Portland home values soar 17% in last year ~ average home prices hit $385,000!

sold - sale pending signs

sold pendingAs of the end of the first quarter of 2016, houses within the Portland city limits have soared an almost astonishing 17% over the last year (according to Zillow). Throughout the rest of the metro area home values are up approximately 13% – not quite 17%, but still a very good return on any investment these days. In many areas of Portland, housing values have hit record new highs, and just keep rising.

To make matters even worse, inventory dropped again to almost new record lows of only1.3 months (the time it takes to sell all the houses currently listed if there are no new listings). Many buyers I work with say that trying to buy a house is almost like having a second job. It is not for the faint of heart or those who are easily discouraged. Buyers need to be ready to get out and look at new listings the day it goes active because any house could be sold in just one day, often with multiple offers. And buyers need to be ready for “rejection.” It’s not unusual for buyers to make offers on many houses before they get one accepted. This is not personal folks. Money talks.

Buyers – don’t even think about a low ball offer; not in this market (unless the house has been listed longer than a week or two.)  Sellers know this is their market and most are prepared to wait for the right offer to come along. 

Average home values in Portland metro area hit $385,000

It’s true that the averages include the prices of homes in the highest priced areas of Portland;  but this is the highest average price we have ever seen, and it’s just going higher. With big industries moving into Portland and employment on the rise, there are more buyers out there with bigger budgets helping to push prices up. 

Home buyers with lower budgets should consider the suburbs

The typical Portland suburb does NOT look like this. This is a photo of a suburb in Las Vegas.

The typical Portland suburb does NOT look like this. This is a photo of a suburb in Las Vegas.

The “dreaded suburbs” has many would be buyers thinking gloom and doom. Millennials and those with larger budgets have their eyes on being close in to down town Portland and are willing and able to pay the higher prices. Just last week in the very popular Hawthorne/Belmont district there were only 3 listings.

But the suburbs aren’t the end of the world. There are some really beautiful neighborhoods outside of the I-5 corridor. With home values up at least 13% over the last year those who move to the suburbs are still making a very respectable return on their investments! Of course, it’s always possible that many of these suburban neighborhoods will sprout little boutique shopping areas too, and in time, you might find that you actually like where you were able to buy at a lower price. You get a lot more house for the money in the suburbs. Remember that the Division shopping area didn’t appear until PokPok restaurant opened and that was only 10 years ago.

Businesses are also moving to the suburbs

It’s not new that businesses are moving out from downtown Portland. Property costs are  lower in the suburbs, so many big companies choose to build their campuses further out. Look at Intel, Nike, Columbia Sportswear, and all the high tech companies out in Beaverton and Hillsboro; or Xerox, Sysco Food Systems, Mentor Graphics and Flir Systems down in Wilsonville and you’ll find those suburbs are where the employees are moving to be closer to their jobs; and their housing markets are thriving too. As a lot of start ups are moving into Portland, we’re finding that many of them are also locating out in the suburbs. 

At some point, housing inventory will catch up to demand, and the market will slow. That 13% return on your investment will definitely help you purchase another house, perhaps in a more desirable location if you choose to. You’re certainly not going to see that kind of return paying rent (which is also increasing at unprecedented rates of 14% per year). Buyers need to remember that a house is more than just a place to live; it’s also an investment for the future. It’s not even unforeseeable that housing prices could dip again one day. It has happened many times historically, so it could happen again.

When will the housing market craziness end? Is this just another housing bubble?

We’re hearing “bubble” everywhere, but few analysts or economists think this is a bubble. Portland property values have been lagging behind all the major metro areas on the west coast forever. It is in part why 500 people are moving to Portland every week. And of course, that high rate of migration into Portland is fueling our high demand and low housing inventory. Plus approximately 25% of all home sales are cash buyers! With all these factors in place, this housing boom was predicted. Even Forbes magazine named Portland one of the housing markets most likely to outperform this year. That prediction is certainly coming true now. 

However, virtually everyone believes that the market will cool, but very likely not before 2018. It will take that long for inventory to catch up to demand. Note, that cool is the word here, not bubble bursting. Eventually the housing market will stabilize and we will retreat to more normal 3% annual home value increases. But inventory has to rise to more like 3-6 months before that will happen. For better or worse, this is our housing market now, and anyone who wants to buy a house has to play in this market. It’s quite an experience. 

What about buyers with budgets of less than $300,000?

Buyers with budgets of less than $300,000 absolutely should be looking outside the inner corridor to find a home, especially if they need a house with 3 bedrooms and 2 baths. Inside the inner corridor, few homes are priced below $300,000 and most are major fixers or tear downs and often require cash buyers. But even close in to I-205, home prices are rising almost as quickly as just across the interstate. Neighborhoods like Park Rose, Maywood and Mill Park took off last year. Others further out such as Milwaukie, Gladstone and even Gresham were among the hottest selling neighborhoods in the metro area. And on the west side, Beaverton and Hillsboro are definitely hot too. 

You may even find that you like living in the suburbs where there is less traffic and your money allowed you to buy a larger home than would have been possible closer in. And with the exception of the new housing developments, most Portland suburbs do not feature “every house looks the same” type of atmosphere. Most of our suburbs are a great mix of older homes, lots of mid-century style homes (which, by the way are definitely coming back into vogue), as well as newer infill homes. There are lots of quaint tree lined streets and evidence of pride of ownership further out. Stranger things have happened, and it could happen to you.

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Alert: Hackers take aim at home buyers

hackers target home buyers

Hacker at workIf you’re a home buyer, you should be aware that you are a very popular and relatively easy target for hackers. In order to purchase a home, you have to disclose all your most closely held personal information, especially if you are financing your purchase. All this information is shared among a plethora of individuals in multiple offices around the country because there are so many moving parts and interested parties involved in the purchase of property.

And, of course, huge sums of money are being exchanged during the process. Why wouldn’t hackers target you?

There are two hacking schemes being used recently that are pretty scary, so please read on if you or anyone you know is in the process of buying a house now or in the near future.

Regardless of which scheme the hackers are using, the route to your information is either via your realtor or your lender. Once they hack into one of our email accounts, they do nothing to let us know they are in; but rather watch for information about buyers and sellers.

Scheme 1 has been around about a year now, and this one is definitely targeting your money.

As your sale closing approaches, your title company or attorney will send you instructions that includes what you need to take to your closing. In addition to a photo ID you will also be told  the amount of funds required, and where and how to wire funds to close the transaction.

At very close to the same time, the hacker will also send you what appears to be an official looking email from the “title company” with “updated instructions” on where to wire funds. (Remember that your agent and escrow officer have been communicating frequently during your purchase, so hackers have the official signatures each has been using, and these are easy enough to copy to make your email with updated escrow instructions look legit.) Some hackers may even include other information about your transaction to make the email look even more like it has come from a trusted source.
Generally speaking, this will not impact the majority of buyers who hand carry a cashiers’ check for down payments and closing costs to the title company at closing. But, for out of state buyers and cash buyers, it is not uncommon for funds required for settlement to be wired to the title company. Cash buyers, this can be hundreds of thousands of dollars that you could be wiring directly into the hacker’s bank account.

Scheme 2 is an attempt at ID theft and comes to you in the form of an email that appears to be from docusign.

hackers target home buyers

This is an actual email a home buyer received

If you’re like most buyers these days, you sign your offer to purchase documents via electronic signature. Docusign is just one of the businesses that offer this service, and so far as we know, it’s the only one that is being used in the recent hacks. Unfortunately, you might get documents to sign from either your realtor or your lender, and the emails you receive are just ambiguous enough to fool you into thinking they are official documents that you have already signed.

Here’s a sample of such an email that was recently received from a home buyer:

As you can see, this email isn’t even from docusign but from an Eden Guthrie, and apparently Google knows about this scheme because a warning is attached as well; so please do NOT click on the ACCESS DOCUMENT button.

 

However, Google also uses this warning on legitimate documents from other e-signature providers, so be sure to check with your lender or realtor to make sure that whatever you have received is legit.

How can you protect yourself from hackers?

  1. Make sure that your realtor, lender and title company are all taking every step possible to keep hackers out of their email. Personally my email is encrypted and I use strong passwords that I change frequently which makes watching my email much more difficult for hackers.
  2. Ask those involved in your transaction to always alert you when any document has been sent to you for electronic signature. I always send a text to make sure you’re watching for email from me or whoever the email will come from.
  3. Be aware that it is very uncommon for a real estate agent to request sensitive information from buyers, especially via email. We don’t need your bank statements (unless you are a cash buyer) or any information with your social security number. That type of information should always be handled by your lender. When we do require proof of funds for a cash transaction, buyers should always redact most of your account number (leaving only the last 4 digits), and should send proof of only enough funds required to settle the purchase. If you are able to encrypt the email, that would be even better.
  4. Before wiring funds, always double check with your title company or attorney to make sure that you have the correct wiring information for your bank.
  5. Be sure to keep and check old emails you have received from the title company to make sure you are calling or emailing the correct person, because hackers will include their contact information in case you are looking for more information.
  6. Don’t click on any links in the email, giving the hacker access to your email (if they don’t already have it).
  7. Remember that all final loan documents must be signed in person. Electronic signatures are never used.

It’s an Internet world out there, but there are always steps you can and should take to protect yourself. Unfortunately, if you’re a potential victim of scheme #1, once your bank wires funds, even if to an incorrect account, the money is gone. And if you’re a potential victim of scheme #2, once a hacker has all your most sensitive information, you become an ID theft victim and have to deal with all the hassles of getting that squared away. Your bank accounts can be locked, your credit will be flagged, and so on.

The good news is that banks, title companies, lenders and realtors are all aware of these threats and are all taking whatever steps we can take to tighten security on your behalf. But at the end of the day, responsibility for protecting your money and your ID  is still yours. So, be careful out there. Check and double check with whoever you’re working with just to make sure that whatever you are receiving is legitimate, and proceed from there.

 

 

 

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