Energy Efficiency Scoring

February 2nd, 2018

In January, Portland became one of a few cities in the nation to require energy efficiency scoring for homes in a real estate transaction. The new requirement was extremely emotional – with vociferous opponents and proponents. Surprising to us, there was some fierce opposition from the real estate industry. The arguments were mostly concern for the elderly or poor who have little funds to upgrade their homes, or pay for one more item before being able to sell their homes. The argument was made that they might be penalized for having a low score, or that energy efficiency upgrades might become negotiation material. Although the concern is legitimate, our view noted that long term appreciation for Portland homeowners has been quite kind, regardless of their energy efficiency updating. The rule also allowed for low income exemptions.

The big picture point that seems to get a little lost in our implementation woes is the overall fantastic influence this rule could have on our energy footprint as a city. The reduction of emissions from homes and businesses is critical to meeting the city’s 2050 climate action goals. Of Portland’s total carbon emissions, residential homes contribute 20% – our municipal buildings contribute an additional 24%. BUILDINGS are 44% of the carbon emissions in Portland – that’s big!

As agents, we’ve spent years consulting on home improvements. Jen and Ron are a fantastic couple doing amazing retirement planning. For many years we did an almost annual visit to their home, followed by a dinner out, ice cream or a beer. Each year they asked which home improvements they should focus on for maximum return on their investment. It saddened us that energy efficiency NEVER hit the list prior to 2018. We believe strongly in energy efficiency, trust us. We live in a well-insulated home with efficient appliances. However, year after year we’ve toured buyers through homes where the modestly updated kitchen won hearts over the expensive energy efficiency packages. Jen and Ron were asking how to woo that buyer. Now we embrace having a way to show value for this work done – we can’t wait to say YES, add the insulation and you’ll be rewarded!! Also, congrats Jen and Ron for a fabulous home sale and a launch into their next life phase.

We’re just now adjusting to the addition of this information in a real estate transaction. There are several companies well established in energy scoring for homeowners, since many homeowners are interested in making their home more efficient and more comfortable year-round. In addition, many new companies have popped up to include energy scoring in their services – some do only energy scoring, others have added it to a scope of service which might include home inspection services. We’ll have a learning curve in implementation of the scoring in our home preparation process.

We’re just dipping our toe into the waters of the negotiation question. Will the score become a negotiation point? I’ll save that subject for future comment – time will tell!

Portland Market Update 2017 Residential Highlights

February 2nd, 2018

Year to Date Summary. Activity in 2017 was a little cool compared to 2016. New listings (40,805) decreased 0.8%, closed sales (31,624) decreased 3.6%, and pending sales (31,330) decreased 5.7%.

Average and Median Sale Prices. Comparing the entirety of 2017 to 2016, the average sale price rose 8.5% from $395,000 to $428,700. In the same comparison, the median sale price rose 9.5% from $347,000 to $379,900.

Last year’s price appreciation follows an unbroken 5-year run up in prices, but the rate of appreciation has slowed over the past couple of years:

Prices continued to rise in the Portland Metro area during the first half of the year. Comparing prices through June 2017 to June 2016, the average sale price rose 9.8% from $388,800 to $427,000.

Inventory remained moribund, at 1.6 months.   In yet another sign of the last quarter’s weak market performance, the average number of days a property stayed on the market before going under contract (“pending”) rose to 55 days.  (For a discussion of the last quarter’s performance, and a look at how 2018 is going to shape up, see our latest Notes From Shannon and Jeanne.)

Setting Our Sights on 2018

February 2nd, 2018

February 2, 2018

Depending on who you talk to, the upcoming 2018 real estate market is going to follow the faltering footsteps of late last year’s market (more about that in a second) or it’s going to rocket off the launch pad come spring, just like it has done every year since 2013.

No one doubts that the market slowed perceptibly last fall, and the stats go a long way to prove it: the RMLS of Oregon reported a steady decrease in closed sales in September, October, November, and December, with each month recording fewer sales than the previous month. December’s sales figures were off an astonishing 10.3% from November’s anemic performance, and many people – Realtors, title companies, and mortgage brokers – have been troubled since last October about the fallout that an extended downturn could rain down on the industry.

Mind you, not everyone is unsettled about the market having faltered, and many market observers have even welcomed the news. First time home buyers, particularly pressed to the max by limited inventories and fierce competition, certainly benefited from the slow down. In late December the Oregonian headlined a story, “Year-end lull a rare sign of normalcy in housing market, but will it last?” that profiled the respite first-timers have gotten recently, and, as the title of the article suggested, raised concerns that the party may not last very far into the new year.

Your loyal reporters are of the mind that this past fall’s market malaise was a blip on the screen, albeit it a pretty bright one. We anticipate the market’s going to run hot again this spring:

  • Inventories of for-sale homes will remain discouragingly low well into the foreseeable future. While new housing starts rose to a 9-year high in October, we’ll need several more years’ home building activity to catch up on demand. The industry is unanimous in calling out low inventories as the single biggest factor that will affect the 2018 housing market.
  • Employment will remain stable and wage growth – which we acknowledge has not been able to keep up with housing price growth – will continue as Portland – and the nation as a whole – is faced with very low unemployment figures.
  • Interest rates picked themselves off the floor this past year, and there’s not much doubt that we’ll see further rate increases this year, to 4.5 – 4.75%, but in the big picture, rates will remain remarkably low.

  • We’ve tolled the bell for several years about in-migration from other states, particularly California. Two or three years ago we wrote, “If one-quarter of one percent of Californians is displaced by drought, that’s 80,000 people. . . .” Let’s update that sentiment for 2018: if one-quarter of one percent of Californians is displaced by drought, fire, flood, and landslides, that’s 80,000 people.

Notes from Shannon and Jeanne

August 9th, 2017

August 9, 2017

Dear Portland Housing Market –Long May You Run?  Portland-area home prices climbed 8.9 percent during the year ending in May, according to the S&P CoreLogic Case-Shiller Index, an increase second only to Seattle’s 13.3 percent rise.  And bronze medal finisher Denver rounded out the podium with a 7.9 percent increase, meeting late-2016 forecasts that the three would lead the nation in price appreciation this year.  (Read our Portland Market Update for the latest statistics and a Portland area-by-area appreciation report.)

Portland’s price appreciation has slowed since a year ago, when prices were up 12.5 percent, and, reporting sluggish market activity in July and August, area agents are asking each other today, “Is these just a typical summer’s market doldrums, or is a protracted slow-down shaping up ahead of us?”

Our market has been on a long march upward, with steady growth since the market recovery began in late 2012. Most observers point out the leading forces driving this market have been low inventories of homes and low mortgage rates; recently we’re reading more reports that new home buildings starts have stalled, which will exacerbate matters in the future.

But that little business about interest rates. . . .

There’s growing interest (pun) in what effect the rising Fed Reserve rate may be having on home sales.  In June the Fed raised short-term interest rates by a quarter point, marking the Fed’s third rate hike since December 2016.  That’s not at all what economists foresaw; the consensus among them late last year was we’d only see two, or, at most, three rate hikes this year.  In fact though, with reports from the Federal Reserve Board that its members are steadfastly optimistic about the health of the economy, and less and less worried about creeping inflation, there’s a strong likelihood the Fed will raise rates once or even – gulp – twice again before the end of the year.

It’s like that adage about boiling a frog, there’s going to be a point where raising the temperature on interest rates is going to kill off some buyers.  Remember, the factors that have spurred on this hot market have been limited inventories and affordable mortgages.  We’re keeping a close watch on the market this month, and, going into September, we’re expecting to see our customary bump in sales activity between Labor Day and late October.  If we don’t get the bump, and interest rates continue to rise, will consumer sentiment falter?  Will buyers take a rain check on moving until next spring?

Portland Market Update Mid-Year Residential Highlights

August 9th, 2017

August 10, 2017

Year to Date Summary.  Activity has been cooler so far in 2017 compared to 2016. New listings (21,505) are down 1.8%, closed sales (14,866) are down 3.9%, and pending sales (16,572) are down 7.2%.  Realtors and other market observers will be looking closely at fall sales as a bellwether for the 2018 market.  (See our Notes from Shannon and Jeanne for details.)

Average and Median Sale Prices.  Prices continued to rise in the Portland Metro area during the first half of the year.  Comparing prices through June 2017 to June 2016, the average sale price rose 9.8% from $388,800 to $427,000.

 

Mid-Year 2017 Average Residential Sales Price and Appreciation by Area


Inventory moved up incrementally to 1.6 months in June.  The average number of days a property stayed on the market before going under contract (“pending”) was only 38 days.

Year 2016 Residential Highlights

February 21st, 2017

Portland Area Housing Market Tops the List.  According to Zillow, the Portland area had the nation’s fastest growing housing prices in 2016.  Zillow said that the average Metro-area home value rose to $354,000 in December, marking a 13.8% increase from December 2015.  In related news, the S&P CoreLogic Case-Shiller Composite Home Price Index reported Seattle, Portland, and Denver scored the highest 2016 year-over-year gains among the 20 cities in the index; among the 20 largest cities in the US, just Portland and Seattle saw double-digit appreciation in 2016.

 

2016 Average and Median Sale Prices.  Comparing 2016 to 2015 through December, the RMLS of Oregon reported that the average Portland-area home sales price rose 11.4% from $354,500 to $395,000.  In the same comparison, the median sale price rose 12.7% from $308,000 to $347,000.  (I see the discrepancy between the Zillow figure and the RMLS figure and I’m at a loss to explain it.  Shannon)

 

Portland Poised to Lead the Nation Again in 2017.

February 20th, 2017

Portland Poised to Lead the Nation Again in 2017.  As we near the end of the second month of 2017, we see a strong consensus among all market forecasters that Portland housing prices will be among the nationwide leaders again.  Look to Portland, Seattle, and Denver, as last year, to lead the pack.

How Much of a Good Thing?   Industry experts predict that Portland home values won’t rise as fast as they have over the past two years, but Portland will still outpace the national average.   The drumbeat – strong demand and limited supply –  will produce anywhere from 5.5% home appreciation in our Portland market, according to Zillow (https://www.zillow.com/portland-or/home-values/), to as much as 11.1%, according to Veros Real Estate Solutions, a company that specializes in property valuations and analytics.  The National Association of Realtors is hanging with Zillow and forecasts that the Portland market will see 6.6% price appreciation this year.  It’ll be fun to see whose prediction wins out when we review the numbers next February.

Just What’s Pushing Our Market Ahead of the Pack?  The Portland and Seattle markets are benefiting from robust economies, growing populations, and continuing low inventories of for-sale homes.

Here in Portland the economy is in full swing.  The unemployment rate, at 4.6%, is the lowest we’ve seen here since those halcyon dot com days back at the end of the last century.  The job market’s strong and growing at 3.5%.  Take note: economic growth is no longer limited to just high tech industry; instead, it’s spread across a wide spectrum of different industries.  Our economy is more diversified than at any time in the State’s history, and with broad diversity there’s greater economic stability.

And people are continuing to stream into the Metro area: the most recent data from the US Census Bureau shows we added 40,621 new residents from 2014 to 2015. That’s 4.6 people per hour, 24 hours a day, 365 days a year.

Housing supply on the other hand has not kept its pace with our growing population.  Doh.  We’ve not seen more than two months’ inventory of for-sale homes since March 2015, and even with all the multi-family housing starts we’re seeing here, we’re not likely to see any significant improvement in housing inventories for at least another two years.

Anything Scary Further On Down the Road?  Well, no, apparently not in the short term.  Interest rates are predicted to remain well within reason for the year, with most analysists putting the year-end mark at 4.75 – 5.0% for the conventional 30-year fixed rate mortgage.  Pat Stone, Chairman and CEO of Williston Financial Group (WFG) and WFG National Title Insurance Co., spoke before a group of Realtors last week and said the outlook for the Northwest, regardless of whatever may come down from Washington this year, points to a robust market “at least” all the way through the first half of 2018.  We’re on board with Pat.

Is Portland Fighting Climate Change through Home Sales?

February 6th, 2017

In December 2016, the Portland City council voted to require home energy audits as a part of the home sales process.  The requirement will take effect in January 2018.  We’ve yet to see how it will play out. Advocates say it’s a step toward meeting our 2050 City action plan for an 80% reduction in carbon emissions; opponents say it is an undue burden on sellers.  The audit would give a home an energy efficiency rating between one and ten by which buyers could compare one property to another.  Voluntary audits have been around since 2009, but the rating did not get much attention during a home sale.  Very few homes obtained voluntary ratings, less than 2%, so many homes coming to market did not have scores.  Therefore, energy efficient homes with score rarely had other homes to compare with.

It turns out Portland’s commercial buildings have been subject to this requirement since 2015.  Since about half of all carbon emissions from buildings come from residential housing, rolling in single family residences helps a great deal with the overall reduction goal.

The Realtor associations have opposed this requirement as one more unnecessary burden on a home’s sale.  Critics say the audit could be used against a seller, or used to negotiate improvements to a home during a sale.  Note: we typically negotiate repairs rather than improvements during the process.

Ready for the inside scoop?  We’ve been in favor of this for a long time.  This has not been a popular stance among colleagues. Disclaimer: no doubt we’ll have bumps along the way.  It will make the process more complicated.  It is already quite complicated, but that’s why professional assistance is needed.  There are a small number of environmentally-minded realtors in Portland that have been proponents of this policy all along.  We have consulted with home buyers for years on home improvements, it has been disheartening to discourage a potential homeowner/seller to forgo energy improvements, and opt for an Ikea kitchen instead (no dis meant to Ikea).  We believe this requirement will balance Portland values with more flashy cosmetic upgrades – with an energy score, both home investments will have a way to be visible to buyers.  R-38 insulation as sexy as a farmhouse sink?  Coming your way.

Portland Market Update

September 29th, 2016

Metro Highlights

September 29, 2016

Average and Median Sale Prices.  Prices continue to rise in the Portland metro area. Comparing 2016 to 2015 through August, the average sale price rose 11.2% from $353,200 to $392,600. In the same comparison, the median sale price rose 12.5% from $305,000 to $343,200.

9-29-av-med-sales-price-graph

August 20, 2016 Average Residential Sales Price and Appreciation1 by Area

market-update-table-9-29

Inventories Have Picked Themselves off the Floor, a Little.  We’ll see inventories pick up through the rest of the year, albeit marginally.   Look for the best buying opportunities in a year come November. 1 Percent change is based on a comparison of the rolling average sale price for the last 12 months (8/20/2015 – 8/20/2016) with 12 months before (8/20/2014 – 8/20/2015)

Inventory in Months, Portland Metro Area

Notes From Shannon and Jeanne

September 29th, 2016

September 29, 2016

Strong sales cap off a busy summer.  Average and median sales prices continued to rise in the Portland metro area through August, and while sales volume is starting show signs of slowing, prices are likely to hold steady through the last quarter of the year.  As we’ve noted earlier this year, Election Jitters, the persistent-but-never-realized threat that the Fed will raise rates, and the customary seasonal slowdown will put some drag on this year’s market rocket ship.  [Tip: if you’re thinking about buying, or know someone who is planning a move – the last part of the year is often the best time to buy.  Put off selling now until February or March, but if a “buy” is in the works, think to call us for advice.]

You can get all the latest statistics, including price appreciation figures, by clicking on our Portland Market Update.

Now not one, but two websites devoted to Portland’s building boom.  When we reported in June that Portland’s growing so fast that there’s a web site devoted to tracking new projects we thought to ourselves, “Holy cow!  Boom town!”  Imagine our surprise when we learned that a second website had been launched by the Portland Business Journal.  Called “Project Watch,” the interactive site covers new hotel, industrial, mixed-use, office, multi-family residential, and retail startups – and the site reports a ton of them.  Check it out here

In the mix:

  • Eleven big downtown building projects are on the books for development on properties owned by the Goodman family’s Downtown Development Group. Watch the first one, a 425-unit apartment building with a grocery store anchor, coming out of the ground now at Harrison and SW 4th.
  • The City has applications from various big developers for construction of eleven new hotels in downtown and close-in Portland.
  • Macadam Ridge, a proposed subdivision of around 46 new single-family homes in the hills above the intersection of SW Macadam Avenue and Taylors Ferry Road is working its way through the city planning process. If approved, it will be the first traditional subdivision built in Portland in many years. Neighborhood and conservationist interests are strongly opposed to the project, which will, among making other environmentally controversial changes, take out 480 trees.
  • “Freeway capping.” Former mayor Vera Katz’s 1998 idea for covering the sunken portion of I-405 that runs along the west side of Portland has been revived again.  The plan would build caps over the sunken interstate that would reconnect neighborhoods and add back 28 of the 36 blocks that were destroyed by building the freeway back between 1969 and 1973.  An example of this idea in action is Seattle’s Freeway Park over I-5.

Summer’s fading. Enjoy the rest of it in the company of your family and friends, and as much of it as you can outside.  Happy fall!

Shannon and Jeanne