It was super fun to be interviewed and photographed by Portland Real Producers Magazine. Check out the link to the full article below to find out what they asked us!
Author: Eric Hagstette
Why 2019 Could be a Great Year to Sell Your Home
With the Feds increasing interest rates already 3 times the last 12 months (and a possible 4th predicted); it’s understandable that people could be hesitant to make any real estate moves. Mortgage rates tend to mirror interest rates, but with some caveats. Mortgage rates are based on the current market, your financial status and the property you are trying to purchase. Mortgage rates hit a 7-year high in November, 2018 at just under 5% as reported by Freddy Mac, but as of February the rates have lowered to the mid to low 4% range. These rates are still incredible if you consider the historic high of 18% in 1981.
Housing markets and volatility will vary depending on where you live. Thankfully, Portland is still a growing and sought after destination which helps keep our market volatility more steady. So why would selling in 2019 be better than 2020 or 2021? Our housing market has a cycle of its own that is influenced by the economy. Typically the cycle is somewhere between 10-16 years. Some experts are predicting the next recession happening in 2020 or 2021. That prediction would be in line with our typical cycle length since the last housing “crash” was in 2008.
If you are unsure what to do, here are some compelling things to think about…
Reasons to Sell in 2019:
- Do you have plans to make a move in the next 3 years?
- Do you have considerable equity in your home? The higher your down payment on a new home, the better your interest rate.
- Interest rates are predicted to rise again in the next year
- New home buyers are entering the market. Based on a recent Trulia survey, millennials are the largest buying group with 1 out of 5 reporting they will buy a home in the next 12 months.
- If you are getting close to retirement and the equity in your home is a big part of your financial picture, then waiting out the next economic cycle might not be the best plan.
Reasons not to Sell in 2019:
- You haven’t owned your current home for long enough to build up enough equity. If you’ve owned for less than 2 years, then paying capital gains on your profit is a deterrent as well.
- You are happy with your home and believe it can meet your needs for the next 5 years or more, then staying put and waiting until the next cycle is probably in your best interest.
I created Inhabit to be a trusted resource for guiding people on how to get the most out of their largest and most important asset. Our overarching goal is to be a trusted advisor and build relationships that withstand all the market ups and downs.
If you want help assessing what you should do to get the most out of your real estate investment, I’m just a phone call away.
In Which I Call B.S. on a Recent HousingWire Story
Did you see the headline from last week? “It costs more to own a home than to rent one in every U.S. state.” For a link to the article, click here.
The story talks about how using US Census Bureau data, CNBC was able to compare the median cost of renting a home to the median cost of owning a home.
Remember what a median is? A median is “the value or quantity lying at the midpoint of a frequency distribution of observed values or quantities.” In other words, if you have 1,001 houses, exactly 500 will cost more and 500 will cost less.
And this is where the methodology is screwed up. RentCafe took the same data that CNBC used and figured out that in the US, there are 73% more apartments rented than houses. And the Terner Center at Berkley took that same data and determined that “Today, single-family detached homes make up more than 62 percent of the housing stock in the United States…” .
So the median rental is way more likely to be an apartment, while the median home that’s owned is way more likely to be a house.
Here’s another way to think of it. Jennifer Lopez has a $28 million home. So she and all the other millionaires who own mansions skew the median cost of home ownership up. But unless
there are a lot of millionaires out there renting apartments for like $2 million a month, it’s a pretty safe bet that median rental doesn’t skew as far north.
If all those numbers make your eyes glaze over, let me frame it one more way. The common
sense way.
The CNBC story implies that in every single state, people who rent out their homes are, on
average, losing money. In other words, we have a country full of generous landlords.
Sorry, that just doesn’t fly.
As a realtor®, it’s important to stay informed. But it’s way more important to think.
Dreaming of a Vacation Property?
If I told you that you could own a peaceful vacation retreat at an affordable price within a half hour of downtown Portland would you believe me? Believe it or not, it’s true. Within minutes of downtown Portland (and in some cases a stone’s throw), there are hundreds of FLOATING HOMES right in front of our eyes. These unique homes come in all shapes, sizes and prices and deliver a truly peaceful, fun retreat from the day-to-day grind of life.
Whether it’s on the Willamette, Columbia or Multnomah Channel, there are moorages of all different styles and flavors with a myriad of floating homes enjoying a convenient, peaceful existence right on the water.
With Portland’s explosive growth, dense housing landscape, affordability concerns and emphasis on lifestyle, it’s surprising that these homes aren’t wildly more popular. The cat is certainly out of the bag in our “sister” cities like Seattle and San Francisco where floating homes are often just as much a consideration as land homes for primary residences or second homes.
As brokers, we hear quite often from our clients the desire to purchase a second property whether it’s at Mt. Hood, Bend or other destinations which could take hours to get to. One of the most important factors when purchasing a second home is convenient access. Taken from first-hand experience, once the honeymoon period is over after purchasing a vacation property, it’s all too easy to talk yourself out of a long drive on a Friday after work to retreat to your vacation home. However, with dozens of floating home moorages within a half hour of Portland, the much-needed escape is only a short drive away.
On top of relaxation, these properties afford fun and entertainment such as swimming, boating, fishing, wildlife observation, kayaking, and unlimited access to waterways, islands, and much more.
We realize that floating homes may not be for everyone, but we want to bring light to these special properties….especially given the abundance of them within a short drive from Portland. As our town continues to bust at the seams, we predict more buyers will begin to consider them as an option for their primary residence or as an escape from city life.
Currently, during the off-season, there are 36 floating homes for sale on the Portland area waterways ranging in price from $80k – $1.1M (with the median price of $266K). Suprised? I was too when my family and I started looking and decided to buy one on Sauvie Island 2 ½ years ago. It was the best decision we ever made. Our summers and weekends are filled with memories that will last a lifetime. Why wait for a vacation when you can live like you’re on one all the time!
2019 PDX Real Estate Outlook From Inhabit’s Owner Eric Hagstette
It’s 2019! I hope you had a restful holiday season and are as excited about the new year as I am. I find this time of year refreshing as I look ahead. The following is my market outlook for 2019. I was excited to look back on my 2018 predictions and am happy to report that I pretty much nailed it! Our Portland real estate market is very healthy….different, but healthy. We’ve been enjoying solid appreciation since 2012 and our market continues to strengthen the fundamental components required to keep a market healthy and resilient (ie., job growth, buyer qualifications, lending guidelines, availability of financing, desirability, popularity, and so forth). With this being said, the Portland market has changed and we think it is chock-full of opportunity for both our buyer and seller clients.
Inventory
Real estate buzz word #1. This simply means “supply” of housing for sale. Inventory levels determine who has the upper hand (or level hand) in the real estate market. Portland’s historically low inventory has always favored our seller clients; however, as of late 2018, inventory levels rose to a point (approximately 3 months) that has given our buyer clients hope of achieving their dreams of owning real estate. We are excited for our buyer clients and investors and doing our best to encourage them to take advantage of this “correction” or “softening” or “shift”. Call it what you will, we think this is a great time to get into the market or move around within the market.
Interest Rates
Real estate buzz word #2. We’ve been warned for years that rates would be going up and it finally happened. As we all knew, 3-4% long-term interest rates were unsustainable. These low rates were simply a tool (“quantitative easing”) used for economic recovery and stimulation as a result of the “great recession”. We’ve begun the march back to more sustainable rates for real estate financing. While these rates are still at historic lows, we understand the impacts (and discomfort) that rising rates have on real estate prices (they both can’t go up at the same time). Our sources say that we will likely have a couple more rate hikes in 2019 so, again, we’re encouraging our buyer clients to jump in the market before rates creep up more. Interestingly enough, as I write this, rates are at an 8 month low which is stirring up activity for us. On a positive note, there is still ample liquidity and loan programs for real estate financing and qualified buyers. Great lenders paired with skilled real estate negotiators (me) can introduce ways to buy rates down for our buyer clients and lower the barrier into the market.
Price, Value, Affordability
Buzz word(s) #3. Inventory, rates and real estate prices are all tied together. As mentioned, rates and prices don’t normally go up at the same time. It’s no secret that Portland (and many other metro markets) have a huge “affordability” issue. Rising rates and inventory have joined forces to encourage (or force) our seller clients to price their real estate realistically based on these new inventory levels. It is important to look at this from a positive perspective. 2019 sellers have not “missed the market”. Most of our sellers have enjoyed huge gains in appreciation of their holdings since 2012 (or longer). In my humble opinion, if we simply adjust those appreciation averages to account for today’s market conditions, most people would still be more than happy with their rate of return when spread across the years.
Luxury Homes & High-End Market
This market is all over the board. We’re seeing examples of high-end listings sitting on the market. We’re also seeing examples of high-end listings flying off the shelf. Every property has a price and there are still buyers that can and will appreciate high-end luxury homes. Keep in mind, Portland has always been insulated by the famous migration of buyers moving from California, Seattle, New York, and other “jumbo” markets. To these buyers, our “high-end” listings may seem like a bargain. With this said, regardless of the market segment, it is imperative to price real estate competitively.
Condominiums/Attached Townhomes
While these types of properties continue to grow in popularity in Portland, so does the buying power for condos and townhouses. The recent over-saturation new rental apartments in Portland has softened prices for condos and townhouses. With Portland’s limited land for development (and sprawl) and encouraged density, these properties will remain a player in the market and will “weather” this shift as our population continues to grow and buyers prioritize simplicity and efficiency. In the meantime, this is an outstanding market segment to take advantage of for our buyer and investor clients.
There you have it….my two cents on the local market for 2019
I strongly believe that these “in between” markets present the greatest opportunities for our clients. Unfortunately, we usually don’t realize these opportunities until they’re gone. While we’re experiencing a market correction, we’re still very bullish in the Portland market. We’ve built the fundamentals of a solid market while our job base and popularity continue to thrive. As “the darling” of the Pacific Northwest, Portland may experience blips like this one; however, the combination of current/future population growth with our Urban Growth Boundary and natural land barriers (to development), we feel we have a recipe for strong upward appreciation over the next 10-year cycle. The long and short of it….we do not think buyers should wait to take advantage of this market. At the same time, we feel like sellers who properly price and present their real estate will have a satisfying outcome. It’s a solid market for both sides! The key component is accepting the change and adapting to it. As usual, if you know of anyone considering buying, selling or investing in real estate, we would be honored to receive your referrals and serve your friends and family with outstanding service.
Mill-50
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Eric’s newest project brings 12 new construction homes to the market in March, 2015. These modern, attached homes feature 3 beds/3.5 baths, superbly located at SE 50th & Mill, just off SE Hawthorne.
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For more information, visit inhabitre.com/mill-50 and contact Eric Hagstette.
Inhabit’s Opening Party a Success
What a party!
Now that we have all had a chance to recover from our Grand Opening event, we want to thank everyone for coming out and christening our new space.
If you were unable to make it, please feel free to stop by when you’re in the neighborhood, or drop us a line at info@inhabitre.com. Inhabit is currently interviewing agents and we welcome all inquiries! Inhabit is a progressive real estate brokerage located in the heart of Division Street’s burgeoning walking district. We offer beautifully designed semi-private and shared workspaces, along with a private conference room and an outdoor patio. We look forward to sharing our space with like-minded Realtors.
A special thank you to our new neighbors!
We had great support from our neighbors & Southeast business partners: Floare provided spectacular floral decorations, American Local delivered amazing bites of food, not to mention our tapped Hopworks keg and wine from Cyril’s Clay Pigeon. We’d also like to thank Pilot Wealth Management, American Local, Floare and Sunshine Tavern for donating gift certificates toward our door prizes.
Door Prize Winners!
- Chris Dorr of Re/Max – iPad Mini!
- Michelle Koury of Realty Trust – American Local Gift Certificate
- Jacob Hailey of HomeStreet Bank – Imperial Tap Growler & Gift Certificate
- Michael Palinsky of Reside Realty – Ava Gene’s Gift Certificate
- Dan Powell of Metropoint Real Estate- 2 hours of business coaching from Pilot Wealth Management
- Steph Noble of NW Mortgage – Sunshine Tavern Gift Certificate
- Crystal Meza of Residential Realty NW – Terrarium workshop at Floare
Now it’s time to start planning our next party; our friends and client Opening Bash! Stay tuned for more details!
Inhabit’s Award Winning Interior Designer
This past weekend at the 15th Annual Northwest Design Awards Ceremony in Seattle, Kim Hagstette of Maven Interiors was awarded first place in the largest category of the night, “Small Design Firm Luminary.” Luminary is defined as ‘a person who inspires or influences others, especially one prominent in a particular sphere’.
There’s no doubt that Kim/Maven Interiors creates inspirational spaces and the design work done at the Inhabit office is no exception. We love our space and are eager to share it with our clients and more brokers. Congrats to Kim for your award, and thank you for all the work you’ve done to make Inhabit’s space so great.
Real Estate Industry Open
Thursday, March 13th is our Industry Opening Party! Stay tuned for the announcement of our friends, family and client party.
Inhabit Real Estate’s Industry Grand Opening Party When: Thursday, March 13, from 4:00 PM – 7:30 PM Location: 3121 SE Division St. Portland, OR 97202 [map] We’d love for you to come check our new space and open patio located in the heart of Division. Sample bites catered by neighbor The American Local , imbibe local beer and wine, and listen to the funky jazz beats of Portland’s True North . We will be giving away gift certificates from our favorite Division neighbors like Ava Genes , Imperial Taproom , Salt & Straw , St. Honore , and SE Wine Collective . Also, you can enter our drawing to win an iPad Mini . Please RSVP using the Eventbrite button below or call us at 503.762.7958 . Hope you can make it! If you can’t, feel free to stop by for a cup of coffee anytime. We’d love to chat. Sincerely, Eric Hagstette, Chylese Austin and The Inhabit Real Estate Team RSVP on Eventbrite
Eric’s Clients Featured on apartmenttherapy.com
A few years ago Eric helped Jason and Eva purchase their first home, a perfect little craftsman bungalow in the Mt. Tabor neighborhood. Eva and Jason have nestled in over the past few years, making their house their home and apartmentherapy.com was there to feature it.
Eric is thrilled to have such happy inhabiters. Check out the feature here.
As the snow and ice melt away… so do the distressed sales
New research from RMLS shows that the percentage “distressed” property sales & listings in our local and regional market continues to dwindle, making up just a small portion of our sales. “Distressed” properties, often referred to as “foreclosures” (technically named REO or bank owned) and short sales (when debt on a property exceeds market value) were certainly a factor in the market a couple years ago. However, in the Portland metropolitan area, urban planning from years past and lack of sprawl have somewhat insulated our property owners from the total devastation that other over built markets experienced as a result of the housing meltdown.
With that said, we continue to hear rumors and rumblings of “the shadow inventory” (the stock piles of foreclosed properties that the banks might be sitting on). Does this shadow exist? Who knows??? But with barely 3 months of housing inventory and the voracious appetite of the buyers shopping the market, we feel pretty good about the stability of our market. At Inhabit, we coach our clients to play by the #1 rule of real estate: LOCATION, LOCATION, LOCATION! Purchasing property in the right location should keep you liquid and “in demand” in good markets and bad.
Portland metro when comparing percentage share of the market 2012 to 2013:
- Comparing ’12 to ’13, distressed sales as a percentage of closed sales decreased from 28.2% to 13.2%.
- New listings rose from 32,011 to 35,524 which is a 11.0% increase.
- Short sales comprised 6.4% of new listings and 8.0% of sold listings in 2013, down 5.7% and 4.3% from 2012 respectively as a percentage of the market.
- Bank owned/REO properties comprised 3.3% of new listings and 5.2% of sales in 2013, decreasing from 10.4% and 15.9% respectively in 2012.
Below is a chart showing the number of bank owned/REO and short sales in all areas of the RMLS system during 2013.
For more numbers and information, visit http://rmlscentral.com
To Airbnb or Not to Airbnb?
Portland’s close-in pocket neighborhoods are a perfect market for the AirBnb concept. Many of our clients are taking advantage of this short term rental demand and converting underutilized space to create passive income. We’ve seen this trend grow stronger and stronger as Portland becomes a wildly popular urban, vacation destination.
Here is a recent article Dale came across on oregonlive.com that discusses the city of Portland’s willingness to ease some of it’s restrictions on the short-term rental market laws.
Eric’s clients’ transformation
My sweet clients Jenn and Jenny hired me to find them a home. At first glance, I was facing a tall order with their needs and wants: $200k budget, good bones, nice lines, a comfortable space for their daughter, a place to operate their home based craft business, not too far away from amenities, etc. I was up for the challenge because my clients were serious, committed, prepared, dedicated, and ready to do what it takes to land a new home for their family.
We shopped high and low, wrote offers, and we got discouraged, but we kept getting back on the bike to ride. One day, after exercising significant patience, the right house came to us. It was rough but it was right. We competed for it, we secured the home under contract and got under way with our inspections and loan underwriting which created a whole new set of challenges: loads of deferred maintenance, elderly owner unable to make repairs, oil tank, dry rot, sketchy wiring,and several other mysteries. On top of this, the loan got shaky (both borrowers self employed). Our loan officer Vince Kingston of Eagle Home Mortgage was pacing at the title company they day we went in to sign…still on the phone, still pulling it together. But WE DID IT!!!
This weekend I received an email that made my day. Jenn and Jenny sent me before and after photos and a note that reminded me of why I am in this business. They purchased a home that even made me squeamish and turned it into a beautiful mid-century jewel. I am so happy for my clients. They faced the challenges and overcame the obstacles!
Navigating the Simultaneous sell-buy/buy-sell
Challenge: You want/need to “move up” but you need to sell your current home in order to buy (because you either need the equity for down payment, or your debt ratios are too tight to be approved for an additional mortgage).
Many of our clients are in this boat, and the current competitive market makes this pickle especially challenging. Right now it is difficult to compete in the buying process with a contingent offer. (In this case the contingency would be that your home must sell before you can close on the new purchase)
There are a few solutions or options for home owners in this predicament. None are perfect; however, with a great Realtor, the goal can be accomplished.
Option 1: Prepare, list and sell your existing home. You would then obtain a short term rental or interim housing while you look for your new home to buy. This requires 2 moves, but puts you in a much better buying position with liquid down payment, your purchase not being contingent on the sale of of your house, potentially more flexible closing period, and no need to request a rentback period.
*We realize many people don’t want to move twice, so here are a few other options.
Option 2: List your home at fair market value, or slightly below. You will likely obtain more than one offer, be more in control the closing terms, and negotiate a longer closing period which would allow you time to shop for a replacement house. The sale would be “subject to finding a suitable replacement property” within a certain period of time. You can then write an offer “subject to the closing” (rather than the sale) of your existing home already in pending status.
Ideally in this situation you’d be through the inspection and appraisal contingency on the sale of your home when you write the offer to purchase your new home, while still contingent on closing. This is perceived as a stronger position, with no predictable obstacles in the way. The close of escrow of both the sale and purchase would be scheduled simultaneously.
Option 3: You prepare your property for sale, find a replacement home, and write an offer contingent on the sale and closing of your current home. If the offer gets accepted, the status of the sale agreement becomes “bumpable” meaning that the contingent offer can be bumped by another buyer under certain terms and conditions prior to closing.
Option 4: There’s got to be a rich Aunt or Uncle out there somewhere that will give you some “bridge” financing, right??
Happy Inhabiters – “Eric exceeded our expectations…”
“There is a great need in the real estate market for your style and approach. You exceeded our expectations with Gloria’s house in every way. We will recommend you whenever we get the chance.” – Lance
Mt. Tabor house sold by Eric Hagstette, July 2013
Inhabit office art
Local artist. Jerry Inscoe, created this amazing abstract map mural of Portland for our conference room wall.
Portland is the best, according to movoto.com
Those of us living in Portland know how great it is. Motovo.com took a compilation of it’s Big Deal Scores from 15 of their national-level top 10 cities lists published in 2013 and averaged them out to produce an overall score for each city for the entire year. Portland ended up NUMBER 1 on the list.
Movoto’s 10 Best Cities in America 2013 By Movoto Real Estate
News & Events – Prices and rates expected to rise in ’14
Rare, Double-Whammy
There’s a lot of excitement in the air in anticipation of a very strong 2014 nationally and locally. Check out this Portland Business Journal article ranking Portland in the top 10 of the countries hottest markets next year. Fasten your seatbelts and get ready. Prices up and rates too….this will be interesting.
If you’ve been on the fence to buy or sell, now may be the time.
Having fun with floor tiles
Here’s another look into our office design and build-out process. Things are really starting to take shape.
5 Reasons to Sell in the Winter
5 Great Reasons to Sell During the Winter
Many of our sellers ask us if they should sell now or wait until the spring market to sell. At Inhabit, we encourage our sellers to list their house during the winter as long as their house is market ready. Here are 5 great reasons to get on the market NOW instead of waiting for the Spring market:
1. Inventory is lowest from November through February. Take advantage of that! Fewer homes on the market means less competition.
2. Buyers out looking during these months are serious buyers. They’re out shopping in the rain and the dark because they need and want to find a house!
3. Interest rates are still historically low. The holidays seem to bring less volatility as well, making it less stressful to pick a time to lock your rate.
4. Home sales in the greater Portland/Vancouver area are now up 15% year-over year on average sales price. Who knows if that significant growth rate will be sustainable through next Spring?
5. The area rental market is very tight right now; such that even with just 5% down, a 30-year mortgage payment has become cheaper in most inner Portland neighborhoods for someone with good credit.
Here’s a great example of one of Chylese’s clients taking advantage of the winter selling market. 5 bedroom/2.5 bath Victorian in the Alphabet District – $795,000
For further information on this house, contact Chylese Austin 503-703-3303 | chylese@inhabitre.com