May’s RMLS Market Action report was posted today. If it is any indicator to what our market is doing, it’s going up, not down. Seven tenths of a month of home inventory is the lowest it has ever been. What is inventory? It’s the ratio of active listings to closed homes: 150 active listings to 100 closed homes would be 1.5 months of inventory. Conventional “wisdom” says that six months is the balance between a seller/buyer market. Even if we reduce that to four months, we’re a long way off at .7 months!
Prices are going to drop. Maybe. Probably not anytime soon. Portland Metro appreciation over the last 12 month is 18.9%. I’m going to be the first one to say that this is concerning, I’d like to see closer to 6% but when (not if) the market slows it’s going to hit the brakes, not grind into reverse. Demand is way above supply and when the market starts to slow it might mean a home that would have had 10 offers will “only” get three or four. Caveat here for sellers: overprice your home and the market is unforgiving.
Interest rates are going to go up. Yes, they are. It’s reasonable to expect that we will see the best rates climb to over 4% by the end of the year. Those best rates are currently under 3% and every half percent they go up, buying power goes down by 5%. If your purchasing power was $500,000- now it’s $450,00. It is entirely possible that the $500,000 house you look at today will be worth $600k next year and your financed buying power will go down.
All the other metrics: new listings, pending sales, closed sales and time on market are all indicating an upwards trend, not decline. If you’d said a global pandemic and world shutdown would tank the market back in 2019, we all would have believed you but here we are. There’s something out there that could tank the market but it’s an outlier.
“But the housing market caused the 2008 recession.” Yes, it did. And it was the housing market that pulled the economy out of the 2020 lockdown recession. Gone are the “fog a mirror” and other loans that caused the economy to collapse. There is more equity in homes now than there was then.
“Okay, prices aren’t going to drop but how do I compete with multiple offers?” Fair question. And honestly, it depends on your situation. That said, we have 38 pending buyer transactions so we’re doing something right. We may not win on the first offer but we’re winning in the end. Contact us to see how we can help get you into a home. Connect with us on Instagram, Facebook, Linkedin, or via email.
Selling your home can feel intimidating for many reasons. It’s easy to imagine worst-case scenarios and base your entire mindset around those fears.
In an effort to help you shift from a mindset of fear to one of empowerment, here are some of the top questions (and answers) we hear from our sellers before listing with us.
1: Is it safe to sell during COVID?
COVID has changed the way we do some things. Please rest assured, our team will make every effort to maintain all health and safety standards throughout all our interactions with you and your home.
This includes wearing masks, gloves and booties, and limiting the number of people on the property when we work with you, potential buyers, and your home. Our COVID precautions have been proven to be effective in selling your home safely.
2: Is now the time to sell? Should I wait until summer, or until COVID is over?
The Lovejoy Real Estate team members recognize that now is a fantastic time to sell based on what we’re seeing in the market (record low inventory, record high closed sales prices, etc.). One could argue there isn’t a better time to sell than now.
However, we also know that market activity isn’t enough to determine what’s right for you in your current chapter of life.
In our first listing consultation with you and your family, we’ll work together to understand why you’re considering selling, and walk through the process together so you can decide whether now is the right time to sell for you.
3: What’s involved with getting my home listing ready?
It’s common to feel like you need to do a major remodel of your home to get the best ROI when you sell. Thankfully, that isn’t the case. There are several simple things you can do to increase the ROI on your home, without remodeling.
Here’s what we recommend you spruce up before you sell your home: refresh any landscaping, fix any peeling paint or damaged siding, give it a nice deep clean, and vacate the property if at all possible.
Don’t worry about needing to have a brand-new bathroom – most buyers are looking to make the place their own anyway. If you’re not sure where to start, let’s chat! We will build a strategy to get your home ready to list in your consultation.
4: Where will I go when the house sells?
With such a wild market, sometimes listing your house can feel like risking potential homelessness. Do not panic though! When we sit down with you in the consultation, here are some (not all) options we’ll discuss:
- Up to 60 days of rent back
- Defining your buying strategy with your agent, so we can get your search started right away
- There’s always plan B, which could look like short-term rentals or temporarily staying with family
Here’s some reassurance for you: we’ve had a lot of clients have a plan B prepared… rarely however, do they actually need the backup plan. Sometimes the peace of mind is really all it takes.
Finally, even with the fear of the unknown or what ifs, remember that in the end your goal is to get the most out of the sale of your home!
I started real estate in 2003. Only twice, has inventory hit 1.2 months: December 2015 and NOW! It rocketed to 19.2 months in January 2009. Inventory is the ratio of active listings to closed sales. If I had 100 listings and sold ten the prior month, I’d have 10 months of inventory. Tradition said that six months was the balance between buyer’s and seller’s market but I feel that number dropped closer to four months after the last market crash. Regardless, we’re deep in seller market territory.
Also of note: the average sales price cracked the $500,000 mark for the first time. The $400,000 mark was broken in mid 2016.
Taken verbatim from the new RMLS Market Action report:
New listings (4,236) increased 6.8% from the 3,966 listed in July 2019, and increased 15.8% from the 3,658 listed in June 2020.
Pending sales (3,656) increased 21.9% from the 2,998 offers accepted in July 2019, and increased 0.1% from the 3,654 offers accepted in June 2020.
Closed sales (3,391) increased 15.2% from the 2,944 closings in July 2019, and increased 25.2% from the 2,709 closings in June 2020.
There’s some wacky, contradicting stuff going on here:
- Interest rates are as low as I’ve ever seen.
- Unemployment is as high as I’ve ever seen.
- There is uncertain political uncertainty.
- There is Covid 19.
- We are spending more time in our homes than ever before.
- The stock market has rebounded like it never heard of Covid 19.
- The U.S. economy is officially in a recession.
- Multiple offers even in the $700,000+ range are not unusual.
- Condos are selling at a much slower pace than single family homes.
Today, the market is as strong as ever. Tomorrow? Who knows?
What will Covid-19 do to the real estate market? That’s a really good question. Let’s take a look at where we were, where we area and were we are going in the Portland and SW Washington real estate market.
Where we were:
- RMLS Market Action reported 1.9 months of inventory in February: a strong seller’s market. Conventional wisdom says that historically six months is a balanced market between buyers and sellers. I personally think that four months is more realistic.
- Multiple offer situations were the norm for homes priced under $600,000 if they were appropriately priced. Buyers were often frustrated by having what seemed like a crazy-good offer get beat. An overpriced house is overpriced in any market and is likely to sit (and eventually sell for less than it would have).
- Interest rates fell and then went up (though still WAY better than this time last year (4.41%). Buying power is increasing. https://ycharts.com/indicators/30_year_mortgage_rate
- The Dow Jones Industrial was flirting with 30,000 (closed at 21,237 today).
Where are we now?
- The Dow first hit 20,000 on January 21, 2017. It dipped below that last week having been flirting with 30,000 just weeks before. If your down payment was coming from cashing out stocks, this is major. If not your future stock based nest egg clearly took a hit but the loss is only realized if you cash out.
- The Fed cut short term interest rates to zero. What does this mean to mortgage interest rates? Nothing. Mortgage rates a correlated but not tied to Ten Year Treasury notes. That said, mortgage interest rates hit historic lows and then came back up.
- Real estate is still happening though in a heavily modified manner: NWMLS (Seattle area) has banned open houses. In Oregon and SW Washington (served by RMLS) we are still left to our own discretion but extra precautions are the norm (sanitizer, wiping down surfaces, keeping parties separated). Reports showed strong participation at open houses last weekend though many were canceled.
- Showings and listing appointments are still happening with the same considerations above. More are being done virtually though FaceTime and other online methods.
- Loan funding, escrow signings and title recordings are still happening.
Where are we going?
- Buyers will rely now and in the near future, more than ever, on strong visual representations of home including 3D Tours (which we do for all of our listing anyways) and professional photos. Here’s a sample of a 3D tour for our 310 NW Maywood Dr. listing.
- We launched two new listings in the last 24 hours.
- Buyers are at home, watching HDTV and looking for their dream home on Zillow.
- Some buyers will step back from their home search. Whether by choice or circumstances.
- Some buyers will relish the current market and take advantage of interest rates and some reduced competition.
- Sellers usually don’t wake up one morning and decide to sell, it’s part of a planing cycle. Now, sitting at home, that plan may developing more. Staying at home gives one a chance to pack up the clutter, touch up some paint, or sit on the sofa and watch HGTV while searching for their dream home on Zillow. Again, listing appointments and new listings are still happening.
What we can’t predict:
- This time next year, an old white guy (or potentially their VP) will be president. Will it be your old white guy? How will said white guy’s policy impact the economy?
- How long will it take to get Covid-19 under control? Is it worse than it looks because we are not testing enough or is it better than it looks because we are paying attention? Will two+ weeks of social isolation work? The last economic crash was caused by the real estate market. This one may be saved by the real estate market.
- How long will it take for economically impacted buyers to re-enter the market? Just as the “summer selling season” starts?
- Will a few “quality” weeks at home with family convince people that their home is too big, too small or just right? Are they going to remodel it or go out and find what they want already done? When are they going to do it?
- When I turn the news on this evening, will everything above be wrong?
I have to confess I’ve been a remiss blogger lately. But here we go… RMLS Market Action for February 2019 was released today. Portland Metro inventory remains low at 2.7 months. What does inventory mean in real estate? Inventory is the ratio of active listings to closed sales. If there are 100 homes on the market and ten close in a month there is 10 months of inventory. Tradition says that six months in a balanced market between buyers and sellers but I’d argue that is closer to four months as buyers have become more informed/savvy and willing to walk away in a transaction. That said, 2.7 months leaves us firmly in a seller’s market. Also keep in mind that that is for the five county metro area. North and SE Portland both have 2.2 months of inventory compared to West Portland’s 4.3 months- real estate is local!
As Portland heads towards a record number of 90 degree days in July, I thought I would take another look at the percentages of homes for sale in Portland with air conditioning.
There are currently 2544 active residential listings in the city of Portland. 1255 (49.3%) of those listings are described in the listing as having ‘Central Air’, ‘Energy Star Cooling’, or ‘Heat Pump’.
Breaking down into price ranges:
- Under $300,000: 52 of 252 listings (20.6%)
- $301,000-$500,000: 453 of 1075 listings (42.1%)
- $501,000-$700,000: 314 of 608 listings (51.6%)
- $701,000 and up: 444 of 620 listings (71.6%)
We live in a digital world. We have to assume that anything we do may end up online with millions of viewers. That said, there are limitations. In Oregon, recording a phone call requires one-party concent. Recording video without audio, does not require concent. This includes nanny/security cameras.
It all changes when audio is recorded. The seller (in Oregon) cannot record your showing unless all participants are aware that they are being recorded. This is covered in the state statutes:
2017 ORS 165.540¹
Obtaining contents of communications:
(1) Except as otherwise provided in ORS 133.724 (Order for interception of communications) or 133.726 (Interception of oral communication without order) or subsections (2) to (7) of this section, a person may not:
(c) Obtain or attempt to obtain the whole or any part of a conversation by means of any device, contrivance, machine or apparatus, whether electrical, mechanical, manual or otherwise, if not all participants in the conversation are specifically informed that their conversation is being obtained.
That said, you need to go into every property assuming that you are being recorded, it’s just a part of today’s societal expectations even if it is against the law.
***I am not an attorney. This is my interpretation of the statute.
The Home Energy Score is coming to Portland on January 1, 2018. At that time, all homes listed for sale (including For Sale By Owners (FSBO)) will need to have a score before being advertised for sale. There are two determinants as to whether a property requires the Score: property type and location.
Property Type: All “Covered Buildings” are required to have a score. Long story short is that all single family homes need a score. More complicated are condos: from what I read below, if you have neighbors above or below you, you do not need a score, otherwise you do. From the City’s Administrative Rules:
“Covered Building” or “Home” means any residential structure containing at least one dwelling unit or house, regardless of size, on its own lot. Covered building also includes an attached single dwelling unit, regardless of whether it is located on its own lot, where each unit extends from foundation to roof, such as a row house, attached house, common-wall house, duplex, or townhouse. A covered building is defined based on the type of structure and physical qualities, regardless of the ownership or whether the property is privately held or part of a home owner’s association or other ownership arrangement. Covered building does not include multiple housing units that are stacked vertically, such as an apartment or multifamily structure. Covered building also does not include detached accessory dwelling units or manufactured dwellings, such as mobile homes or residential trailers. Covered building also does not include single dwelling units used solely for commercial purposes.
Location: The rule only applies to properties in the City of Portland. www.PortlandMaps.com is the best source to make the determination. Enter the property address and look for “Portland” in the jurisdiction.
If you meet both requirements, you need a score.
For more information, see this post.