than PortlandMaps.com to see if the “kitchen remodeled in 2005″ was done legally.

Once checked in, your slip of paper is put in a box depending on what you need to accomplish. My application was first entered into the computer. During this session, we discovered that some of the forms on the web are no longer in use but they are making a concerted effort to correct. It’s better to have too much documentation than none at all. When finished, the slip of paper goes to another box and your name is called. From what I could tell, your initial check in time determines your draw out of each box.

Since we live in the Historic Alphabet District, we have to get special approval for any project that will alter the exterior. I hadn’t realized that this was in addition to the State Historical Preservation Office application that I had already submitted so none of my exterior work was approved. All of my interior work is now permitted and I have the bright orange card that must be posted for all to see.

The staff was kind, helpful and friendly. I was at the cashier in just over an hour from the time that I walked in the door. The process was so much nicer than when I did the same in 2001 for another house.

“Forgot” to get a permit? Check out the City’s “Get Legal Program.”