May
15
Portland Gas Prices
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I have noticed that around Memorial Day or thereabouts that gas prices fall after jumping quickly. Looking at this map from gasbuddy.com shows I was somewhat right as is usually the case with anecdotal evidence. The reason I noticed it is because I expected to get gouged throughout the summer but it didn’t happen. Specifically 2004 and 2007 had the best declines after May. 2005 and 2006 had their declines in August.
I do think that this raise in prices is having an effect on driving. Except for the typical rush hour in the morning and afternoon, the roads seem much emptier. Taking a left out of my office is usually a wait but in the last few weeks I have noticed I don’t have to wait long unless it is rush hour or lunch time.
Since I am obligated to relate this to real estate by the Code of Bloggers International Fraternity of the Never Ending Cursor, I will say that location may well come back into play. Our traffic is not bad compared to big cities (San Francisco was horrible). More and more people will think about living close to what they need. In 2005 and 2006, people were willing to live in Banks, Vernonia, happy Valley, Sherwood and Newberg. That may be part of the reason that my listing in Cedar Hills had multiple offers and another in Vista Hills gets so many showings. Both are about a minutes drive to Hwy 26 there near 217.
In the case of those homes they get the benefit of being a 4-10 minute drive to downtown but only pay Washington County taxes. Compare that to living in the Pearl, paying monthly HOA fees of $200 to $700 a month and you may have only one garage space while paying Multnomah taxes, you seem to get a good deal. But that is all relative based on what you really want for a lifestyle.
May
15
The Draw Of the Flaw
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I stole the headline from the Washington Post because it is so good. Buying a home with real or perceived flaws can allow you to be in a neighborhood at a discount. It is just best that you understand why there is a discount.
Powerlines are often an issue for many. No one has determined conclusively whether or not it is bad for you and for the conspiracy leaning folks, would the government admit to it and incur the cost of burying the lines? In the popular Bethany neighborhood there are many homes that back up to the powerlines. They usually go for a discount but you get to have access to great schools.
Busy roads are an issue for many because of noise, lights and the possible danger for children playing in the yard. Apartments, businesses, noise, etc are all reasons people may be dissuaded from buying a home. As I tell my sellers, the further you get from the expected traditional home, the fewer buyers you will have.
Specifically I had a client whose driveway was sloped toward the home as steep as a ski ramp. At one Open House people would drive up, get out of their car and look down the driveway. Then they would promptly get back into their car. I wouldn’t drive my vehicle down there either.
My client bought because of the design and the fact he was surrounded by protected greenspace. Because the home sat low in his cul-de-sac, he couldn’t see his neighbors and it felt like he was in the middle of the woods. It was a fantastic home but he was realistic when it came time to sell it. he waited until there was a buyer who didn’t mind the driveway and it was sold. Now he gets to enjoy the home in a pristine setting.
In this market particularly, what sets a home apart from others may well be the thing that sells it. Because the buyers are more price conscious and there are so many homes for sale they can wait for the standout.
via http://www.flickr.com/photos/seier/
May
14
One-Level Homes The Next Big Thing
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With the growing Baby Boomer population I would expect one-level or ranch homes to be big in the next 5-10 years. In recent years, the reasons to choose a one-story home have increased. The baby boomers are aging and our entire population is getting older. More and more, we prefer to live our lives on one level, rather than climbring up and down stairs at the end of each day.
So as people look to buy smaller homes many will look to buy ranches or settle on homes with Master on the Main but they will be settling with that choice. This is excerpted from the Chicago Tribune in Jan ‘07.
This year, buyers who are 55 and older are expected to account for 370,000 housing starts, according to the NAHB 55-Plus Council, and they will place 24% of the orders for new custom homes. And because the average home buyer is getting older, builders are adding a choice of traditional ranch floor plans, ranch homes with an optional second floor, all-on-one floor duplexes and ranch-style townhouses, according to Steve Hovany, president of Strategy Planning Associates in Schaumburg, Ill.
If the condos downtown, with their elevators, were priced right according to Boomers income, could that be the next wave of condo owners? I recall that the average age of a certain condominium development downtown was about 60 years old. Maybe that will happen in the Pearl.
May
14
Why I Love Portland
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There are many reasons to love Portland but I just want to list the overall benefits of our location and climate. We mayhave incidents of the items I list but it isn’t so much that anyone expects these things. I love Portland because we don’t have:
- Tornadoes
- Rattlesnakes
- Hurricanes
- Scorpions
- Earthquakes
- Droughts
- Floods (at least not like the midwest)
- Alligators
- Lightning striking people (in the east, you don’t play in a storm)
- Avalanches
- Crocodiles
- Blizzards
- 120 degree heat
- Snakes the color of fall leaves (Copperhead)
- Chiggers (In the South)
- Tsunami (so far)
- Traffic (come on, it doesn’t touch other big cities)
Can you think of any others?
May
13
Is Smaller Better?
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Somehow as families got smaller, homes got bigger. In the 50’s the average size home was about 1300 sf . Now it is over 200sf. Thanks to credit we could buy more stuff and we needed bigger homes to put the stuff in. (Tip of the hat to George Carlin.) Now, as is typical, when there are changes in the economy, people are looking to spend less.
I hear more and more that people don’t really need or want (or afford) large homes. I had always been against two bedroom homes until about two years ago. They have often been ignored by buyers unless they were looking the cheapest thing.
I think there will be a coming gap in home sizes. Just as there are always people ready to buy expensive things, there will be people who can only afford the minimum. That middle ground often breaks down. People may decide they don’t need a bonus room or the fourth bedroom. And especially with the expected large expansion of baby boomers, small will be in.
I have heard many people talk about how happy they were not to care for a large house. And many don’t think of the cost or time in the maintenance and care of large homes. Small living will free up time and money. Also with the push to be “Green,” smaller fits in their model as well.
Photo via http://www.flickr.com/photos/r80o/
May
13
“Control Your Client!”
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I had a conversation today that reminded me of another one I had in 2003. My client was refusing to sign until everything was completed on his new home. He had been watching over the progress very closely and caught a few problems that would have been hard to fix when the home was done. He was worried that once it closed he would be forgotten, and rightly so.
The Principal Broker of this new construction development called me, frustrated and angry. He said, “You need to get control of your client.” Control? Really? How do I do that and why would I do that? Push my client into something that benefits you and may lost my credibility? No.
I know there are some agents who want to control their clients because they think they know best. Most of the agents that I know and respect are advisers to their clients. We tell them the options and our best advice then they make a decision. And any agent who thinks he is right 100% of the time is a fool.
I have wanted clients to offer more or less, accept more or less and have been wrong at times. Just when the market started to take off in 2005 I was one of four agents to meet with a seller. When I told him my suggested price I warned him that I was usually lower than others. He told me that I was actually the second highest which worried me. I got the listing and sold it in two weeks. One of the agents he had met was in my office. She had 20+ years of experience and would have had it wrong but she is still a great agent.
A woman is California is suing a real estate agent because he allegedly didn’t show her other homes so she bought his listing. That is control.
My client ended up signing only because he had gotten to know the foreman on the job and he promised to get things done. Well it still took three weeks to finish it up and he regretted signing. The reason Principal Broker wanted my client to sign? The corporate division wanted it in their quarterly numbers for stock holders.
And to be honest, in retrospect, he was serving his client by pushing me. Though it wasn’t anything he said to me that got my client to sign he pulled out his last tactic by trying to muscle me. I have to guess that is what the agent was doing today. Nothing else was working to get my client to bend, so push and whack on me to see if I could get my client to change their mind. Nothing personal. It’s just the business trying to get the best for our clients.
photo via turkeyanne
May
12
Quick Hits
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Find the cheapest gas for an area.
My client bought this tomato and soon thereafter had an accepted offer. I am not saying that it brought the offer but when a tomato is called the Mortgage Lifter, what are you going to do?
Coyotes are on the rise in Lake Oswego.
I was driving through Forest Grove and saw a kid, about 8 years old, smacking and stabbing the chimney of what I hope was his house. I wonder if the pest and dry rot report will figure out the origin of that damage.
May
9
Happy Sewer Days
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First of all I don’t get quite get what this guy is touching in the relief of this sewer cover. I am sure it seemed like a good idea on paper but just didn’t come through in metal.
Talking with a sewer repair man I learned that there have been quite a few problems with new construction sewer lines. When I first started in real estate I did what most rookie agents do, I never pushed my clients to do a home inspection on new construction.
“It’s new.”
“They will fix anything wrong in the first year.”
I learned after a while. Keeping with the sewer theme, I heard of two new construction homes that did not have connected pipes for the downstairs toilet. Somehow the plumber forgot and the county/city inspector didn’t look. For about a year, in at least one case, the toilet was flushing into…the crawlspace. You just asked what everyone else asks. “Didn’t they smell something.” I guess not.
I have found problems with new construction since then. When you think about it, fifty plus guys are working on your home. Some care about quality, some don’t.
So when the sewer repairman mentioned crushed pipes on new construction, it rang true. I can see inadvertent crushing that is known and covered up and unknown crushing. He estimated that 35% of new construction has problem pipes.
This all came up because I had a sewer scope done on one of my listings. There were issues found. I haven’t had a sewer scope done on one of my listings since 2002. It is almost automatic on the eastside but still even on those listings no one did it. I have started to feel foolish until I started calling colleagues.
None had a repair referral as they hadn’t done it or at least hadn’t had problems. So I don’t know if we don’t have as many problems on the westside because the homes are newer or we just don’t know about the problems. I am guessing this is going to become more and more commonplace and wonder if it will become an epidemic.
photo via http://www.flickr.com/photos/misserion/
May
8
How To Price A Secret Room?
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Creative Home Engineering specializes in secret doors. You have no idea how much I love hidden rooms. I don’t know where it comes from but I saw one when I was a kid and it floored me. Up in a loft where everything looked normal and then my Mom pulled the bookcase back. Things always seem big when you are a kid but I am guessing the room was 12′ X 12′.
Many of my clients could probably tell you I mentioned where a hidden room could fit in a house we were viewing. When my friend was getting ready to move I mentioned that he had the perfect setup to make an 9′ X 9′ room into a secret room and I would lay down money that no one would guess it was there. He thought it was cool but didn’t have the time to order and have it installed. I did some research back then and I think it was around $10,000 for a good bookcase door.
So the real question, since I sell homes for a living, how in the world do I price a secret room? The market decides but there are so few that the market doesn’t know. And if you tell every buyer and mention it in the listing then it takes some of the mystique away don’t you think?
I know I would pay more. Would you? Should I wait until a deal is almost finished and then tell the buyer? Actually I guess the inspector should know so the inspection is comeplete. I am having more fun fantasizing about it than I would have figuring out the answers to these questions.
If you have one I would love to see pictures or the house. Indulge me please.
May
4
The Value Of A Home
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I have been reading a lot lately from people talking about pricing. Homes are only less subjective than art and collectibles. What is the White House worth?
I got into an online discussion with an appraiser from the Southwest. He believed that only a licensed appraiser can determine the value of a home. Asking a Realtor®, in his opinion, was like asking your tax attorney to take care of your divorce. Sure.
So who can value your home?
I had one listing that sat for 9 months. The owners lived out of state but the mortgage wasn’t enough to hurt their finances. They did do some price drops but finally held tight on a price. I felt they should drop some more but they didn’t.
I would guess there were 30 showings on the property. Maybe 26 didn’t like the property. Two didn’t like the price. The last two wrote identical offers 3 weeks apart. We were able to negotiate the price close to the listing price with the last buyer and it sold.
Let’s say the price was $300,000. In the tax record and RMLS it will say $300,000. Every agent and appraiser will compare that and other numbers to determine the price of another home. But is that really the value of the house. No, not if you are using it to determe other home’s prices.
We are essentially using subjective numbers to place an definitive value on another subjective item. Picasso’s prices don’t help my stick drawings on Ebay.
29 other people did not purchase that house but had an opportunity. Sure, some should be excluded because of the price drop but many could have. Just as they price art and collectibles, they are estimates. For an appraiser to say this is the absolute price, well that is wrong.
Days On The Market (DOM) helps a little to gauge overall interest but I don’t know if that is taken into account. I know of divorcing couples that have sold at very low prices and people who have sold to out of state buyers for high prices. DOM can be misleading as well. As I tell my sellers, you never know when the ONE buyer will come by.
The market will decide the ultimate price, no one else. The willing buyer who falls in love with the smallest detail of your home will buy your home over another. Agents usually give you a range, at least I do. Appraisers give a single dollar amount quite often based on just three comparable homes.
photo via http://www.flickr.com/photos/dcjohn/
