In the January issue of Realtor magazine, an article entitled “Small Projects, Big Bang” summarizes the results of the Remodeling Cost vs Value Report 2009-10.  The report outlined a number of different home improvement projects, costed them out in different metropolitan areas around the US and calibrated a percentage ROI on each one. There’s a lot of detailed information in the article (and helpful hints on smaller projects) but here’s my summary for the Portland market:

With so many wonderful older homes on the marker here, it is well worth investing in the following infrastructure upgrades for your home. Buyers and their realtors are always going to value:

•  new plumbing

•  a good sewer connection

•  new or upgraded electrical system

•  an energy-efficient furnace (not oil)

An investment in siding had a really high ROI (92% in our area). Costs averaged out at just below $14,000 but with that ROI, it is certainly an investment worth considering.

Improving the basement also came in with a high ROI. And this can be a simple matter of sprucing up what’s already there. New flooring, a coat of paint, and new lighting fixtures could make a big difference and there may be no need to delve into plumbing or dry wall.

Curb appeal has always been important. A little front yard landscaping can go a long way to making a good first impression on buyers. However, you might also want to give your front door a good look. Replacing the front door with a mid-range product (approximately $1200) had the best ROI of all the improvements at 128%.

Several of the most worthwhile improvements are, not surprisingly, centered on the kitchen:

•  add a breakfast bar (this can be as simple as cutting an opening in a wall, adding a bar and a couple of stools)

•  upgrade the kitchen counter to granite tile (12” tile is a very affordable option compared with granite slab)

•  cabinet fronts (check into refacing or replacing doors or perhaps just the hardware)

•  tidy and organize kitchen cabinets (Yes, buyers open them so adding a roll-out tray or lazy susan can create the illusion of more space.)

•  retile the backsplash to freshen or brighten or just clean up the look of your kitchen

If you need any more information on remodeling or renovations, I keep a list of reliable vendors who could estimate your job for you. And I’m always happy to talk to you about plans for your home with a view to selling at a later date.  But remember, don’t make a change solely for the sake of resale. This project needs to be something that you and your family will enjoy for the length of time you live in your home.

                 RMLS quotes our 12 month rolling Average Sales Price as being –12.6% since last October, compared to the previous 12 months.  Year to date, our total time on the market for homes is 143 days!  A positive note is that our inventory has dropped significantly.  Last October it would have taken 11.1 months to sell out of the city’s inventory whereas now it would take 6.5!  That’s great right?  Well, not exactly.  We have 20% fewer new listings, and we have more people getting frustrated with the market and taking their homes off.  Traditionally higher priced markets such as West Portland (-11.9%) have fewer pending sales because homeowners can’t get the prices that they would have gotten in the past.  If they don’t have to sell, they pull it off the market and wait.

This is all great for buyers, right?  Well, many of the homes still on the market are overpriced listings, and many of the properties that are competitively priced are so competitive that you are competing with 5-6 offers.  Interest rates are great, but appraisals are tight and coming in very low.  With less sold properties to use as comparables, appraisers are expanding their search areas, and some deals are falling through.

Well…its a bit of mixed news in the Real Estate Market according to last months stats from RMLS Market Action Report. Inventory has dropped to 10.2 months from 11 months in April. This marks the fourth straight month that we have had a decrease in inventory. We had an increase in pending sales of about 6% from last month to this month and an almost 10% increase in closed sales. This is an absolutely positive stat, however, we have also seen an average sales price below the YTD average sales price of homes, indicating that our market is still declining, although slightly. The troubling news, in my opinion, is that this has been the best market in recent memory to purchase a home. Interest rates were in the mid 4%’s for a 30 yr fixed and the government is offering an $8000.00 tax credit to first time buyers. In the last three weeks, interest rates have jumped 1%, and buyers have lost out on their impressive purchasing power. My thought is that we probably should have seen more of a bump in pending and closed sales while the conditions were prime, and we may have to wait a long time to see that scenario again

Conversely, the bump in activity is welcome. We generally see an increase of activity in the Spring and Summer months, with activity slowing again in August. Certain markets are also doing extremely well. Properties priced below $350,000 in Inner N, NE, SE, and SW are literally flying off of the market provided they are in good condition and priced well. The interesting trend to watch for will be the new buyers from those sold homes under $350,000 and if they turn around and purchase properties in the higher price ranges. Even at 5.5%, interest rates are good, and many brokers are hoping to see this scenario unfold in June.

As a reminder, please contact me if you or any of your friends or family have questions concerning the market. I am happy to talk with them!

January’s stats just came out, and it’s not surprising that things are slow in the market. Despite the fantastic buyer’s market that we are experiencing, we are missing one important ingredient: Buyers! That statement is not entirely accurate, because the market seems to be picking up. Now, we have a lot of inventory and not enough buyers. Last month, we had an increase in the number of pending sales (52% vs. December), yet we had over 120% increase in new listings. Therefore, our inventory has increased, despite the increase in “prospective” buyers. And, of the 4196 pending sales, only 732 (or less than 1 in 6) actually closed. This is a significant number…what happened?

Loans are harder to come by and people are worried about losing jobs. It’s as simple as that. At a time when traditional buyers should be able to purchase a home, they just can’t find the loan or the job security to do it. We will continue to see small percentages of closed homes while consumer confidence is low and while banks are afraid of lending.

On a positive note, we aren’t hurting as much as most of the country. MSNBC again rated Portland, OR as one of the top 5 Real Estate Markets in the country along with San Diego, Washington DC, New York, and Charlotte.

If the bailout works, and lenders free up credit, I would expect to see a higher percentage of these pending sales close. This would, of course, lower our inventory and make sellers a lot happier.  Of course, if you have any questions regarding the market, feel free to contact me to talk about your personal situation.

Folks, it is a wonderful time to buy a home. Whether it is your first home, second home, or even an investment property, you will rarely find a market better than our current market. Interest rates are in the 5% range for 30-yr fixed loans, prices have dropped, and there are a lot of homes on the market.

According to RMLS, we have 14.1 months of inventory at our current rate of sales, and sales have fallen by over 30% from December 2007 to December 2008. This means that sellers must be very competitive in their pricing, and the condition of the home must be ideal. I see many sellers that have homes sitting on the market because they aren’t prepared to price competitively or make changes to the condition of their home. So in a sense, the inventory number of 14.1 is misleading because some of these homes just aren’t in the game. We have an interesting dilemma from my perspective. Buyers have a fantastic position in the market, but are tentative because of the current economic situation. Sellers want to sell, but some can’t adjust prices because they might end up losing any equity that they have in their home. The best way to sell is to get your home in great condition, and price it near or below comparable properties. It simply has to be the most enticing home on the block!

As of right now, only West Portland has seen an increase in home prices (1.9%) from the last 12 months compared to the previous 12 months (December 2006 to 2007), and I am confident that will disappear next month. So what do we do? Well… if you sell high, you are going to buy high. Conversely, if you sell low, you are going to buy low. There are still plenty of opportunities and strategies to do well in this market, give me a call if you want to look at your unique situation. Have a good month!

The major difference, according to the article, between the Case-Shiller index and the RMLS is that the Case-Schiller index compares the sales price of a home to the previous sales price of that same home.  The RMLS generally looks at Median and average home prices in the areas.  Its arguable as to which index gives the best information, and I think that each is useful in its own way.  This article is citing the Case-Shiller index, which in this case seems to be appropriate.

The second important point to note while looking at the article, or any piece of information, is what they are comparing.  This article cites the data from Multnomah, Washington, Clackamas, and all counties surrounding Portland.  When talking about the issue in such a general way, its easy to make you case and/or lose the point.  Saying that Portland home prices are at a record low using all of this data is like saying its raining in the United States.

The fact is, there are still plenty of areas and homes where home prices increased during the 12 month period from August to August.  Many of these areas are close in to the city, like parts of North Portland, SW Portland, NW Portland and SE Portland.  Finding this information takes a little extra effort and the ability to view the situation from a different angle.  I’m not saying that things couldn’t be better, because they can.  They just aren’t as dire in some locations here in the City of Roses.  Real Estate is very local, which is why it is important to hire an expert.

First, it comes down to the issue of foreclosures.  Many states in the West have had a serious issue with the number of foreclosures.  This is allowing people that are buying homes to purchase them at lower prices.  The uptick in sales, more or less, can be contributed to the high number of discounted foreclosures in these states.  When prices drop, people do react and take advantage of the situation.

As far as our decline is concerned, we have had a drop in the number of sales in Portland.  However, our housing values are not dropping at the rate that they are in several Western states.  This is good for home owners, as the value of their home has been protected, relative to the experience of home owners in other parts of the country.  So, I don’t see the fact that the number of homes selling in Portland has dropped over the past year as a complete negative.  Stats show that the value of our homes are dropping, but at least we are avoiding the high rate of foreclosures that other states have seen.

Obviously buyers still have an edge.  People that do need to move are having to drop their home prices to attract a buyer in the saturated market.  Its the simple fact that buyers have so much to choose from right now compared to markets in the past. 

A tradition here in Portland, Oregon during October is visiting  Sauvie Island and the numerous Pumpkin Patches.  With or without children, its a fun tradition.  My wife and I have been do this every year.  Sometimes we visit the “Corn Maze”, but we usually go to pick out our pumpkins, try some apple cider, and enjoy the island.  This year our daughter seemed more interested in the tractor ride than anything else going on around her.  Judging by the traffic every year during October, its a tradition in many Oregon families.

What is Sauvie Island?  Sauvie Island is an island in the middle of the Columbia River, about 15 minutes drive along Highway 30 to the NW.  It is a highly agricultural island with plenty of U-Pick farms for flowers, berries, pumpkins and more.  It has about 800 residents, its own school, and is also popular for cyclists and runners for its beautiful 10 mile loop.  A current client teaches at the school and raves about the fantastic amount of parental involvement and support.  The people are proud of where they live.  Its a rural oasis close to the city. 

Real Estate in Sauvie Island is rare because of the size of the island.  There are traditional and farm homes, and on the river you even have some House Boat Communities.  Current stats show that there are 6 active listings on the market and 3 homes that have sold in the last year.  The lowest priced home sold for $550,000, while the most expensive home sold for $1.25 million.  The active homes on the market range from $590,000 to almost $2 million dollars.  Each of these properties had at least an acre of land, and one property had 10 acres.  Plenty of room to stretch out!  Come for a visit and a pumpkin, or purchase a farm and lay down some roots.

Pending and closed sales are down around 12% compared to September of last year according to the RMLS Market Action Report.  For the second month in a row we are seeing the median sale price ($267,000) and the average sale price ($315,300) drop, this time close to 5% from August.  Quarterly stats show that compared to the 3rd quarter of 2007, we have a 15% decrease in new listings, and a 26% decrease in closed sales.  We have a little more than 17000 active listings citywide, and with the rate of sales as it is it would take us 10.4 months to sell out of these homes.

The good news is that our 10.4 months of inventory is almost identical to the inventory that we had in April of this year.  In fact, we have had a steady inventory level of around 9-10 months since February.  This means our balance of new listings and sales has remained consistent this year.  That is a lot more than can be said about our financial markets and the state of the market in most other regions of the country.  Lots of inventory, lower prices, low interest rates…Why such a decrease in sales when we have such a buyer’s market?  It’s the economy.Buyers are having a difficult time in the mortgage market because banks and loan packages have gone away that were here a month ago.  People are predicting that we will have a tough time well into next year.  Money will be tighter, and its predicted that interest rates will creep up.  However, people have been talking about a difficult market in Portland since last year.  So far we have not been nearly as slow as 99% of the markets in the country.  In fact, there are several areas that have seen an increase in the value of properties over the last 12 months as compared to the same 12 months in 2006-2007.  These areas are North Portland (2.7%), NE Portland (2.1%), West Portland (6.8%), and Lake Oswego (5.4%).  The fact of the matter is that it has taken us a long time to get to this point, and Portland is still attracting new residents every month.  The consensus is that we will be insulated from the worst of it until it finally turns around. 

Portland currently is the home of the Portland Timbers, a USL division franchise that plays down at PGE park.  USL is the United Soccer League, and is one step below the MLS level in regards to prestige and ability.  The teams owner is attempting to bring an MLS franchise to Portland, which would require a new soccer-specific stadium at the location of PGE park.  The question is, where do the Portland Beavers end up playing?

Merritt Paulson, the owner of both the Timbers and the Beavers, is looking to build a smaller, more intimate baseball stadium in the Lents neighborhood.  The idea is that it has access to public transportation, highways, and the price is right.  If you look quickly at the Real Estate Market in Lents you see a slight increase in the median pricing of homes over the last year.  Pulling numbers from RMLS I found over 1500 units listed in the immediate area within the last year and over 600 units sold.  The average sold price in September 2007 was roughly $246,000, and in mid-September 2008 it is near $260,000.  The number of units sold per month varied from 32-70, with the majority of months seeing sales of 50 or more homes.  The average days on the market for these homes was just under 2 months.

Has the Urban Renewal project made a difference?  I would say that the sales look consistent if not slightly positive.  The area looks nicer than it used to, and I have more and more clients that are looking for homes in the Lents neighborhood.  Prices are still affordable, and the feeling is that positive change is coming to the area.  Some people believe that the influx of the Beavers will tip the scales in bringing more restaurant and retail business to the area, and more money.  It will interesting to see what happens in the next several years.