I had an opportunity to talk with Dana Tims for today’s “Dealing With The Downturn” feature in the SW Weekly section of the Oregonian, which covers Tigard, Tualatin, and Sherwood.
Tims interviewed a homebuilder, supplier, remodeler, homeseller, and real estate agent to gauge how each sector is adapting to a slower housing market.
Here is the text, in case the link goes away:
Trying to adapt to the new housing market
A builder, a Realtor, a seller, a remodeler and a supplier discuss their strategies
Thursday, April 10, 2008
DANA TIMS
The Oregonian Staff
Until recently, a vibrant housing market provided many of the jobs and much of the income that stoked the southwest suburbs’ economy for the past half-decade.
Much has happened in the past year to erase the double-digit profits that home sellers were taking for granted.
The number of houses on the market, for instance, has increased almost sixfold since 2006, giving buyers the upper hand.
Houses are lingering on the market far longer than they did two or three years ago. The multiple offers and bidding wars common among prospective buyers as recently as 2005 have been replaced by sellers trimming asking prices 10 percent and more to keep buyers from shopping elsewhere.
Some areas are feeling the pinch more than others. Below are brief profiles of five people and their accompanying market sectors. Each is trying to find new strategies for coping with the downturn.
The Realtor
Ron Ares jumped from his job as marketing director for a high-tech company to a family-run real estate business in West Linn three years ago. That may as well have been a lifetime ago.
“Inventories were half of what they are now, full-price offers were commonplace and if buyers didn’t have all their ducks in a row, they were likely to miss out on houses that were selling the same day they came on the market,” said Ares, a Tigard resident who specializes in the southwest suburbs. “It was one open house, one advertisement and ‘Katie bar the door.’ ”
The market hit its peak, in terms of median sales prices and number of houses sold, last July or August, Ares said.
Ultimately, he expects that this year will see a considerable dip in closed sales when compared with 2007, but the drop will be less than the 35 percent chalked up so far this year.
Successful agents — that is, those not among the nearly 1,100 Portland-area Realtors who decided not to renew their licenses at the beginning of 2008 — need to pay close attention to the market and be willing to expand their skills sets, he said.
Some agents, for instance, are focusing on so-called short sales, where the balance owed on the mortgage is more than a house’s market value. The endeavor involves negotiating with lenders, who may be willing to settle for less to avoid foreclosing.
In Ares’ case, he is working only with longtime lenders who have endured down cycles before and know how to source solid loans.
“What I’m telling clients is, if you need to sell and don’t want to get stuck, look at what the peak pricing was and take 5 percent off the asking price,” Ares said. “Otherwise, they’ll just be chasing the market down.”
Read the full interview for how the other interviewees are coping with a slower real estate market.
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Over the past few years, those companies that plant the 4×4x8 signposts in yards for real estate signs have had quite a bustling business. But even that little cottage industry isn’t immune to a little regulation.
Apparently, they are now required by law to call utility companies and have them locate all services before the post can be dug and set. Ostensibly, a few too many sprinkler lines and cable TV services got nicked over the past few years by aggressive posthole diggers.
Their advice? Plant a flag where the signpost will likely go, so that the utility companies won’t locate and mark EVERY utility path in your yard with day-glo orange, like what happened to the poor sap below:
The city of Portland has stepped in to provide relief to homeowners dismayed to find themselves on the hook for unforseen, major sewer repairs.
But for a prospective home buyer, a $100 video will help you avoid such shock.
Hopefully, by now it is commonly understood that an inspection of the sewer connection is an integral part of a homebuyer’s inspection procedure. For the uninitiated, a sewer inspection consists of running a fiber-optic camera down the home’s sewer connection all the way out to where it meets the city’s main sewer. The cameras are calibrated to show their distance down the sewer line, so if a crack, tree root intrusion, broken joint, or other obstruction (rats!) is found, it can easily be located in the yard. When it’s done, the potential homebuyer usually gets a DVD or tape of the inspection–their own ‘dirty movie’.
If damage is visible, then repairs become a negotiable item between the seller and buyer. Most of the simple line replacements I’ve seen have run in the $3,000 to $4,000 range. But it can be a lot more–particularly when it comes to the dreaded party sewer line. These are sewer lines that collect from multiple homes, sometimes traverse over several private property lots, and eventually find their way to the city main.
On January 2nd, the Portland city council unanimously approved a subsidy to share the cost with homeowners of replacing party sewer lines with individual connections to the city’s main lines. Over 3,000 properties in the city of Portland are still affected by party lines, particularly those on large lots in older neighborhoods that were subsequently divided to build new homes. The inner SE is especially affected.
The plan…guarantees homeowners a rate of $2.98 per square foot of lot to run city sewer lines near their home. That’s nearly $15,000 for a typical 5,000-square-foot lot. The city will pay the rest of the cost for the work. Homeowners must also pay a plumber to connect their house to that city line, which often costs $1,000 to $2,000, Danaher (city sewer manager) said. That’s still much cheaper than the $25,000 to $60,000 bills homeowners typically face, she said.
So, potential homebuyers, while the city subsidy might be viewed as relief to the existing owners who were staring down a $50,000 estimate, your $100 inspection lets you see the filthy truth with your eyes wide open–and watch it over and over.
Photo: Mark from City Sewer, getting some footage on a 1993 property in Tualatin. Yes, it is advisable to check newer lines, especially if they are long runs out to the city main.
It’s a new year Baby, and with it come a handful of modifications to Oregon’s real estate practice.
The 2007 Legislature passed a few items that have impact on homebuyers and sellers, and Oregon’s largest multiple listing service, RMLS, has made some changes, too.
Here’s a summary*:
RMLS Listings Numbers Change: The listing identification number on properties for sale in the multiple listing service has changed. Starting January 1, all new MLS listing numbers start with an ‘8′, as in RMLS# 8000043. This is standard procedure for RMLS, however, it does not ensure that the listing is NEW in 2008. Listings can change brokers, be removed from the market temporarily and relisted, or are merely refreshed with a new number (a practice that is frowned upon). Check with your broker for details for a history of how long a listing has REALLY been active.
Contracts address Measure 49, sort of: The Oregon Real Estate Sale Agreement commonly used by Oregon Realtors, now contains language addressing the recent passage of Measure 49. Like the previous language for Oregon’s Measure 37, the language cautions buyers and sellers to know their rights and the rights of neighboring property owners under the provisions of the new law. Those rights might seem a little murky right now as the courts and counties grapple with land use applications and lawsuits.
Flippers Get Relief: Oregon House Bill 2498 provides an exception to the licensing requirements for general contractors. Previously, if you were in the business of buying properties and fixing them up for re-sale (flipping), you were required to have a contractor’s license. Now, you may work on up to three existing homes and market them for sale per calendar year. Please note that if remodeling requires building permits, the property owner is required to hire a general contractor to perform the work or supervise subcontractors.
Tax Withholding: This change may bite a few investors this year. Oregon House Bill 2592 created a provision for tax compliance withholding at closing for all non-resident owners. So, escrow companies will now be required to withhold a percentage of sales proceeds at closing from out-of-state or foreign owners that do not qualify for an exception.
The withholding amount is the lesser of: 1) 4% of the consideration; 2) 4% of the net proceeds; or 3) 10% of the gain includable in taxable income.
The exceptions include: 1) when the consideration is less than $100,000; 2) if the property is acquired through foreclosure; or 3) if the seller is advised by ‘professionally competent knowledge or advice’ that it is a non-taxable transaction (i.e. tax-deferred (1031) exchange, sale of a principal residence, etc.). Real estate investors, beware…and talk with your tax advisor!
Other changes: Other changes for 2008 on Oregon’s real estate forms include new warning language surrounding legal lot or parcel validation and some minor changes to property disclosure language, but I won’t belabor them here.
*Note: I am not a tax or legal advisor, but have written this to highlight some of the more significant changes to Oregon real estate practice.
(Disturbing) photo by LifeSciences used under Creative Commons license.
Million-ton media gorilla Comcast has rolled out an interactive real estate shopping channel on its On-Demand network in Portland (one of only a handful of markets nationwide), where you can plop down in your Barcalounger to channel surf up to 3,000 property listings each week.
If you have Comcast On-Demand service, check out channel 888, and look for the Real Estate section. Homes for sale in the Portland metro area are sorted by area and price range. Make a selection and sit back while a 15-second spot for each listing appears. Every listing gets 3 digital photos treated with the Ken Burns effect, plus a text-to-speech narration of the agent’s comments to complete the video advertisement. Each segment lasts 7 minutes for a total of 20 - 28 listings per segment.
A local company, HouseInDemand.com is the exclusive Portland-area agent for selling these ads. I daresay they are going to be raking it in as agents look for new cost-effective, digital means to market their listings. I haven’t used it yet but HouseInDemand’s listing templates has made the process verrrry easy from what I can tell, so even technophobe agents should be able to create their ads effectively.
HouseInDemand claims over 25,000 viewers during just its second week of operation. (The On-Demand client base in the Portland area is approximately 400,000 viewers.) I suspect some of this traffic is due to the ‘looky-lou’ factor and their advertising blitz. For the next week, I would expect to see a fair bit of the Buena Vista inventory getting some pre-auction promotion.
For agents, it’s a relatively affordable advertising outlet—just $115 per week for ‘TV advertising’, arguably a better deal than pouring well over $100 into a one-shot, 4-line Open House ad in the Sunday Oregonian. But it won’t reach non-cable broadcast viewers, alternate cable provider or Dish/Direct subscribers.
So, I’m a DISH subscriber and haven’t used the Comcast On-Demand service. Has anyone out there seen Channel 888, and do you think homebuyers will use it to shop for a new house?
A sampling of Portland-related real estate links from the last week or so. Forecasters and prognosticators are making the rounds. I’ll share additional notes next week.
Home Builders Association of Metropolitan Portland forecast
Analysts Jerry Johnson, John Mitchell & David Ludwig address the Home Builders Association of Metro Portland. Net message: A slow 2008, perhaps slower than 2007, but a strong rebound in 2009.
Jeffrey Kempe, local real estate broker, drags us into his Conversation Pit with timely thoughts about green building, the upcoming Buena Vista auction, and a significant change to Oregon state law as it pertains to sales by out-of-state homeowners.
(I should mention the previous NYT article which documented the in-migration phenomenon surrounding Portland quoted my recent clients Richard & Lila. Cheers and hope you are enjoying the new digs!).
Slower home sales are challenging agents to become more creative in preparing their clients’ homes for high-impact first impressions.
Today’s post comes from Ruth Chancellor, a home stager located here in Portland. She suggests that a trip to the local craft store for a few decorating knick-knacks is not the way to go.
Organic Home Staging
Really? Really.
Recently, home staging has garnered a lot of attention and is being credited for selling homes faster and at top dollar. In short, home staging is the art of using marketing and decorating techniques to showcase homes both vacant and occupied.
But in a city known for scenic beauty and environmentally conscious citizens, fake ivy and silk flowers won’t help sell a house.
Effective home staging builds connection points, creating a vision of home that buyers want. While a silk plant might make the dining room appear a little less bare it won’t evoke that emotional connection that attracts attention. As perspective buyers tour a house, they imagine the lifestyle they would live in that home.
Organic materials bring a sense of well-being, both consciously and subconsciously. Potted herbs, bamboo, and fresh flowers add a feeling of luxury that buyers aspire to. With a trip to the farmers market, a few props and some creativity, any kitchen can feel gourmet. An average bathroom can have a serene spa-like feeling with artfully arranged sea shells, polished polish rocks and coral.
And while occupied homes can easily be staged with live plants or fresh flowers, organic materials can easily be incorporated in the staging of a vacant home. An empty home feels anything but homey. A few furnishings and some nature-inspired accessories add warmth to an otherwise cold environment.
In the current market, the decision facing Realtors and home sellers is not “if” but “how” the home should be staged.
On a related note, a Realtor organization that exclusively advises home buyers suggests that home staging is ‘distracting’, uses ‘trickery, and misleads buyers to overpay for homes that are nicely presented.
I don’t think I’ve read anything more absurd in a long time. Heaven forbid you present your home as a nice place to live!
While the Portland real estate market may not be suffering some of the inventory and price-erosion problems as in other parts of the country, there are still some homeowners that need to sell quickly.
Home condition, curb appeal, and strong marketing are certainly keys to selling, but proper pricing is the primary motivating factor to entice buyers to act quickly. Pricing decisions purely based on backward-looking information (i.e. a review of comparable properties sold in the past 3 to 6 months) may be an incomplete picture of the true state of the market.
Are homes languishing on the market? Did homes sell for their list price or were steep discounts required? How much inventory has come on the market in the past month? How long are homes in the surrounding neighborhoods taking to sell?
My comparative market analyses are always accompanied by ‘market status’ sheet, showing active, pending, and sold properties in the same geographic area, with figures for length of time on the market and listed price vs. sold price.
Past performance is helpful, but current trends are just as important if you need to sell your home quickly. Here’s a convincing clip from Money Talks.
Buds and blossoms are bursting forth here in Portland as we enter 70-degree spring days.
Springtime’s early harbingers, iris, daffodils, and tulips, are at their peak. Lawns are greening up with a quick shot of fertilizer. It reminds you of the landscaping you see at the Masters tournament at Augusta. You step back and note how good your home might look to a potential homebuyer.
The problem? You aren’t planning to sell until later in the year. Perhaps at a time of year when your garden is fallow. Or when it is 43 degrees and drizzly. Or late summer, when it’s tough to keep that lawn from browning a bit.
No problem…plan ahead. You need to take photographs now if you want show potential buyers later in the year what your home looks like during the peak blooming months of spring. Pull out your camera on a bright day. Try different lighting conditions. Be careful of too many shadows creeping in and muddying up your shots.
Tuck them away on your computer and when your real estate agent comes calling to put your listing active, let them review your bright shots of daffodils, plums and cherries, azaleas, and more.
If you don’t use the pictures in your listing photos, you can put them in a photo album on your countertop or in an expanded online photo tour. Since nearly 80% of homebuyers are now using the Internet to begin their hunt for a home, you want to put your best foot forward in the visual marketing of your home.
Even if you plan to sell in the summer, fall, or winter, capture your home’s springtime curb appeal now. You (and your agent) will be glad you did.
From the productivity-maven LifeHacker (motto: Don’t live to geek; geek to live) comes this handy, online paint color selector application for Behr paint. Called ColorSmart, it’s a nifty example of a Web 2.0, consumer-friendly interactive site.
While you can always find printed color-chip guides at the home center or paint store, with ColorSmart you can click and pick swatches from the comfort of your own chair. Choose one of Behr’s pre-configured palettes, or if you’re creatively inclined, make up your own body+trim+accent selection.
If you’re selling your house soon, my advice is: go with the pros’ color selections. Trust me, very few will really like your ‘artistic’ turquoise exteriors or lavender interiors.
You can save your color choices for later review, and print out chip codes to get your paint ordered. With ColorSmart, you can buy an 8 oz. trial size to check your colors first. If you choose a paint that doesn’t sell samples in small amounts, then go ahead and buy a quart. I recently painted my home’s exterior, and my first choice….well, let’s just say that the $9.00 I spent on the tester quart was an excellent investment. We went with choice number 2.
One reviewer of the Behr site mentioned Sherwin Williams’ version, the Color Visualizer, which I thought was cool because they actually simulate different rooms and architecture styles with your color choices. Just drag-n-drop the color on the walls. You can even preview different faux finish techniques.
I had an opportunity to talk with Dana Tims for today’s “Dealing With The Downturn” feature in the SW Weekly section of the Oregonian, which covers Tigard, Tualatin, and Sherwood. 
The city of Portland has stepped in to provide relief to homeowners dismayed to find themselves on the hook for unforseen, major sewer repairs. 
It’s a new year Baby, and with it come a handful of modifications to Oregon’s real estate practice.
Million-ton media gorilla 
A sampling of Portland-related real estate links from the last week or so. Forecasters and prognosticators are making the rounds. I’ll share additional notes next week.
Organic Home Staging
While the 
Buds and blossoms are bursting forth here in Portland as we enter 70-degree spring days. 
From the productivity-maven 
One reviewer of the Behr site mentioned 
