Portland Real Estate Blog

RMLS Reports First Average Price Decline Since 2001

It's not often that you get three posts on one day but RMLS Market Action for April just hit the streets. The trends are largely what we would expect to see in keeping with Case Schiller and other reports: "Also of note was the first decline in average sale price since August 2002 and in median sale price since May 2001 when comparing April of the current year to the same month the year prior. Average sale price dropped 3.9% and the median fell 3.5%."

One area of growth from March to April was pending sales, which grew 6.8% (2,070 v. 1,938). This is the first increase in pending sales from March to April since 2005. New listings also grew 2.7% (5,295 v. 5,155). Closed sales dropped 6.4% (1,582 v. 1,691). This drop is on par with the last three years, though, as closed sales have dropped an average of 6.7% from March to April.

This surprises on one hand as I am surprised the buyer pool in this range has changed much but on the other hand jumbo loans are harder to come by:

One factor in this price decline may be a 51.2% (21 v. 43) decrease in the number of homes sold for $1 million or more, when comparing April 2008 with April 2007. Year-to-date, sales in this price range are down 31.9% compared with the same time last year.

Portland Spaces Condo Graphic

Portland Spaces is one of our city's newest magazines. I received a clip of the condo graphic via email a couple of days ago with no source so it took a little tracking down. Portland Spaces has graciously allowed it to be reproduced here as it appeared on page 34 of May/June issue. A little number crunching shows the average percentage of listed condos against those built in the last five years for the six cities is 37%.

	Active	Built
Portland	1503	6575	23%
Seattle	3478	7961	44%
Vancouver	2330	17169	14%
Las Vegas	7560	26382	29%
Miami	25424	29054	88%
Phoenix	3904	15769	25%

Repost of Comment

Welcome to the Portland Real Estate Blog three ring circus. In the main ring we have Portland Real Estate. In the ring to your left have those that believe the Portland real estate market is in the tank and has 30% of value or more to give back. In the right hand ring, we have those that see Portland as a strong and growing housing market. Realtor, Charles Turner has the role of Blog Tamer. The audience is made up of all demographics with a universal interest in the Portland housing market. Some potential participants don't participate out of fear of being mauled.

Some of the participants are getting a little agitated. The comment that Tiffany says isn't hers was sent from a different IP address than her other comments. It is not an IP address associated with another commenter but that doesn't mean that it isn't.

I'm not having a lot of fun doing this right now. The sarcasm, impersonation, meanness and attacks need to stop. If you can't say something with some modicum of respect, even if you disagree, don't comment.

I reposted (and added a couple of lines) this comment from this morning as its own post to make sure that the entire readership sees it.

Termination Agreement

NW Ryan is back on the market. The transaction failed today through no fault of the seller or the property. The cash buyer walked away from the transaction and forfeited their earnest money. This is only the second time in five years that I have seen a buyer walk at this stage in a transaction but this is exactly what earnest money is for. 100% of it will go to the seller. There were no contingencies left that would entitle the buyer to get keep their earnest money.

A buyer is only at financial risk for the amount of earnest money committed in the offer. The buyer can walk for any reason at any time before closing and forfeit their earnest money if there are no valid contingencies to refund the earnest money. The seller can be sued for specific performance and forced to close the transaction under the terms of the contract.

Net or Gross Based Commission?

Question, Charles: This seems to vary from broker to broker, but what is your policy regarding commission: As a listing agent, do you take the 6 percent off of the listed price (e.g., 350K), or off of the actual price (i.e., the price minus any concessions, e.g., sewer repair, house inspections, etc., which might amount to 7K -- 343K)? I ask because I've run into agents who do both, though those who take their commission off of the list price instead of the lower price, after concessions, usually never say anything unless the seller notices it.

It should not vary from broker to broker. RMLS rules are very clear. According to RMLS:

Indicating Compensation in RMLS™ Listings

Compensation information not allowed in remarks section. It has come to our attention that several listings state in the remarks section, “No commission on seller concessions”, “Compensation on net amount”, etc. This information is not allowed in the remarks section. RMLS™ Rules and Regulations Section 6.2, Cooperative Compensation Specified on Each Listing, states “…The compensation specified on listings published by RMLS™ shall be shown in one of the following forms: a) by showing a percentage of the gross selling price; or b) by showing a definite dollar amount….”

The Listing Broker may offer compensation other than what is published, provided that they inform the other broker in writing in advance. Notification of a change in compensation must be independent of the RMLS™ listing. Further, the modification in the specified compensation may not result from an agreement among all or any other RMLS™ Participants.

Please review your listings and remove any wording in the remarks section that would indicate that compensation is to be paid on net selling price or to exclude seller concessions.

Gross sales price is easy to determine. It is the recorded price of the sale. How do you determine net? Obviously repairs and credits can be calculated. But how about a piece of personal property? We were planning on taking the counter-depth stainless fridge and 15" LCD TV out of our old house. We ended up leaving them in lieu of repairs. What were those items worth? You'd have to determine the value of each piece of personal property to figure out commissions based on net and you'd have to decide if the personal property that was included in the original offer was a concession or part of the sale. The Earnest Money Agreement states that personal property included in the sale is of "no value."

The example in the question at 6% is $420 net versus gross (2%). Gross may be an imperfect method but I don't see how net is feasible across the board as it is a moving target. You have to have something firm to go by. That said, that is the rule. We talk through the process with our sellers. Both agents are entitled to commission based on gross and only once have we had a buyer's agent enforce it when we have suggested otherwise. He probably pocketed $100 and looked like an ass for it but it was his right.

Monday Morning Real Estate May 12

I'm actually not lacking for post ideas but I thought this topic might be a good way of doing a little house keeping here at the Portland Real Estate Blog. I'm finding it more and more frustrating to write a post about A and then spend the day reading comments about X that have nothing to do with the topic at hand. Even giving an open forum post on Thursday didn't stop destroying Friday's Earth Advantage thread by going off topic. So, for the next week, I'm not going to delete comments but I am going to move off topic comments to this thread. I'd rather not waste my time doing it so it would be greatly appreciated if you can monitor yourselves.

I showed property yesterday and found this to be the piece de la resistance of the day. The listing said the oil tank had been decommissioned. It didn't say what it had been replaced with.

“Green” Certified Homes Sell for More in Portland Real Estate Market

I'm not usually one for a cut and paste post but this one came to my email from Earth Advantage as a press release and has merit for a its own thread.

                

Certified Homes Also Sit on Market for Less Time Aligning with Consumer's Values and Higher Demand for "Green"

 

PORTLAND, OR – The growth in the number of "green" certified homes in the Portland metro region is attracting some significant attention. Over the past year, three percent of all new homes sold in the Portland Metropolitan Area carried a sustainable or "green" certification brand. These homes earned more in the market than non-certified homes, selling for an average price of $223 per square foot, versus $185 per square foot for non-certified, traditionally built homes.

This information was compiled by the Regional Multiple Listing Service (RMLS) in Portland. The percentage quoted includes new home sales in Multnomah, Clackamas, Columbia, Washington and Yamhill Counties. It does not include new home sales in Clark County, WA. RMLS began tracking the sale of green certified homes in 2007 when the certification search feature was implemented on the MLS database.

"Green" certified homes also sold faster than homes without certification. New "green" homes in the Portland Metro Area remained on the market for just of 66 days on average, while the average time on the market for all homes was 73 days. The announcement of Countrywide's Green Incentive mortgage product that discounts the interest rate is sure to add further value to green homes.

"These findings are very important," states Sean Penrith, Executive Director of the not-for-profit Earth Advantage, Inc. "We have long heard and touted that green building is the right thing to do, and it is. But now we have actual data that points to higher value for green homes and reduced time on the market. This is the tipping point, and in five years, builders that are not identifying green in their practices will undoubtedly be marginalized."

"Green" certification includes third-party certified Earth Advantage^® homes, Earth Advantage/ENERGY STAR^® co-labeled homes, ENERGY STAR, and LEED^® for Homes. For the period ending April 30, 2008, 309 housing units in the study received either Earth Advantage or an Earth Advantage/ ENERGY STAR certification. To obtain third-party certification, a builder or developer works with Earth Advantage, Inc to ensure that the highest standards for energy efficiency, indoor air quality, resource efficiency, water conservation and environmental responsibility are integrated into the construction of the home. Final performance testing and inspections are conducted by Earth Advantage, Inc. before a certificate of compliance is issued.

Home builders in the region are offering "green" or sustainable amenities as a way to compete in the housing market. Such features include efficient home furnaces and high performance heating and ventilation systems. Steve Tapio is the Building Science Team Leader for New Tradition Homes in Vancouver. His company began offering Earth Advantage certified homes in 2005. "All builders need to be in the running now," Tapio reported. "The cost of energy is one of the largest concerns on the consumer's mind. Sustainable features are also of interest in this market."

"Green" built homes are designed with people in mind. They are more energy efficient reducing monthly utility costs, have healthier indoor in qualities that are better for occupants, and have more durable features and products that reduce time and money for upkeep. People are acknowledging these traits as not only core values to themselves, but are also beginning to understand how "green" built homes truly make sense, from an economic and environmental perspective.

Earth Advantage, Inc., a 501(c)3 non-profit corporation is a leading green building authority in the Pacific Northwest and the largest third-party tested program in the country. At a minimum, Earth Advantage homes are designed to use 15 percent less energy than houses built to standard code practices. Earth Advantage works with builders, developers and home owners to bring the most energy efficient, sustainable and healthy homes to the market. The organization has the ability to certify homes as Earth Advantage (Silver, Gold and Platinum levels exist too), ENERGY STAR®, or LEED for Homes®. Over 9,500 homes in the state of Oregon have been certified to the Earth Advantage standard since 2000. For more information, visit www.earthadvantage.org.

Thursday Open Forum

If you are reading this on Thursday, you are warmer and dryer than I am. Depending on how late in the day it is, I am either crossing, or have crossed the Columbia River Bar for the start of Oregon Offshore which is a sail boat race from Astoria to Victoria BC. We should finish some time very early Saturday morning depending if the start is delayed for favorable tides over the Bar. Navigation has changed so much over the years that I might even get a chance to read the blog but I am pretty sure I won't be punching messages out as we beat up the coast of Washington. One of the great reasons to live in the Pacific Northwest.

Tomorrow's post is already set to run. Enjoy the day, discuss some thing real estate related and be nice to each other!

Buyer Due Diligence 5: Stucco

Rewriting this as somehow it saved the title and nothing else.

Stucco has been around for 100s of years. It's recent history is scared by EFIS which was a synthetic stucco which has a history of failing or being improperly installed. For us, the question is less about whether it needs work or not but how much work it does need. It has visibly failed in a couple of places but ripping of the rest for sake of ripping it off is not a good plan.

Western Architectural came out on Monday to look at it. The consensus is that we can repair the damaged area and attempt to match the existing as close as possible. It appears to be original to the 1906 house as there was no evidence of previous siding being covered up. The cost of the inspection is high: $160 per hour and takes four to five hours.

One of our clients had a stucco inspection on Monday as well. That house shows perfectly so it will be interesting to see how the stucco report comes out on that property.

Buyer Due Diligence 4: Lead Based Paint

Unless it has already been stripped, a 1906 home has lead based paint. The Oregon Earnest Money Agreement (the purchase contract) has a provision for testing for lead based paint separate to the professional inspection period. For you and I, the Cliff Note version is, "don't eat the paint." It is more serrious for children and pets where health and development issues can be dangerous. If you don't disturb it, you are better off than if you do so impropperly. The Lead Based Paint Addendum is required for any transaction where the home was built before 1978. The Protect Your Family From Lead in Your Home is an EPA handout and is required that the buyer receive as part of the addendum. If you have any questions about lead in your home, you should contact the appropriate agencies.

I've already got bids for stripping the paint off the house but I thought I would give one of the home test kits a try to confirm what I already knew.

Sure enough, after two minutes of holding the moistened pad to the paint sample, the pad turned pink: