Portland-Vancouver metro area home prices hit new highs

Housing prices UP

 

 

Housing prices UP

 

 

It’s official. Throughout the Portland-Vancouver metro area, home prices have hit new median highs as of the end of 2015. All four counties have surpassed the values and prices last seen prior to the housing crash of 2007.

 

There are multiple causes for this explosive growth:

  1. Five hundred new migrants are moving to this area every week and they need a place to live.
  2. More high paying jobs are being created as technology businesses create outposts and new offices in the Portland area.
  3. Investors love Portland housing

    Investors & Portland housing

    The extreme volatility in the stock market has many investors re-thinking the wisdom of investing on Wall Street. Institutional investors are buying up the Portland housing market and are aggressively competing with all cash offers often at premium prices as they consider our market a better investment than Wall Street. Portland is currently the 2nd most desirable area for institutional investors in the country.

  4. Mortgage rates remain low (for many below 4% last week for 30 year fixed rate loans.)
  5. Millennials have entered the housing market.
  6. Record low housing inventory has buyers driving up prices with bidding wars as new buyers try to get into the housing market. This is especially true for houses priced at or below $400,000.
  7. Builders have been very much behind the eight ball in catching up to housing demand; though big developers such as DR Horton and Lennar Homes just completed purchases of huge tracts of land. Still it will be a couple years before they are able to sell houses on those parcels because plans must be submitted to cities for approval of developments and of course the infrastructure has to be completed before they can even start building houses.

It seems that every day new articles cross my desk talking about just how hot the market is in Portland causing the prognosis for how long this housing boom will last continues to be extended. Last year the “experts” were saying that we would see a robust market at least through 2016, but now some experts say that with the unprecedented job growth, low housing inventory, and rate of migration to this area, our housing market will very likely not slow down until sometime in 2018!

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Portland’s explosive housing market grabs more headlines

Portland Oregon hottest housing market in the US

 

If you’ve been watching and reading the news lately, you would have noticed that the Portland real estate is in the headlines. The state of our housing market has been featured in The Oregonian, on national news and there was even an article in CNN Money  published on February 5, 2016 asking “Who’s to blame for Portland’s soaring home prices?”

According to the report in CNN, “Everyone wants to move to Portland, Oregon. But the more popular it gets, the less affordable it becomes.” Portland was the fastest growing city in the country in 2015, and appears to be on pace to top the charts again in 2016.

Anyone currently shopping for a home in Portland already knows how crazy our housing market is. As in 2015, the normal slow-down of home buyers never happened during the holidays, and January again broke records for number of home sales. In fact, sales were up 25.9% over number of sales for January 2015, and posted the most January sales ever since RMLS began keeping records in 1992.

Sellers are still receiving multiple offers and homes are almost always selling for more than list price. Eighteen to twenty offers on a home are not uncommon.

According to KATU, in a news report last night, buyers who offer $20,000 above list price often find themselves outbid. In fact, we have seen houses sell for as much as $150,000 higher than list price in the last year or so in the most popular neighborhoods.

According to RMLS, the average price for houses in Portland as of the end of January 2016 was $355,700, up from $333,400 as of end of January 2015.

Are prices soaring everywhere in the Portland metro area?

Yes, but of course some neighborhoods are hotter than others. According to Zillow, the three hottest areas in Portland so far in 2016 are St. Johns, Woodlawn (Dekum Triangle) and Parkrose.

Other sources say that the hottest neighborhoods are St. Johns, Hawthorne, and inner NE Portland (west of I-205). 

Regardless of which neighborhoods are in fact the very hottest, what we know is buyers searching for homes anywhere west of I-205 should expect high demand and unfortunately bidding wars.  Since prices anywhere west of I-205 tend to run from $300,000 and up, buyers in lower price ranges are being forced to look further east, so homes sales anywhere west of 130th are now booming too; the closer in to downtown, the hotter the neighborhoods.

So, who’s to blame for Portland’s soaring house prices?

There are many reasons for what’s going on in this area, but following are some of the primary reasons housing prices continue to rise so quickly:

active home listings 2012- 2016

  • Supply and demand. There simply aren’t enough homes available for the number of buyers. At the end of 2015, inventory dropped to just 1.2 months (if all listed homes sold with no new listings added, the supply would be gone in 1.2 months). That number did rise to 1.8 months as of the end of January, but we’re not even into the spring months yet; typically when the majority of buyers are out shopping.
  • Migration to Portland. New migration numbers show that there are now approximately 500 new migrants arriving in Portland every week! 
  • Employment opportunities paying high wages. Many of the migrants arriving in Portland are being moved here by their employers, often at the same salaries they were being paid in areas such as San Francisco or Silicon Valley. This gives these migrants much greater buying power than the typical Portland resident. 
  • 25% of all buyers pay cash. This is especially true with migrants being moved for jobs, and those buyers coming in from California and other areas of the country with even higher housing prices. (The median price of a house in San Francisco is $1.1 million!)
  • Developers are buying properties in the most high in demand locations at premium prices. They tear down the existing homes, especially if those homes are on larger lots or are in need of updating. Then they build two, three or even more higher priced homes on the same lot. Most buyers can’t compete with the price developers are willing to pay and the developers know even if they pay more for the property, they will reap in the profits on the multiple homes they construct.
  • Low mortgage rates are enabling buyers to qualify for increasingly higher prices.

How can anyone win the bid for a house in Portland these days?

As realtors, we know how busy the market is. We try to get our buyers out to view new listings the same day they go live on our multiple listing service because sellers often receive several offers the first day. Most of us do try to stay in touch with the listing agent to determine how many offers are on the table and when the seller will be reviewing them. (Most sellers know that leaving their properties on the market for at least one weekend will maximize the number of offers and selling price.) This gives us a sense of how high offers might go on these listings, so we can better advise you when preparing your offers.

Here are some tips that might help:

  1. If at all possible, look at homes considerably lower priced than what you can afford to pay so you have room to increase your offer and still qualify. 
  2. Be prepared to look outside your preferred area to cut down on the competition. Currently virtually anywhere west of I-205 is in high demand, and prices are much higher as well.
  3. Don’t automatically reject houses that are in need of cosmetic updates. Most buyers; and especially those who can afford to bid high or who insist on the neighborhoods in highest demand will make the highest offers on “move in ready” homes.
  4. If you are willing to paint, upgrade appliances, kitchens, bathrooms and flooring, you have a much better opportunity to win the bid. AND the upside to this is you will actually pay less after updates than you would have paid for the same house if it had already been updated by the previous seller or a house flipper. New construction properties also sell at premiums relative to comparable homes, sometimes just a few years old.  

If you find yourself in a bidding war,  you might be asked to give up some of your rights:

  • It is not uncommon for winning bidders to give up the right to ask for repairs that are found during a home inspection.
  • If you want or need help with closing costs, be prepared to offer an even higher price to cover that cost for the seller.
  • Sellers may insist that if you win the bid, you give up your right to re-negotiate price if the appraisal comes in lower than your accepted offer. 

It’s a tough market out there, but not hopeless. Many buyers last year walked away from the market in frustration; hoping this year would be better. We are already hearing that many of those buyers are regretting that decision as rents continue to rise almost as fast as housing prices. Remember, those who managed to buy last year are already building equity quickly. But the market will eventually calm down, and even return to normal.  

Builders are buying up land as quickly as they can, but it takes at least two years from date of closing on land purchases to actually selling homes at those sites. At current rates of new home construction it is now estimated that our housing market should catch up to demand some time in 2017. 

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Banana peels, coffee grounds and egg shells are gardeners’ best friends

Bananas egg shells and coffee grounds

Tips to organically nourish your soil for spring and summer planting

Bananas egg shells and coffee groundsIt’s never too early to start preparing your soil for spring planting. When the rain gives way to those intermittent sunny days, many of us start just can’t wait to get our veggies into the ground, or plant flats of color to chase away the gloom. February is still a little early for most of the planting we’ll get to when the weather really warms. Here are a few tips to get a jump start on feeding your soil organically with banana peels, coffee grounds and egg shells.

To compost or not?

If you’re an avid gardener or just ready to tackle your first garden, you’ve certainly heard a lot about composting all your kitchen scraps; from fruit and vegetables to egg shells and coffee grounds, composting is a great way to enrich your soil. But composting, even if you’re using a composting bin, attracts bugs, and who wants all those bugs and bug larvae around? There is an easier way to use some of that waste.

Banana peels can be cut into smaller pieces and placed into the ground around the base of your plants, just an inch or so below the surface is all that is necessary but deeper is better. They are full of all kinds of great nutrients like potassium, phosphorus, and calcium, and other minerals your plants need. OR, if preparing soil for your veggie garden, get those banana peels into the ground now so they can break down before you’re ready to plant. There are many other ways you can use banana peels – such as drying and grinding them up, but this is by far the easiest. (Don’t leave the peels on the surface of your beds unless you want to attract bugs and squirrels.)

Coffee Grounds are rich in nitrogen a nutrient that all plants need to flourish. Contrary to popular belief, the grounds are not acidic but are pretty much PH neutral, so can be added around any type of plants. Be sure to start slowly with coffee grounds though, just adding a tablespoon or so a week, and stop using if you see existing plants start to react badly to them.

Egg shells add calcium to soil and have the added benefit of deterring slugs. Crush eggshells – just put in bag and crush with your foot or hand, and scatter around the base of plants, especially those that slugs like to eat. The sharp edges keep slugs away, but soften and break down quickly, so you need to put fresh shells out every week or so for best results.  

Vinegar is NOT for mulch but is an organic weed killer. It will kill plants as well, so use carefully. If you’ve looked out in your garden or lawn recently, you have probably noticed that dandelions and crab grass are already growing. 5% vinegar (which is what you buy at the store) will fry those tender young dandelions and crab grass shoots, and will kill them to their deep roots. Yes, you might see brown spots in your lawn, but it’s better than hundreds of dandelions appearing and taking over your lawn later in the year. Unlike chemical weed killers, vinegar won’t harm the soil for the grass that will soon take over that brown spot. Vinegar is best sprayed to make sure you get the whole plant. If going after well- established dandelions, you might need to spray them a couple times to kill them off, but they shouldn’t be producing offspring once well sprayed the first time.

 

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Job growth driving huge migration of new residents to Portland

According to the Oregon Office of Economics, approximately 40,000 people are moving to Portland every year. These new migrants come from everywhere and include all ages and ethnic backgrounds. The biggest numbers of migrants are those in the 20-30 year age group and are well educated, even if many are unemployed. That may seem like an oxymoron, but for the educated, areas with high job growth are natural locales for seeking employment. And the young are generally more mobile than any other age group.

Most people move for two economic reasons; jobs and housing costs.

Portland has been leading the country for migration, and our pace of people moving into this area far exceed the number of those leaving.

Because there are so many people moving to the Portland area unemployed, our unemployment rate is higher than most cities in the country. While 50,000 new jobs have been added since the recession, this number is not nearly high enough to accommodate the number of new job seekers who arrive every year, never mind put back to work those who lost their jobs during the recession.

The good news is that picture is changing this year. Currently Portland is adding approximately 4,000 new jobs every month, so at this current rate, our unemployment numbers should start to drop at least in line with the rest of the country.

Housing is an issue though that has everyone concerned. As our housing prices continue to rise, more current residents find themselves priced out of the market. In some areas of the country, housing starts are up, but Oregon starts remain relatively flat which has caused our inventory to hit alarming lows – down as low as 1.2 months inventory at the close of 2015. Optimistically speaking, the hope is that housing starts will increase enough to keep up with demand within the next 1-3 years which should stabilize housing and rental prices.

Oregon Office of Economics forecasts “By this time next year, if our forecast comes to pass, employment in Oregon will have fully caught up to the population gains since the onset of the Great Recession.” Hopefully our housing needs will catch up to our needs within the next few years too.

 

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Great curb appeal can net home sellers up to 10% higher sales prices

Before and after photos of curb appeal
Before and after photos of curb appeal

Hard to believe these photos are of the same house. Yes, the portico over the front door adds dimension to the flat surface of the house, but even without the portico, the paved walkway, plants and mulched garden beds make buyers believe that the AFTER photo shows a house that will be in much better condition indoors as well. Which house would you offer more for?

If you’re thinking about selling your home, don’t overlook your front yard. Buyers form their first impression of your house as they drive up to it, so failure to make a great first impression can cost you a LOT of money. Statistics show that homes with great curb appeal sell for up to 10 percent more than comparable homes without it.

Did you know that you have only about 10 seconds to make a first impression on potential home buyers, and that first impression will last all through the first walk through of your property. Whether your potential buyers love or hate gardening is irrelevant. Everyone wants to impress anyone who visits them and often invite guests to see their new house, so they want their homes to look as good as possible, both inside and out, from the day they move in.

It’s great that you’ve got a killer house indoors, but if potential buyers won’t even get out of their car to look indoors, you have lost a potential sale.

Tips on sprucing up the front yard to maximize your sales price

  1. Rent a pressure washer to clean up walkways, the home exterior, driveways, etc.    
  2. Wash all your windows.
  3. If you have a lawn, make sure it is trimmed and edged.
  4. Add some gardening beds if they don’t already exist, and at least put in some foundation plants to add interest and dimension to the front of your home.
  5. Weed the flower beds and apply a fresh layer of mulch to make your plants stand out.
  6. Prune trees and shrubs.
  7. Plant some color in the beds if possible. Annuals are very inexpensive and add instant warmth to the exterior. But flowers are not absolutely necessary, (especially if you list your house during the late fall and winter months). There are many evergreen shrubs and grasses in multiple shades of green that can stand out beautifully against fresh mulch.
  8. Fill some planters with fresh lush plantings, especially near the front door, to welcome visitors into your home.
  9. Get a new welcome mat.
  10. Paint your front door.
  11. Replace torn screens, especially if you live in an area where open windows invite flies and other unwanted bugs indoors. 
  12. Dig up dead or sick looking plants and if necessary fill that space with containers with fresh plants. These are almost always available at nurseries, even during the winter months.
  13. Store excessive yard décor type items. Not everyone likes pink flamingos or gnomes in their yards.
  14. If you have a water feature, be sure to clean it up.
  15. Repair leaking faucets. If your faucet is leaking outdoors, buyers will wonder what other deferred maintenance might be indoors.
  16. If you are planning to dig up any plants or trees to take to your new home, you might consider doing this before you start showing your house.
  17. Touch up any areas on the exterior paint that might make the house look like the entire exterior requires a paint job.
  18. Chain link fences are very out of favor and are most often nothing more than an eyesore. Buyers see this as a big job and expense to remove, so if possible remove or have it removed prior to listing your house. Leaving it there will more often than not result in low offers. 

A well kept front lawn is better than no landscaping or weeds in front of your home. But the front of your house is both the first and last impression of your home as buyers drive away. Remember, no matter how beautiful the interior of your home is, you should always strive to make your home as inviting and warm as possible, and good curb appeal will result in higher offers. Your wallet will thank you for the efforts you make before you list your property. 

More information about increasing the value of your home:

Factors that can increase the value of your home

Tips for sellers in a hot housing market – staging your home results in higher offers

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Portland housing market posts biggest nationwide gains for 2015

Average Median Sales Prices Portland metro 2015

                                Portland metro area average/median sales prices 2007-2015

S&P’s Case Shiller’s most recent housing report, (which includes statistics only through November 2015), the Portland housing market has seen the biggest gains in housing prices year over year than any other city in the country.

“Portland prices were the strongest, rising 11.1% compared with a year ago. San Francisco, at 11%, and Denver, at 10.9%, followed. Some 14 cities had stronger yearly price gains in November than in October.

While the composite index is still roughly 12% lower than the peak set in summer 2006, Dallas, Denver and Portland have all touched fresh highs. San Francisco prices have pulled even with the earlier peak.”

(If you bought a house for $300,000 in November 2014, your home is very likely now worth approximately $333,000! That’s nice appreciation in just one year, especially when compared to the national average of only 5.8% price increases over the last year. Only??? A 5.8% home price increase in one year is historically a very high rate.

Will Portland housing prices continue to increase at this same pace in 2016?

Forecasts for the housing markets nationwide are a bit mixed. Low housing inventories, coupled with job growth and low mortgage rates have buyers motivated and have been driving housing value increases for the last few years. But some say that buyers are tired of over-paying for housing and are being much more picky already this year.

In Portland, rapidly rising home prices have been exacerbated by our explosive population growth over the last decade. Technology businesses are moving into Portland with outpost offices here and many new start-ups have their home offices here. This is bringing in higher than average wage earners with money to spend, including on housing. And of course Portland’s reputation has gone from “why would anyone choose to live in Portland where it rains all the time?” to “Portland is a great place to live.” So we keep topping the charts for number of people migrating here from other states around the country and even around the world.

The truth is that while home prices have risen dramatically in Portland, the west coast continues to attract people from around the world for our climate, life style, and all that the west coast has to offer. Portland housing prices are about half the price of homes in cities such as Seattle, San Francisco, Los Angeles, and San Diego.

Upside – rent increases in Portland forecast to slow

Last year we reported that Portland led the nation in rental rate increases. In fact, we were dubbed the toughest rental market in the country. It was not uncommon for renters to receive notices that their rent was being increased by up to $500 a month and more.

Bidding wars for rental properties in some of the “most desirable” neighborhoods became all too common.

Last year we saw average rent increases of 9.7% metro-wide. Zillow predicts that number will drop to 3.8% in 2016.  Hopefully they are right. Still, at only 3.8% increases, Portland is forecast to have the 6th highest rate of rent increases nationwide in 2016.

Will the housing market crash again?

housing bubbleThere are many would be buyers out there who are calling this housing market a bubble ready to burst at any minute. The truth is that housing values, similar to the stock market, do go up and down, though not nearly as dramatically or as quickly. 

Now that lending standards have tightened, there is less likelihood that we’ll see another crash like that of 2007. So if you’re buying, you should be thinking a bit longer term. Most home owners tend to keep their properties an average of seven years before they start thinking about moving up or down sizing. Home ownership, for those who can stay the course, has always been a good investment. You are not just investing. You are also locking in your monthly payments for the long term, and putting away equity for your retirement years.

 

 

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