Portland ranks #1 best city to live by Bankrate

Recently Bankrate rated all the metro areas in the U.S. and determined which are the best and worst cities to live in based on multiple criteria.

Best places to live in the US

Metro differences that matter

According to Bankrate, “Based on Wachter’s advice and some of our own research, we selected factors that influence the overall cost and benefits of home ownership and set about finding the best data available to measure them. They include:

  • Property taxes.
  • Affordability.
  • Property insurance costs.
  • Foreclosure rates.
  • Maintenance costs.
  • Average monthly home energy costs.
  • Appreciation rate.
  • Rent hedging.”

Out of a possible score of 80, Portland ranked the highest with at total score of 60.58.

Unlike many similar rankings, Portland was the only west coast city among the top ten, with other west coast cities such as Seattle, San Francisco, San Jose, Los Angeles and San Diego considerably lower in the rankings.

Portland had among the lowest foreclosure rate in the country, and THE lowest costs for property insurance!

Read more: http://www.bankrate.com/finance/real-estate/best-worst-places-for-homeowners.aspx#ixzz4L12M3KY2

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It’s a sellers housing market ~ where are my multiple offers?

As home buyers and sellers know, this is a sellers housing market. In fact, Portland has been consistently one of the hottest markets in the country almost every month for the last several years, and no one is anticipating any slow down in rising home prices. As a result, home sellers have come to expect multiple offers when they list their houses. Unfortunately, many sellers are not finding that to be the case. Why not?

Location, location, location AND price

Buyers know that when it comes to buying a house, their top two requirements are location and price. In some locations, just about any house that is listed, regardless of the condition, will sell with multiple offers IF it is priced properly for the neighborhood. Even fixers sell quickly in these neighborhoods.

So, why do some sellers receive so many offers regardless of location?

Homes that seem to be in the highest demand are often either priced under that buyer sweet spot of $300,000 or less, or are priced below market value.

Unlike the house buying frenzy we experienced in 2012 – 2015, home buyers this year are far more cautious, picky, and savvy. This is likely to continue, in spite of low inventory and high demand. The bottom line is when buyers are spending so much money on a house, they want what they want, and seem willing to wait for that “right house” to come along. This is likely to continue as long as home prices continue to rise. Paying $300,000 for a house, while still relatively low priced in Portland’s current housing market, is still a lot of money.

Houses must be priced right to sell quickly

Almost every home owner thinks their house is worth more than it really is. Part of this is the emotional attachment to the house, but more often, sellers expect to recoup every cent they have spent in upgrading and maintaining their home. This is not the way it works. There are almost no upgrades that will repay you fully for the actual cost. You should reasonably expect about 75% of the actual cost, while some renovations will net you slightly more, and some could actually result in lower offers because they are so personal in nature that buyers will deduct from the price in order to have that upgrade removed or replaced. You may love your renovations and upgrades, but not every buyer shares your taste. You may think it was worth it to pay $5000 for a Bosch cooktop, but your buyer may not even notice or care if cooking isn’t a really big deal. You may have spent a ton of cash on custom cabinetry in your kitchen and bath. Would you believe most buyers won’t even notice that it’s custom?

Items on buyers must have lists that may keep them away from your house

  • Gas ranges – while this is generally not a major factor in price, approximately 90% of all buyers want gas ranges, and some won’t even look at a house without one.
  • Dual sinks in master baths are must haves in master baths, and often in main bathrooms as well, depending on family size and number of baths.
  • Air conditioning is increasingly becoming a must have for many buyers, especially as we see more people moving into Portland from much hotter and/or more humid climates.
  • Attached garages.
  • Hardwood floors.
  • Curb appeal is critical. If buyers won’t even walk into your house, you may have lost a sale. Be sure you’re not advertising a yard full of weeds and at least have some attractive landscaping out front. Paint the front door and even install a new light fixture. Remember, buyers form their first impression of your house in the first 10-15 seconds. Make sure their first impression is a good one. Great curb appeal can net you up to 10% higher offers and sales prices.

What if you price your house too high?

Prior to the housing boom of the early 2000s and this sellers market, it was okay to price a house a little too high. Houses typically were on the market 30-60 days, and most buyers typically offered less than list price anyway. Those days are gone. These days, if a house isn’t under contract within 5-10 days, buyers assume there is something wrong with the house. The old adage that if a house doesn’t sell, we can always lower the price is a bad practice in this market. The longer your house is on the market, the more likely it is that offers you receive will be less than list price. You can forget about multiple offers – they are very unlikely.

While it may seem counter-intuitive, sellers who price their houses a bit below market value are far more likely to sell for more money, AND receive those coveted multiple offers. Buyers are always shopping for deals, and sometimes can’t resist making an offer on a “steal of a deal.”

Price per square foot – this is the most over-used and inaccurate statistic out there

We see this number on multiple websites, or we can compute it ourselves really easily. If you divide the sale price of a house by the square footage of the house, you arrive at what is customarily called price per square foot. While this number makes sense in a homogenous neighborhood, where all lots were purchased by the developer for the same price, it is much less accurate in more custom or older neighborhoods where even lot size and condition of homes can differ widely. This is when price per square foot becomes such a misleading number that few people really understand. The truth is that a proper sales price is determined by multiple variables including:

  • number of bedrooms (each bedroom is given a value, but a master bedroom with a walk in closet is valued higher than one with a small closet, while a master suite is the most desirable).
  • number of baths (this is further refined by whether a bath is a half bath (sink and toilet), 3 piece bath (sink, toilet, shower or tub), 4 piece bath (sink, toilet, tub and separate bath), 5 piece bath (sink, sink, toilet, shower, bathtub). The more plumbing outlets, the higher the value of the bathroom.
  • square footage of house (this should be actual living space but in fact includes unfinished basements and even storage areas) .
  • garage (single car, two car, oversized, oversized with storage, finished (sheet-rocked), attached or detached, etc.)
  • basement (finished, unfinished, partially finished, high ceilings, outside entry, walk out basement or underground basement, etc. While all basements are computed into living space, they shouldn’t be. A basement with only 5 foot ceilings is basically worthless as living space for most families, but is often cited as living space and is calculated into price per square foot. An appraiser won’t give this basement full value though, and he/she shouldn’t).
  • finished attic space versus unfinished (variables include formal stairway to attic, ceiling height, insulation, walls, number of rooms, bath in attic, fully wired, etc)
  • lot size (if your lot is dividable or just over-sized or under-sized for the neighborhood, this will definitely affect the price per square foot)
  • condition of house – don’t overlook the details because buyers won’t.
  • landscaping – and yes this definitely does matter. Buyers are more likely to pay more for a house with both hardscaping and attractive front and back yards. Landscaping, and especially hardscaping is expensive. Do you have an outdoor kitchen? Water feature? Pool? Hot tub? While some of these features add values, others can cost you. What should not be overlooked is making the landscaping attractive, because a yard full of weeds will lessen the value of the house, and some buyers won’t even walk into the front door if the “curb appeal” is missing.
  • energy efficiency of appliances, fixtures, etc. Homes with high energy scores will appraise higher and will sell for more – up to 4-5% more than homes that are not scored and don’t include that 95% efficient furnace, etc.
  • Decks are more attractive to most buyers than patios – for reasons I don’t totally understand. They are much higher maintenance, and if not up high enough off the ground to be easily accessible, can attract all manner of varmints. Stray cats, mice, rats, etc will find that low lying deck a great place to nest and shelter from bad weather.
  • Hardwood floors versus carpeting. Some buyers won’t even look at houses with carpet.

So, if you see the house down the street from you is listed for $300 per square foot, you may decide that your house should be priced the same. But what if that house is priced under $300,000, while you want to price your house at $400,000? Suddenly you’re looking at a whole new batch of prospective buyers. Yes, your house may be bigger and have more upgrades than your neighbor’s house, but there are far more people who can and will pay up to $300,000 than up to $400,000, so you’re not competing with the same buying pool. It’s very likely that your neighbor’s house is smaller than yours, and/or may be on a much bigger lot. In any event, more potential buyers will find themselves in a more competitive market for lower priced homes regardless of size or condition.

Statistics show staging your house almost always reaps more offers at higher prices

Believe it or not, only 10-30% of all home buyers can actually visualize how their furnishings will look in your house. This is why most high end homes and almost all big developers stage their homes before they go on the market.

  1. Empty homes look smaller than furnished homes, and this is especially important for bedrooms.
  2. Buyers are better able to visualize themselves in your space.
  3. Rooms with undefined uses (such as dens or bonus rooms) can now be defined.
  4. The entire house looks more finished and higher end. This is really important when prospective buyers are looking at photos online, and of course when they walk into the house.

Yes, staging is expensive, but statistics show that homes that are staged do receive higher offers.

Why do home prices continue to rise in Portland?

  1. Industries continue to move into the Portland area – many of these are industry giants like Google, Airbnb, Amazon, Uber, and more. At the same time, tech start ups find Portland attractive, and of course, it seems that just about everyone wants to at least visit Portland, and once they do, they’re hooked and ready to pack up and move here.
  2. It has been reported that as many as 160 people move into Portland every single day!
  3. Portland has been rated the #1 best city to live in by the National Association of Realtors as of September 2, 2016!
  4. Portland offers much that so many people are seeking:
    • moderate climate,
    • big city atmosphere,
    • it’s a foodie haven,
    • everything you could ask for in terms of outdoors activities all within an hours drive, and often bike riding distance
    • employment
  5. Moderate housing prices relative to most other big cities in the U.S., and especially relative to other urban areas on the west coast
  6. Housing inventory remains below 2 months (the number of months it would take to sell all the houses currently listed at the current pace of sales.
  7. We still have a huge number of institutional investors (think pension funds, banks, unions, insurance companies or real estate investment trusts)buying in Portland to capitalize on the rising housing prices and rising rents.

We could go on and on singing the praises of Portland, but unlike 20 years ago when Portland was known primarily for rain, we are now one of the most popular tourist destinations, and as mentioned above, one of the fastest growing cities in the country. (If only our transportation and housing needs could keep up with our growth.)

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Should Portland home sellers be required to get a home energy score before selling?

energy star logo as seen on most appliancesThe city of Portland is proposing that all Portland city residents be required to have an energy audit and obtain a home energy score prior to listing their homes. There are approximately 160,000 single family homes in the city of Portland, but fewer than 2% of owners have an energy score. Why does this matter?

As shoppers, and we’re all shoppers, we want as much information about what we’re buying as we can get. We look for labels on food, automobiles, energy labels on appliances, etc. But home buyers want more information, and without an energy audit and score, that information is not readily available.

The framework for energy audits for houses in Portland was first established in 2009. By 2013, the training program for certifying energy scoring professionals was underway, and yet, here we are close to the end of 2016, and fewer than 600 Portland houses have had an audit done.

Portland has a Climate Action Plan that proposes that by 2050 Portland will reduce carbon emissions by 80%. But how can we achieve that goal without knowing how much carbon is emitted into the atmosphere by each house without audits? We already know that residential buildings account for approximately 50% of the total carbon being released into the atmosphere from buildings. (According to the proposal, “By April 2017, 80 percent of Portland’s commercial building square footage will be reporting energy performance.”)

More about energy audits

Before everyone panics, you should know that an energy audit takes only 45 minutes to an hour to complete, and costs only approximately $150-$250 per house. On the upside, a house with a high energy score will generally sell for up to 4% more than one with a low score, or no score at all. (With average home prices in Portland now around $400,000, you just might net a lot more money when you sell your house.) So, in spite of a lot of opposition, this is really a no brainer for both buyers and sellers alike IF the proposal is drafted property (see below for reasons to opposition). Most home owners are upgrading their homes all the time. So why not pay a little extra for more energy efficient appliances, better insulation, and regular home maintenance to improve your energy score? It makes your home more comfortable to live in and reduces your energy bills to boot.

The other upside to going energy efficient is that there are both state and federal tax credits for many of these purchases, as well as rebates issued by Energy Trust of Oregon, and sometimes even the approved contractors who install these purchases. I’ve even been told by one prior client that installing an electric heat pump instant hot water system was almost a net zero purchase with all the credits he received for the purchase. AND, of course, if you’ve ever looked at your Portland water/sewer bill, you will have noticed that the sewer portion of the bill is usually higher than the water usage portion of the bill. With instant on hot water, you’re not paying for all that water that runs down the drain while you wait for the hot water to get to your kitchen, bathrooms, and laundry room.

And one last benefit is that with a good energy score, when you sell your house, you qualify for appraisers who are certified to value your home with your energy upgrades. That is no small bonus these days when all too often homes are appraising lower than actual sales price.

How will this information be passed on to prospective buyers? Home owners can obtain a score at any time and report their scores to the city of Portland via mail, fax or online. The city will make this information available on Portlandmaps.com, and of course, listing agents will enter this information into the RMLS when the house is listed.

Why so much opposition to requiring energy audits?

According to PMAR (Portland Metro Association of Realtors), this proposal is poorly drafted.

  1. There aren’t enough certified auditors yet, and most who are certified are also selling some of the “green” products you might purchase anyway.
  2. There are multiple scoring systems. In any given metro area, the scoring model must be consistent so consumers will understand the reports and scores.
  3. We are already experiencing an appraisal crisis here in the Portland metro area. It’s not unusual for it to take 4-6 weeks and even longer in more outlying areas to get an appraisal done. Are there enough appraisers out there who are certified to value energy efficient homes?
  4. The audit must be completed prior to listing a house. For someone who is ready to list now, this could delay that transaction, perhaps for months. This could potentially be a disaster for someone who has just lost a job or is experiencing some other type of life crisis.
  5. Why are banks exempt from this disclosure?
  6. Why are rental properties exempt from this disclosure?
  7. Finally, why does this proposal apply only to homes within the Portland city limits? Does this mean that home buyers in Washington, Clackamas and Clarke counties don’t care about energy efficiency?

What other cities have passed similar policies?

Several U.S. cities have passed similar disclosure policies for their market, including Austin, Texas; Berkeley, California; Santa Fe, New Mexico; and Boulder, Colorado. Internationally, residential disclosure policies are in effect in the United Kingdom, Denmark and Australia. The reduction in carbon emissions is apparently already noticeable where audits are required.

Please read the full scope of the proposal for more information.

 

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