Home prices keep rising, but rate of increase slackens
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WASHINGTON — U.S. home prices rose at a faster year-over-year pace in October than in September, snapping a seven-month slowdown. And in the Portland-Vancouver area, they rose a little faster still.
Real estate data provider CoreLogic said Tuesday that prices increased 6.1 percent in October compared with 12 months earlier. That was up from September's year-over-year increase of 5.6 percent.
Still, home values are rising more slowly than they were earlier this year, when 12-month gains were averaging nearly double their current pace.
In the Portland-Vancouver-Hillsboro area, CoreLogic reported that home prices rose 7.7 percent on an annualized basis in October — but declined 0.2 percent from September.
The price momentum began to tail off in the middle of the year as home values in more cities and states neared the record highs last seen shortly before the Great Recession began in late 2007.
Higher prices have reduced affordability, especially because the incomes of many would-be buyers have yet to match their pre-recession levels. Lending standards also remain comparably tight.
Previous price increases led investors to pull back from the home market, and first-time buyers have yet to fill the void created by their departure.
Price growth will likely remain mild as a result, CoreLogic said. The firm projects that home values will rise 5.1 percent over the next 12 months. Roughly half the country's homes will match or surpass their pre-recession prices by mid-2015, it predicts.
Every state reported a price gain in October. CoreLogic said prices reached new highs in Colorado, Louisiana, Nebraska, New York, North Dakota, South Dakota, Tennessee, Texas and Wyoming. In 27 states, home values are within 10 percent of their previous peaks.
There are still pockets of the country — including parts of Texas, Seattle and Denver — where prices are rising faster than in the rest of the country because of their relatively strong job markets, incomes and home prices, said Sam Khater, deputy chief economist at CoreLogic.
Other real estate companies have forecast a sharper slowdown in price gains next year.
Zillow, the online home marketplace, released estimated Tuesday that home values will rise a mere 2.5 percent nationwide in 2015. That slowdown should ultimately help bring more buyers into the market and increase sales, said Stan Humphries, Zillow's chief economist.
-The Associated Press (Oregonian)
AS THE SPRING home-selling and buying season commences, most good news lies in the future. How far? Nobody knows for sure.
Yet if you scan our annual real estate grids with a magnifying glass, positive stories can be found: neighborhoods seeing upticks in value, median ages going down, median income going up. And last year, the number of homes sold actually increased by more than 8 percent in Portland and by 12 percent in its outlying suburbs. In neighborhoods that saw double-digit percentage price drops in home values—like the Pearl, Hillside, and Cathedral Park—sales increased by as much as 80 percent.
According to Gerard Mildner, director of PSU’s Center for Real Estate, these trends should inspire some cautious optimism for the future.
“There are more transactions happening, and fewer people have homes on the market,” he says. “That means there’s some upward pressure on prices.”
But the best news, Mildner says, is that the housing bubble made us wiser—and long-term investments may begin to trump opportunistic buying.
“Your decisions about owning a home should be about the neighborhood and the size of the home and whether that fits what you need. It shouldn’t be about whether it’s going to appreciate in value quickly.”
Finding that perfect neighborhood is tough—but we’re here to help.
Check out an interesting article from Portland Monthly below
Portland's Current Market Trends
The major movements within Portland's real estate market, from cash purchases to sustainable mixed-use developments.
New (Seasons) Math
Proximity to urban amenities seems to be the drumbeat of today’s highly desirable neighborhoods. But can having a grocery store or cinema within walking distance really raise the value of your home? In theory, yes, according to a 2007 Metro study. Using hedonic modeling (fancy math to measure complex behavior, like home buying), local real estate consultancy firm Johnson Gardner evaluated more than 400 Portland home sales in 2006 and determined that, indeed, some amenities appear to have a statistically significant impact on home price. Top of the list: cinemas, wine bars and shops, and specialty grocers. But appraisers haven’t embraced the new math in their calculations. “There’s no standard adjustment for proximity to New Seasons,” says Mark Hepner, co-owner of Portland Residential Appraisals. “When you talk about the hip neighborhoods, you’re talking about areas that have diverse housing stock. When you try to narrow down your adjustment to a specific item, like a New Seasons, there’s not enough consistency in all the factors to make a fair comparison.”
Kings of Division
Andy Ricker’s Pok Pok might have captured the culinary heart of Division, but seven-year-old Urban Development Partners has claimed something more tangible—land. The development firm owns six properties on Division, between 31st and 39th, among them the Reliable, a LEED Gold-certified building with 13 residential units hoisted atop popular eateries like the Sunshine Tavern and Wafu. UDP came to Portland in 2006, after transforming Oakland’s historic Mutual Creamery building into 26 live-work spaces. Division immediately caught their eye. “When the city puts investment or intention behind an area—with tax incentives, up-zoning, even just cleaning up the streets—it’s a recipe for reinvention,” notes cofounder Eric Cress. The firm’s first Division Street building, the Richmond, opened in 2008, anchored by the Victory Bar. Next came Reliable, in 2010, followed by a 26-unit LEED Platinum mixed-use building at 38th and Division in 2011. Up next: a 39-unit building at 3339 SE Division St, slated for completion this fall. (Salt and Straw and St. Honoré have already signed up for ground-floor retail spaces.) And in 2014, UDP will debut two more mixed-use projects at 3360 and 3330 SE Division St.
An ADU Explosion
When the Portland City Council approved waiving system development charges and upped the maximum size of Accessory Dwelling Units (ADUs) to 75 percent of the main house in April 2010, the number of completed backyard cottages grew by more than 30 percent: from 52 in fiscal year 2009 to 70 in 2010 and 104 in 2011. The savings—typically several thousand dollars per dwelling—helped encourage a wave of these backyard bargains, but so did the emergence of an übertight rental market. And since the city voted to extend the waiver for another three years, look for more of these charming cottages coming to a backyard near you.
In Portland’s low-inventory real estate market, money doesn’t just talk—it screams. Fully a quarter of all home purchases made in 2011 and 2012 were cash purchases. No financing, just dollar signs. “It’s basically investors getting into the market,” explains Jerry Johnson, principal at Johnson Reid real estate consultancy firm. “They see huge buying opportunities. When cash buyers come in, it typically means they’re reading bottom of the market.” It can be good business for builders, as Keller Williams principal broker Nick Krautter points out: “You can pay $250,000 to $300,000 for a house, tear it down and build another, and still make money,” he says. “That wasn’t the case two years ago.” The proliferation of cash buyers can be frustrating for buyers looking to finance a home, since cash deals are often more attractive to sellers. Krautter relates the story of a recent listing in the low $300,000 range that garnered six offers within 48 hours, all well above the listing price. Two of them were cash offers (and one of those won out). “Sellers are really looking at the bottom line,” he notes. But as the number of foreclosure properties on the market continues to decrease, Michael Hasson of Hasson Company Realtors expects to see cash sales level off.
In the rent-controlled Big Apple, where vacancy rates regularly dip below 2 percent, and competition for the city’s apartments verges on all-out warfare, employing a leasing agent to hunt down a rental is about the only way to ensure you score a dream (or at least cockroach-free) apartment. With similarly low vacancy rates here, it was only a matter of time before the practice arrived in Portland. “We’ve found the need and request for rental location service to be increasing as the rental market continues to be competitive,” says Jenelle Isaacson, founder of the fast-growing firm Living Room Realty. So the firm, along with a few others, began offering “relocation services.” For a $500 deposit (applied toward your total fee—one month’s rent once you find an apartment) a Living Room agent will research, preview, and photograph potential properties for you. Goodbye, Craigslist. Hello, home.