Portland Real Estate Blog

The Home Builders Association met yesterday and predicted that 2008 is going to be a tough real estate year and that we should see some recovery in 2009. The choice quote in Ryan Frank’s story on the front page of the print version of the Oregonian business section is, “my daughter’s Realtor is becoming a phlebotomist,” said economist John Mitchell.

I get a little squeamish having my own blood drawn so can’t imagine that I would enjoy drawing it from someone else! The National Association of Realtor expected 10% fewer Realtors in 2007. I wonder what they are figuring for 2008. They can count the four of us in.

I was looking on Trulia for some appreciation numbers. Northest Portland gets hammered in the results. Down from an average sales price of $606,921 (May-July ‘07) to $445,189 (Aug-Oct ‘07). What’s going on? From what I can tell, the Civic and some other condo complexes have started to close. A large number of these units are smaller and are priced around $300,000 thus dragging the median and average price down from what has previously been an area of largely higher priced resale property.

MySpace went completely past me. I think I registered and never went back. Joel Burslem of The Future of Real Estate Marketing got me turned on to Facebook a little while back. I’ve been poking around more and more recently, adding friends and discovering new avenues of advertizing properties.

Typepad, this blog’s provider, and Facebook have a feature now that will submit the posts I write here to my Facebook account at the same time. This post will be a test of that feature.

Facebook has the Neighborhood application. Sign up and select the neighborhood that you live in. Point2NLS runs the back end and they have created the neighborhoods. It’s a little confusing as you can only live in one place and in my instance could live in Northwest, the Alphabet District or Nob Hill. When an agent submits a listing it only publishes in the specified neighborhood.

I’ve just joined CribFinder so can’t comment on that application yet.

The poll to the right has been running a few days now with not many submissions.

***Editor note: had to delete first post and try again. Let’s see if this goes to Facebook!

Forest Heights has been one of the long standing “desirable” neighborhoods in Portland. Located between the high tech corridor to the west that is home Nike, Intel and other large companies and downtown Portland to the east. The development rises up the hillside offering so great views to the west and the setting sun. Views are often tempered by steep lots that sometimes makes decking the primary outdoor living space due to the steepness of some lots. Forest Park Elementary School serves the area and feeds into West Sylvan Middle School and then Lincoln High School.

The Forest Heights neighborhood began life as an investment by the Nauru Phosphate Royalty Trust, operated by the nation of Nauru.

The tiny South Pacific island country, about 2,500 miles northeast of Sydney, Australia, made heaps of money from phosphate mining and created a means to invest the money worldwide.

Among other areas, the Nauru (pronounced NAH-roo) trust invested in real estate. It built a skyscraper in Melbourne, Australia, and, in 1988, stumbled across 600 acres of vacant, residentially zoned land near Portland. Portland Tribune 2002

Two decades have made Forest Heights into what it is today. The recent commercial development in the heart of the neighborhood has helped make it into a community unto itself. Starbucks, a drycleaner, a grocery store and a competing real estate company now call Forest Heights home. Prior to their opening, the nearest services were out on Barnes Road a couple of miles away. Forgetting the milk was a time consuming proposition.

There have been considerable growing pains in the neighborhood, especially in the condo market. I’ve heard it said that the developments in Forest Heights “have been, are in, or will be in litigation over construction at some point.” Condo owners in Forest Heights have two HOAs since Forest Heights has its own and each development has its as well. The Forest Heights HOA maintains the overall area including the network of walking trails, some landscaping and enforcement of real estate signs in the neighborhood.

As of today there are 41 single family listings priced between $615,000 (2518 SQFT) and $1,495,000 (6193 SQFT). There are 22 condo/townhouses priced between $219,900 and $689,000.

Image from Google Earth.

In a heated market developers are only too happy to let buyers out of their contract so that they can raise the price. Now a couple of developers (John Ross and Civic) have decided that they are going to enforce the contracts that buyers entered into. It’s an interesting situation for a couple of reasons. First it is a case contract enforcement versus goodwill. Second there is probably an agency question to be addressed. ***Note that we backed out of a new construction condo/hotel project in Seaside in the spring and got our earnest money back***

In the heat of the moment, buyers lined up (literally) to get a condo reservation. Those contracts became binding and then, in some cases, more earnest money was due and it was reiterated customization additions became nonrefundable (on paper). I heard more than once, “earnest money is nonrefundable but I have never seen this builder go after it” from sales offices. Neither had we. If Buyer wanted out, buyer got out based on Developer’s goodwill. That is no longer the case.

The other issue becomes my long standing debate over dual agency. We firmly believe that dual agency on resale property should be against the law even though we are in the minority of Realtors on the matter. I’ve made the exception for new construction but this and another recent event make me wonder (We had a builder offer the buyer a $10,000 price reduction if they chose not to be represented by us. We have to assume they took it since we never heard from them again).

Builders and developers, more often than not, use their own paperwork for the contract. It is written by their attorneys for their projects. Realtors, including us, are trained on OREF contracts; the standard contract used in real estate. When we come across nonstandard forms, we have to disclose, in writing, that these are not the forms we are familiar with and therefore advise legal advice before entering into a binding contract. We read the contracts but cannot offer legal advice on them.

There is no way of knowing what percentage of the sales in question were buyer agent represented versus sales office represented but I am willing to bet that most did not involve a second agent. Would it have made a difference? Would the buyer’s agent have been any more aware of the potential reality of contract enforcement? More questions to a changing market.

Portland Community Land Trust helps moderate-income families become homeowners, is working on a branding and messaging campaign to educate home buyers and increase overall awareness of its activities. An article in this week’s Portland Business Journal says that they have gone to the city to help raise its profile. Participants in the program can earn up to 80% of the median family income for Portland ($63,800).

The Trust is running a survey. I couldn’t get the link in the Biz Journal story to work but this one does. This is a quote from the survey so note that they do place a restriction on the resale of the home:

PCLT makes homeownership affordable for moderate-income, first-time home buyers by bringing an investment to every transaction, buying down the purchase price of a home. A resale agreement between PCLT and the homeowner ensures that, upon resale, the home will remain affordable for the next moderate-income, first-time home buyer, while providing the seller with a return on his investment.

We are in Phoenix for Thanksgiving and a wedding this weekend. Today’s newspaper headline in the Phoenix Republic is titled: “Buy this house; Desperate Home Sellers get Creative.”

According to Wikipedia: Approximately two million people live in Portland metropolitan area (MSA),
the 23rd most populous in the
United States as of July 2006. As of 2006, the Phoenix Metropolitan Statistical Area (MSA) was the

13th largest in the United States, with an estimated population of 4,039,182. Phoenix has roughly twice the population.

I did a really quick search in RMLS: of 4863 active and bumpable listings listed in “Portland,” 183 are Limited Representation (3.7%). I’m trying to think of a situation when limited representation wouldn’t equal FSBO but nothing comes to mind. Once they have paid a Realtor to enter their information into RMLS they are under contract so another agent cannot suggest to the seller that they should list with them if they agent knows that the listing is in RMLS (the seller can initiate that conversation, the agent cannot). This is the typical info in the private remarks:

Take offers directly to seller: Mr. X @ 555-555-5555. Call seller with any questions i.e. Availability Etc. Use a “Seller’s Fee Agreement”. Seller Represents Seller.Buyer to varify (sic) square footage. Contact Seller for appointment to show.

There are 18 listings in Portland on FSBO.com and 77 listing on Craigslist that have “FSBO” in them.

***added 10 minutes after original post:

Thought this was interesting from: Real Estate 101 – Listing Agent vs FSBO

The number of property owners selling their land independent of a realtor has seen a sharp decrease in recent years. In fact, it has dropped six percentage points over the last decade, according to the latest numbers from Chicago-based National Association of Realtors. As of the beginning of 2007, a mere 12 percent of all real estate transactions were for sale by owner, or FSBO.

No credit for originality here. Consider this today’s public service announcement. Straight out of the Sunday Real Estate Section of the Oregonian:

The Community Housing Resource Center, 2700 N.E. Andresen Road, Suite D3, Vancouver, is offering a free CreditSmart workshop on Saturday, Dec. 1, 9 a.m. to 2 p.m. CreditSmart, a curriculum developed by Freddie Mac, explains how to build wealth, reduce expenses, manage money, use credit wisely, plan for a financial future and set goals such as buying a home. The Community Housing Resource Center currently offers the workshop bimonthly, but will offer it every month starting in January. To register, or for information about future workshops, call 360-690-4496, ext. 101.

A small victory for the market: inventory didn’t increase last month and actually declined .2 months (about six days). There are 15,567 residential properties on the market. That’s the good news. The rest is more of what we expected: decline in pending and closed transactions and a 12 month appreciation of 6.7%.

Affordability
After its lowest reported rate of 88% in July, affordability improved to 94% in September carried by lower interest rates and a lower median sales price. This means that a family living in the Portland Metro area making the median income ($63,800 per HUD) cannot afford to purchase a median priced home in the
area ($283,500 in September). According to the NAR formula, a median income family can only afford
94% of a monthly mortgage payment with 20% down and a 30-year fixed rate (6.38%, according to Freddie Mac).