Portland home prices hit new median highs as of end of 2015

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.

What’s driving all this growth? I’ll recap some of the reasons covered in the past, and add a couple new reasons that aren’t as common knowledge.

  1. Approximately five hundred new people are taking up residence in 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. 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 those still financing their purchases.
  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, but 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 may very well not slow down until sometime in 2018! 

 

 

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Which Portland neighborhoods saw 20+% median price increases in 2015?

median price increases in Portland

 

Did you know that RMLS now breaks up the Portland metro area in 122 neighborhoods (primarily for statistical purposes)? While most neighborhoods throughout Portland saw median price* increases last year of 10% and more, a few just rocked the statistics with greater than 20% median value increases in 2015. Several of those areas have been rising stars for a few years now, such as Woodstock, Cully, Kerns, and Sabin, but there were some surprises east of I-205, such as Mill Park, Park Rose, and Centennial. But the biggest single median price gainer was East Columbia which saw a 42.1% increase in median prices for the year!

It’s true that a few of the neighborhoods that saw the biggest increases were lower priced areas (average home list prices below $250,000), but a few now have median prices at or above $400,000, so price was not the single factor that contributed to the gains. However price has been a factor in driving attention to those areas that have emerged over the last few years.  

How did your neighborhood fare? Check out the interactive map here, along with a chart with even more statistics by neighborhood. (Please note that the interactive map includes a second map showing neighborhoods outside Portland city limits). And if you’d like even more information about the value of your house these days, please feel free to contact me directly and I’ll be happy to do more research for  you.

Overall, real estate remains on fire throughout the Portland metro area. Bidding wars continue to be the norm, especially for homes that are basically move in ready. It’s becoming increasingly difficult to find any listings priced under $225,000 anymore as avearge and median prices continue to rise due to demand exceeding inventory. This trend is expected to continue at least through 2018, when it is hoped that new construction will catch up to demand. 

 

*median price = half of all homes sold were above prior median price and half were below

 

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The average home in Portland Oregon increases in value $2.82 every hour

girl saving pennies in piggy bank

Did you know that the average price of a home in Portland has risen to $357,500 as of the end of February 2016? That’s a huge increase over the average sales price of $283,300 at the end of February in 2013. Put another way, a home owner who purchased a home in February 2013 at an average price of $283,300 has seen their value increase by $74,200! That means that home owner was actually earning $2.82 in equity every hour from the day they closed until now.

Remember this represents an average price and value increase over the last three years. In some areas of the Portland metro area, values were increasing at a much higher rate, and of course the reverse is true that many areas saw lower rates of inflation.

For those who are still waiting to buy a home, or are trying to save for the down payment, are you saving at a rate of $2.82 every hour?

Yes, this is all based on averages. Not all future potential home buyers can afford an average priced house or $357,500. If this is you, should you just give up on your dream of home ownership?

The truth is that  less than half of all home buyers can afford an average priced home in Portland anymore. These last two years in particular have seen an explosion in home values due to low inventory, low mortgage rates, and the number of competing buyers (which is being exasperated by the high migration rate to Portland. 

Many buyers are moving further out from downtown to make the dream of home ownership a reality. The end result is that prices east of I-205 and south of I-84 are now sky-rocketing too.  Yes, the hottest neighborhoods are still predominantly close in to downtown Portland, but areas way further east, such as Gresham, or southeast, such as Oregon City and SE Portland are in high demand lately, and this is likely to continue as we move through 2016 and even into 2017-2018. In the southeast, Woodstock and Milwaukie have seen almost astonishing growth. 

Where will the next hot neighborhoods be?

There is really no definite way to predict which areas will take off and become the next Alberta, Sellwood or Hawthorne, but buyers should look for anchor restaurants that see a lot of traffic. Just look at what happened on Division Street after PokPok opened just 10 years ago. Also watch for great little coffee shops to open nearby. Sure Starbucks is a good indicator, but a boutique coffee shop where residents are comfortable hanging out with laptops and tablets are even more significant. Little shops are likely to follow to hopefully cash in the traffic generated by the anchor establishments, and a new “in” neighborhood can emerge. You’ll know your area has fully emerged if a Trader Joes or New Seasons opens nearby, but that takes a while. 

In the meantime, enjoy your new home and work with neighborhoods to beautify where you live.

Your piggy bank will thank you. 

 

 

 

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Two tips to net top dollar when you sell your home

Every home seller wants top dollar for their home, but many are going at pricing wrong, and it’s costing them money!

List your house with a realtor®

  1. Sellers think that by trying to sell their home on their own, they are saving the cost of the realtor commission. The truth is that study after study has shown that sellers who list their homes with a professional actually sell for much higher prices than those who try to go it alone.

“The median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $151,900. However, homes that were sold with the assistance of an agent had a median selling price of $249,000 – nearly $40,000 more for the typical home sale.”

FSBOs vs listed - median sales prices

The truth is that realtors have a lot of tools to market your home that you do not have. Just listing your home on the local MLS (multiple listing service) gives your home thousands of times more exposure than the typical home owner has. 

  • Local realtors may not even know your house is for sale if it’s not listed.
  • Realtors who list a home have the capability of broadcasting your listing via email to all realtors in a given area letting them know there’s a hot new listing to show. 
  • There are more than 5,000 realtors in the Portland metro area working with buyers. How can a single home owner compete with the sheer numbers of possible real estate professionals who might show your home to their buyers?
  • You are free to go on vacation and leave the work to us. 
  • Most buyers prefer the seller NOT be home when they are viewing your home.
  • We know what our buyers are looking for, so know what features to point out that could be just the right selling point for your home.
  • Lock boxes give listing agents the capability of calling the buyers’ agent to follow up and get instant feedback from buyer viewings; and to keep those agents in the know if prices are changed, when offers are received, etc.

The MOST important reason to list your house is that most buyers prefer to work with a professional realtor. As a home owner, you are not permitted to use our state sanctioned offer forms (10 pages of legalese that protects both buyers and sellers). Most buyers want that protection, and the comfort of knowing that their realtor will watch out for them and guide them through the process.

In short, far more potential buyers will view your house when listed than when for sale by owner. The more people who view your house, the more likely you are to receive more and higher offers.

Price your house slightly below market value

Most sellers think that if they price their houses just above comparable value, they have room to negotiate with buyers. This actually makes some sense in a normal housing market. But NOT in a sellers’ market.

Look how many more people will view your house when it's priced below market value!

Look how many more people will view your house when it’s priced below market value!

The truth is that the secret to making more money on the sale of your home is to get more buyers to view it. In order to do that, we will often price your house just below actual market value so it looks like it’s a bargain.

Home buyers are pretty savvy these days. They do their research and have a pretty good idea what a house should be priced at in any given neighborhood based on size and features. But, everyone wants to pay less for a house than fair value and that will bring hoards of buyers to your home. Who can resist a house on sale?

Because the buyers think they might get a good deal, more of them are likely to “throw their hats into the ring” to try to pick up this bargain. When there are multiple offers for a house, the buyers actually end up competing with each other for your house, rather than haggling with you over the price. This is why in multiple offer situations, so many homes end up selling for considerably more than list price, making you Mr./Ms. Seller “the winner.”

 

You might also like to read:

Factors that can increase the value of your home

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

Staging your house for sale nets sellers higher offers

 

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16 signs your home is seriously dated

maintained bodyHomes are a little like people. They require continual maintenance and updating to maintain their integrity, appearance, and safety. Potential buyers to your house will watch for any features that spell money to them after the purchase closes. But beyond that, failure to invest in proper maintenance and updating WILL cost sellers money, and can be dangerous to current residents.

Obvious signs that a home has not been well maintained or upgraded in a long time:

  1. Fuse boxes – especially a fuse box with only four fuses! Fuse boxes haven’t been installed in new construction in decades with good reason. They simply don’t have the safety features that new circuit breaker electrical panels have. Yes, fuses trip or burn out if over loaded, but it was too easy to bypass those safety features and create a fire hazard in doing so. In addition, there are no fuse boxes out there with enough capacity to handle new appliances, big flat screen TVs and sound systems, computers, and all the new gadgets that are being manufactured every day to safeguard your home.
  1. Old electrical panels – especially where additional panels have been wired into the original panel, or where there are signs of cobwebs, frayed wires, etc. inside. Electrical panels need to be replaced to accommodate new technology, or can also be a fire waiting to happen.
  2. No GFCI outlets – especially in any room with water access such as bathrooms and kitchens. Again, these are dangerous and should be upgraded. Electrical shock and potential electrocution are the obvious readily apparent dangers here.
  3. Aluminum wiring According to the Consumer Product Safety Commission, homes wired with old technology aluminum wire “are 55 times more likely to have one or more connections reach Fire Hazard Conditions than is a home wired with copper.” Enough said.
  4. Old furnaces that obviously have not been serviced regularly (if there are dust mites inside, this furnace needs at the very least, a good cleaning and inspection). But buyers are also looking for energy efficiency, and old furnaces were not built nearly as energy efficient as newer models. If you have an old furnace in your home, make sure it is cleaned and serviced prior to listing, and if possible get your servicer to write up a letter stating that the furnace is in good working condition.
  1. moss covered roofMoss covered roofs – If your roof is so covered in moss that you can barely see the roof, most buyers will assume this roof needs replacing. At the very least, have that roof professionally cleaned and inspected.
  2. Carpet in the bathroom – This is a definite replace it now situation. It is not only unsanitary, but mold can be hiding in and under the fibers of the carpet.

 

 

More flags that will cost home sellers in their ultimate sales price

  1. Wall to wall shag carpeting is definitely out, and if stained or has well-worn or bare patches, dollar signs are going off in your buyers’ heads.
  2. White appliances – especially if they are old. White appliances have been out of favor for a decade or more, and especially those older electric stoves with coils rather than flat surface tops. Even worse are appliances in colors such as sage green, gold or beige.
  3. Busy dated wallpaper and bold colored paint. Remove both and go neutral with your color scheme.
  4. Brass fixtures (lighting, drawer pulls and door knobs) really date your home.
  5. Linoleum
  6. Tiled counter-tops – OK – you love that electric blue tile, but it will be the very rare buyer who loves it as much as you do. And the grouting is very hard to keep clean and sanitary.
  7. Formica counter-tops – enough said.
  8. Popcorn ceilings – These are not only dated, but in a huge percentage of homes built prior to 1978 or so, contain asbestos. Popcorn ceilings definitely have to go. But be careful about doing it yourself before you have it tested for asbestos.
  9. Wood paneling – We’re not talking log cabins here or beautiful wood details such as wainscoating. We’re talking about the inexpensive wood paneling that was so in vogue half a century ago. If you can’t afford to tear those out and sheetrock the walls, at least paint them a neutral color.

Remember that home buyers have their eyes on their wallets

If there is anything in your house that seriously needs updating, sellers should always consider making those upgrades before listing. Buyers almost always over-estimate the cost and time to do those upgrades themselves and will low ball sellers to the extreme IF they make offers at all. All too often buyers won’t even want to go see a house with photos showing white appliances, popcorn ceilings, wood paneling and gold fixtures. 90% of buyers out there are looking for move in ready.

If you Mr./Ms. Seller are looking for top dollar for your house, talk to your realtor® about what not upgrading your house could cost you in real dollars and cents. Remember the more potential buyers you can attract, the more money you will make on your sale.

 

 

 

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Portland tops the list of fastest rising home prices in US for last 3 months

home price appreciation 2015 in USAccording to a recent article in the Oregonian, Portland continues to lead the nation with the fastest rising home prices in the U.S. with prices rising more than 10% in 2015 (followed by San Francisco and Denver. Seattle and Dallas were the next runners-up with price increases above 9%). For the last couple months of 2015, and now two months into 2016, the market is screaming hot and home prices just keep rising.

For those considering buying a house, you should know that prices for starter homes are closing in on $300,000 in most of the Portland metro real estate market. To be sure, there are homes still priced in the low to mid $200,000 – $250,000 range, but with more buyers than available properties, bidding wars are the name of the game. Within hours of being listed, sellers will receive often multiple offers, resulting in a sale price 20-30% higher than list price.

I’ve heard it many times, “I’ll just wait for the market to cool off.” But the forecast is that the demand is so high most economists forecast that this condition is likely to persist well into 2018 (when it is anticipated that new construction should catch up to demand.)

Where are houses priced under $250,000 in Portland?

If your budget and pre-approval is for less than $250,000, you should be looking in SE Portland. I know, everyone wants to live as close in to downtown as possible. The “hottest” neighborhoods are moving east too. It used to be that everyone wanted to buy west of 82nd Street. Last year that barrier moved to I-205, and this year we are looking at almost anywhere between I-205 and 130th as hot neighborhoods. But there are pockets east of 130th that are getting to be equally as hot.

Currently prior overlooked neighborhoods such as Maywood, Park Rose, or Mill Park are becoming the Montevillas and Cully neighborhoods of last year.

How to spot neighborhoods on the rise

Forecasting where the new boutique areas will pop up is tough, but here are some signs to watch for:

  1. Restaurants opening to anchor a shopping area – remember that Division street started with the opening of Pok Pok and just expanded from there to be one of the hottest little neighborhoods in town.
  2. A great little café offering freshly baked pastries and more atmosphere than a Starbucks.
  3. Nearby strip malls that can easily become little boutique malls.
  4. Small boutique type shops squeezing into more commercial strip malls.

You will know the neighborhood is “on the map” if a Trader Joes or New Seasons market opens nearby. But by then, it’s already too late to get in on what has already become a trendy neighborhood.

 

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