Portland Real Estate Blog

Don’t like you neighbors? Move.

NAR releases studies at a pretty high rate. The latest is about what buyers want. The results surprise me because it is not what I see with our clients. #1 on the list? Air Conditioning. Looked outside today? That’s not our market. Sure, the few 100 degree days can be pretty uncomfortable but in a previous post, we found less than half the houses on the market had AC.

Number two on the list is an over-sized garage. That’s not likely inside of 205 on the east side. Number three on the list is a walk-in closet in the master. We see that more than the other two features.

The New York Times discusses Portland’s food scene. Some of our local top chefs were interviewed and an underlying theme of the story is that real estate prices helped bring top talent to Portland.

Portland also has what anybody in the restaurant business will tell you is most important of all: affordable real estate. Just as young, passionate chefs flocked to the East Village and Brooklyn in the 1990s, chefs have gravitated to Portland because it lets them have a vision and take risks without lining up corporate backers and lawyers.

“This is one of the very few places on the West Coast that has been an affordable place to live,” said Andy Ricker, who in 2005 opened Pok Pok, which started under his obsessive eye as a ramshackle Thai takeout shack and now has a hip little dining room as well. “There are a ton of people here who are going at it in sort of an indie rock way, mostly because they can.”

I’m not aware of having seen it brought up anywhere else: should 401ks and other retirement account tax laws be modified so that distressed homeowners can use the money to refinance or pay down mortgage debt on a primary residence without a penalty?

Wouldn’t it make more sense to allow someone to bail themselves out with money that is already theirs rather than to be forced in to bankruptcy or defeating years of intelligent saving in a single blow by penalties?

Of course, not everyone has a retirement to fall back on. When the both the real estate and stock markets were on the rise, there was a frequent mantra to retirement accounts, “Contribute ’til it hurts and then give some more.” Now there is money “locked” in these accounts.

Is it worth discussion?

Value Range Marketing was created a number of years ago in an attempt to bring sellers and buyers together in a challenging market. We’ve used it in the past but not recently, until today.

The idea, at the most basic level, is that any offer is better than no offer. If a buyer feels that a house is overpriced, they may move on when it is really the house they want and the seller was willing to sell it for a lower price. None of that can be conveyed in a fixed asking price. The range doesn’t mean the seller is willing to sell at or anywhere near the bottom of the range. It does mean that they won’t be insulted by an offer at the bottom of the range and outright reject it. They’ll negotiate which is the first part of any sale!

In this case, the top of the range is a price drop. We were listed at $850,000 and the range is $750,000- $848,876. The ,876 in the pricing allows a PVRM property to be seen when listings are presented in list form. We hope that the price drop and the creation of the range will help get the house sold in an area with an increasing inventory homes.

One note about RMLS and PRVM. RMLS only allows the high end of the range to appear in the listing- we have to put the PRVM portion in the remarks like this: “Seller will consider offers between $750,000- $848,876.” Some MLS systems allow for the range to appear so it is returned in more searches.

For the first time since June 2003, the Federal Reserve cut the key interest rate tied to home mortgages by .5%. Too little too late? Not the Fed’s business? The cure? It sounds like we can expect at least one more rate cut by the end of the year.

Two sides to every coin. Last week, the Oregonian reported “Oregon Home Prices Lead in Growth”. Today’s RMLS Market Action for August is a little less rosy. Inventory continues to climb (up to 6.2 months).

Appreciation is still up over 8% for the last twelve months but we have discussed the effect of the high appreciation numbers at the end of last year countering the not-so-hot numbers in recent months.

Needless to say, everyone has their own motivation for either entering, leaving or watching the market.

This is either really funny or really sad.

Last week, I posted about the City of Portland going after party sewers. I was going to link back to a post I had written previously but it wasn’t there so we’ll recreate today. A few years back, sewer scopes on the east side of town were part of the recommended inspections that we had buyers do during the inspection period. At that time, we were mainly looking for breaks and found plenty. Now we recommend sewer scopes to everyone, even new construction. There have been numerous reports of new ABS sewer pipe being laid and then crushed by heavy equipment!

We’ve now been involved in three transactions that have had party sewers. One property owns the main tap to the line and the other properties must connect directly to the line to disconnect. In the first two instances, the combined bill for the disconnection was over $10,000.

Prior to the Tribune’s report last week, the progression of party sewers in Portland was “we don’t care,” “if it needs repair, it must be disconnected,” and now “not allowed.”

Portland State University just released its July 2007 edition of the PSU Center for Real Estate’s Quarterly Real Estate Report. The report covers both the national market and local market. A good deal of the report discusses Measure 37 but I think for this blog and our typical disucssion, the real meat starts on page 24 with, “Housing Price Appreciation in the Portland Region: A 25-Year Retrospective.” It is a historical look, not looking to the future at all. 6.5% annual appriciation equates to a doubling of home prices every 11 years.

Things start to get more interesting on page 30, “Local Housing Market Update.” The median price of existing detached homes in the Portland metropolitan area (excluding Vancouver) continues to rise. The median home price increased by 5% from $294,000 in the first quarter of 2007 to $308,000 in the second quarter. Over the entire year, the median price increased by 7%, which is a sharp decline in appreciation when compared to a 20% increase between the second quarter of 2005 and the second quarter of 2006.2 While the Portland housing market has cooled off from last year’s feverish pace, it continues to experience shows healthy appreciation… Prices of new detached homes increased only 4% from the second quarter of 2006 to the second quarter in 2007 compared to 23% in the previous year.

The graph shows that April and May were strong, creating good quaterly numbers even though June was not as good.

However, as a sign of recovery from this trend, the past quarter saw a 12 day decrease average days on market. Days on market decreased from 58 days in the first quarter of 2007 to 46 days in the second quarter.

It only seems fair to end with a quote from the introduction:

We see the role of the Quarterly Report as a place to publish unbiased analyses of local and national real estate trends and policy issues. As a quarterly publication, we take a longer view, rather than repeating the function of a daily newspaper or a weekly magazine.