December 2019 Issue
As 2019 comes to an end, I want to wish you a very happy Holiday season, with good health and happiness for the year ahead. Thank you for reading this newsletter each month, for your questions and ideas, and for your business in the past and for the future. You are very much appreciated.
With warmest wishes,
The Portland Market
In this last month, the Portland metro area saw gains in both pending and closed sales compared with this time last year. Closed sales rose 6.1% over sales reported in October, 2018.
New listings have decreased 1.2%, down to 2.4 months of inventory. This is down from 2.8 months the previous month. And the total days on market increased slightly by 2 days, to 54 days.
Overall, activity is a bit cooler compared to 2018, so far. New listings are down 1.4% and closed sales, 25,085, are down 1.8%.
Comparisons: Comparing what we have so far in 2019 to 2018 (totals not in yet), the average sales price has increased 1.2%, from $453,600 to $459,000. The median sale price has increased 2.5% from $400,000 to $410,000.
Affordability – According to a formula from the National Association of Realtors®, buying a house in the Portland metro area is affordable for a family earning the median income. A family earning the median income ($87,900 in 2019, per HUD) can afford 123% of a monthly mortgage payment on a median priced home ($410,000 in September). The formula assumes that the buyer has a 20% down payment and a 30 year fixed rate of 3.61% (per Freddie Mac).
All in all, we are seeing a seasonal drop in number of active listings, and along with that, a predictable but small increase in the number of days on market. But the drop and the increase are minor, underlining the stable market that we have seen in 2019. Interest rates continue to be low, with a decent amount of inventory. And sellers are more likely to lower their asking prices than they have been. Still a great time to be a buyer, with sellers having to pay attention to the condition of their property and pricing their homes correctly.
2020 Economy Predictions
There is a lot of discussion about where the economy is going for the coming year. As we near the end of 2019, it is very common to be looking ahead and figuring out what will happen, as well as for the real estate market. But since the health of the economy has a lot to do with the real estate market, I have been looking at some national publications for their insight. Here are some thoughts from the Bloomberg Business Week Magazine and from the Wall Street Journal.
Bloomberg: 2020 The Year Ahead Oct. 28, 2019
“To avoid a recession in the US in 2020, households need to keep spending, peace needs to break out in global trade wars, and investors can’t get spooked by the US presidential election or anything else.
It’s likely that all these things will happen. That’s why Bloomberg Economics is forecasting that the US economy will grow 2% in 2020 as the record length expansion turns 11 years old in June.”
Wall Street Journal, Nov. 2, 2019
“The US economy has cooled but continues to expand with employers hiring, consumers spending, and growth stabilizing.
Friday’s figures also showed job growth was better in August and September than previously reported. That and other economic news point to a US economy that is growing at a stable but slower rate compared with 2018, despite signs of global slowdown.”
“The US economy is in a good place,” Federal Reserve Vice Chairman Richard Clarida said in a speech Friday afternoon. “Growth has been supported by the continued strength of household consumption, underpinned, in turn, by a thriving labor market.”
This is the word from excellent sources. I am looking forward to a healthy 2020.
Being Safe in Your Home
As I tour homes in the area, I see a variety of problems that could become safety issues.
Here is a summary of the most important.
1) Handrails: One common problem I see is a lack of handrails, even in some new home construction. This is always a safety issue. Here is what is required:
Every handrail and guardrail shall be firmly fastened, and shall be maintained in good condition, capable of supporting the loads to which it is subjected, and meet the following requirements:
A. Handrails and guardrails required by building codes at the time of construction shall be maintained or, if removed, shall be replaced.
B. Where not otherwise required by original building codes, exterior stairs of more than three risers which are designed and intended to be used as part of the regular access to the dwelling unit shall have handrails. Interior stairs of more than three risers shall have handrails. When required handrails are installed they shall be installed so that they meet the applicable building code requirements in effect at the time this work is being performed.
C. Open sides of stairs with a total rise of more than 30 inches above the floor or grade below shall have guardrails. When required guardrails are installed, they shall be installed so that they meet the applicable building code requirements in effect at the time this work is being performed.
Error on the side of caution. And handrails need to be finished off at the top and bottom, so a sleeve does not catch.
2) Carbon monoxide alarms:
Ensure that you have carbon monoxide detectors in your home and test them regularly.
Check your heaters annually to prevent danger from carbon monoxide poisoning.
Some home security systems have carbon monoxide detection and will alert you early to unsafe levels in your home.
3) Fire hazards
With over 3,000 American lives claimed each year from fire hazards, this is the third biggest killer as far as home accidents are concerned. Follow these steps to avoid fatalities and devastating burns to loved ones as well as damage to your home and belongings.
Minimize the Risks:
Install smoke detectors in the kitchen, bedrooms and basement.
Test your alarm monthly and ensure you replace the batteries twice a year.
Consider a home alarm system that detects smoke. This will not just raise an alarm like a usual smoke detector but it will contact the local fire department and help will be on its way.
NEVER leave a pan of oil for deep-frying unattended. If the pan catches fire use a damp tea towel to deal with the flames, never try to put the fire out with water.
Keep matches and lighters away from children.
If you smoke, take care to extinguish all cigarettes carefully.
Never leave a candle burning overnight.
Have a fire safety plan that everyone knows and carefully plan how you will exit the home.
Have your electrical wiring tested regularly by a qualified electrician. Don’t overload your system or any 1 outlet. Check for frayed wires. Do not put cords under rugs or across doorways. And do not use extension cords as a permanent solution. You may need to add an extra outlet.
At Xmas, check your Xmas tree lights. Switch off all Xmas lights before you go to bed.
5) Water heaters: inspect annually, with your setting at no higher than 120 degrees.
6) Chimneys: Hire a chimney sweep to have flues and chimneys inspected & cleaned.
The 55+ Housing Market
Builder confidence is up in the 55+ housing market, according to the National Association of Home Builders. This is seen in the single family and condo markets. Baby boomers are looking to downsize, but with higher end features and amenities.
“Demand for 55+ single-family housing remains strong, mirroring the gains we have seen in the overall market, which has been largely supported by low interest rates and healthy job growth,” said NAHB Chief Economist Robert Dietz.
Although many condo projects are not designated as 55+, some are. Here is what you will find in the Portland metro area, for both single family and condos:
If you might have an interest in this special type of listing, please let me know. The condos require a monthly HOA and the single family homes may also require a yearly fee and/or a buy-in fee.
New City Rules to Demolish Your House
The City of Portland just passed a new rule that only allows hand demolition of a home built in 1940 or older. The home must be deconstructed in order that the materials be salvaged. Previously this rule applied to homes built in 1916 or earlier. The new City rule goes into elect on January 20, 2020. In the last 3 years, more than 200 homes have been demolished. By requiring hand demolition, there are increased chances of ending lead based paint and asbestos. There are currently 12 companies now certified to do this type of demolition.