Portland Real Estate

The Portland Oregon real estate market ended 2004 with a large increase in sales volume. In fact, there were 8.1 Billion dollars worth of real estate sales in 2004 some 17% more than in 2003. The average price increased an even 10.0% over same period last year ($222,500 to $246,000). Currently our marketing time is a very short 2.4 months and the inventory of homes on the market is about 50% of normal for this time of year. So if you are thinking of selling, or know anyone who is contact me today for a no obligation comparative market analysis on your home, and let me show you why we sell more homes than 99% of all the agents in the Portland area. (Chart and information courtesy RMLS)

Old House ? New House? Which is for you?

Maybe it has something to do with a childhood home we fondly remember. Many of us long for old homes built with solid construction, quality craftsmanship and beautiful details. We wax poetic and wistfully recall the hand carvings, plaster walls and eyebrow dormers of homes we’ve known. On the other hand, how do the old homes we admire compare with newly minted models—and what should we consider before deciding which to buy?

Location. Typically, old homes sit on generous plots of land in or near town. The neighborhoods are established and usually more central to schools and shopping. Mature trees and plantings provide shade and beautify the property and neighborhood streets. New homes are generally found in new developments outside of town and homeowners who buy into an early can expect to contend with dust and construction sights and sounds as the remaining phases are being built. Landscaping may be skimpy or nonexistent, but a buyer has the opportunity to design the décor from scratch.

Layout. New homes tend to have a more spacious functional layout with higher ceilings, bigger windows, family kitchens, walk-in closets, and family rooms. Some even have media rooms and come pre-wired for cable and computers. On the other hand, older homes were designed for a more formal lifestyle, which is reflected in the formal dining and living areas and many cozy rooms, including small bedrooms, closets and bathrooms.

Energy efficiency. Those eight-over-eight single pane wood windows add character to an old home, but even with storm windows, they’re not nearly as energy efficient as modern dual-glazed or thermal windows. While most old homes lacked insulation in outside walls and attics, homes built today insulate against high heating and cooling costs. Although the bigger windows, higher ceilings and larger rooms, common in new homes, can also cause high utility bills.

Maintenance. With older homes, upkeep could be more expensive because of older appliances, plumbing and electrical systems—not to mention the roof—may need to be replaced. A turn of the century home may have outdated knob-and-tube wiring, and even a recently built home may have an inadequate fuse box-style panel that falls short of the energy demands of 21st century families. But new homes generally come with warranties that will cover the cost for most major problems.

Price. Older homes are usually less expensive per square foot. In addition the tax structure is more predictable because the neighborhood is already established with amenities that newer neighborhoods are still in the process of gaining, such as schools, police and fire services, and infrastructures (roads, sidewalks, etc.). However, with restoration costs a possibility for older homes, your dollars may very well be spent on the back-end rather than upfront.

If the charm and beauty of an old home wins your heart, hire an inspector to evaluate the home for lead paint, insect and water damage, lead and/or galvanized pipes, outdated wiring, foundation problems and energy efficiency, including windows as well as heating/cooling systems and insulation. After you get the all-clear, you have one last consideration: Does the home fit your lifestyle or would the conveniences of a newer model suit you better? Only you and your family have the answer.

Important IRS Tax Law Change

As I mentioned in my last newsletter, there has been a significant change to the rules regarding a 1031 tax exchange. This one bears repeating as I have found that very few people are aware of this and it can really make a dent in your retirement plans. On October 22nd, 2004 President Bush signed into law some major tax law changes that took effect that very day. One of the many affected the sale of a Personal Residence Acquired in a Like-kind Exchange.

Taxpayers who convert rental property to a principal residence should know that a tax law change may limit their ability to exclude gain on the sale of that residence if they obtained the property through a like-kind exchange. Generally, a taxpayer can exclude up to $250,000 of gain on the sale of a home, provided the individual has owned and used it as a principal residence for two out of the five years before the sale. The exclusion is $500,000 for a married couple if both meet the use test. The American Jobs Creation Act of 2004 does not allow any exclusion if the taxpayer sells the home within five years of acquiring the property through a like-kind exchange. The new law applies to sales after October 22, 2004.

Shortage of housing a problem, expert warns

The Portland area's three-month supply puts pressure on buyers, says the chief of RE/MAX
Tuesday, January 18, 2005
DYLAN RIVERA
Low inventory has defined the Portland-area housing market for the past year.

In May, the 8,054 active residential listings would have sustained the market for a record low 2.8 months, based on prevalent sales rates, according to RMLS, the primary regional real estate listing service. Inventory stayed at supplies of 2.4 to 2.9 months through December.

The shortage pushed the area's median sales price to $204,500, up 9.35 percent over the recently revised $187,000 median recorded for 2003.

Daryl L. "Jes" Jesperson, chief executive officer of RE/MAX International Inc., said last week in Portland that such a valuation rise on the back of low inventory should cause concern for anyone interested in the region's housing market.

Jesperson was in Portland on an annual visit to discuss strategy with local agents of RE/MAX Equity Group, the highest-volume brokerage in the Portland area.

Here are excerpts of an interview he gave with The Oregonian:

How is Portland's real estate market regarded nationally? How do we compare with other areas in terms of appreciation and new home starts?

I think you're doing pretty well. What I would really watch closely, because it's going to affect your appreciation rates, is the inventory on hand. You have very, very tight inventory. You're under three months' worth.

A well-balanced marketplace is going to have six, eight months' worth of inventory. You get down to three months' worth of inventory, you put buyers in a difficult situation where you either choose this house that's really close to your needs, or in two weeks we're going to come back and it's not going to be available.

Your appreciation was higher last year as your inventory went down. Appreciation's great if you're owning. It's tough if you're on the outside.

So that makes the market exceedingly hard for buyers?

It takes away their ability to make decisions in a rational manner. They act irrationally because they feel time pressure. They're afraid that the next buyer's going to walk through and make an offer, that house isn't going to be there and there isn't another one like it.

What I've seen in other markets for the first time in the last couple of years is people taking their homes off the market in the November-December period. They don't want to be interrupted through the holidays, and then they put it back on the market after the first of the year.

One advantage of putting it back on the market after the first of the year is you get a fresh picture in the multiple listing service. So you may not have the snow in the front yard or whatever.

So your inventory may grow some over the next couple of weeks, but I'd watch that real close. If it stays under three months, you're going to have a lot of frustrated people in the marketplace because there is no selection out there.

There's talk nationally of a housing bubble. Do you think there's some sort of irrational bubble?

There's no basis to it.

Real estate is a local market. You can have escalation in one, and depressed prices in another market. For example, prices are going nuts in Manhattan, but some of the lowest housing prices in America are in Buffalo, N.Y., 400 miles away. It shows you that it's local markets.

As far as a bubble, what happens in real estate is you have rapid escalation, and then all of a sudden, some of the buyers start saying, "Look this is nuts. I'm not going to participate in that."

They can't afford to, and the lenders won't lend on it, and the appraisers won't appraise on it. And so it plateaus, and the market gets a chance to catch up.

With the rise of the Internet, consumers have much more information available. Why should they use an agent at all?

First of all, they are still using agents. The reason they're still using agents is it's the largest financial transaction that you enter into in your lifetime. And you cannot possibly learn enough on the Internet.

You might learn about the property, you might become more educated as you come to the process, but I'll tell you it's pretty scary sitting down at a closing table realizing that you're betting your $40,000 in equity or whatever it is that you're going to get this thing right on what might be a once-in-a-lifetime thing.

It's like doing your own heart surgery.

A national trend that's playing out here is that condos have been very hot sellers. What's driving that?

Over time, the cost of land has caused housing to change. That's why our starter homes are coming in as town homes and condos. The cost of the house is so much now, you can't afford to buy a section of land to go with the house.

When you get into a city, there comes a point where people don't want to drive 45 minutes to get to work. It's happening all throughout America.

It's attractive to all levels of people on the housing ladder. There are people, particularly high-tech people, who travel a lot. They can't manage a yard or take care of a swimming pool. A condo makes all the sense in the world for them.

As our culture changes, our housing has to change.

At what point will the condo market fall off a cliff like it did in the 1980s? Is that ahead for us?

I don't believe so, because if you go back to the problems in the '80s, it was all banking-related. Bankers have unbelievably long memories. As long as this generation of bankers is around, I don't think that's going to happen.

Copyright 2005 Oregon Live. All Rights Reserved.

Two pillars of urban planning tumble

Sunday, December 26, 2004

In 2004, what fell down was more important than the architecture that went up

Gragg: Too many wonks, too few visionaries

Voted into being just five months apart 32 years ago, the 1972 Downtown Plan and Oregon Senate Bill 100 gave Oregon two of the most far-reaching visions in the history of American urban planning.

At least until the nearsightedness of 2004.

Much as they rose together, they fell in November. The Downtown Plan's brilliant framework of tightly focused partnerships between business and government cracked with November's pitiful deal to revitalize the transit mall. Senate Bill 100's design for a mutually beneficial urban/rural divide was shattered by Measure 37.

In the local world of architecture and planning for 2004, nothing measures in profundity to those two events.

For those who don't know their Portland catechism, the '72 plan laid the groundwork for downtown's comeback with such catalytic projects as Tom McCall Waterfront Park, the transit mall, light rail and Pioneer Courthouse Square. It kept the city's star shining brightly as the region's center for everything from shopping to new urban housing.

Senate Bill 100 shaped the statewide land-use planning system that has bounded cities and preserved farms, forests and wilderness. One need only savor the sprawl of the Seattle area's Sammamish and Kent valleys to see what might have replaced many of the Willamette Valley's farms, nurseries and vineyards had the bill not been written.

Both plan and bill were merely pieces of paper. What brought them to fruition was leadership. What broke them was the lack of it.

As city and TriMet officials finalized details to bring light rail to the transit mall -- and with it urban design improvements to begin a new chapter of downtown revitalization -- the Portland Business Alliance, allegedly the voice of the private sector, opted to sit mutely on the sidelines. The self-appointed downtown chief, parking magnate Greg Goodman, took the lead, negotiating a deal he couldn't or wouldn't deliver.

The result? Light rail is still coming, but courtesy of Goodman's flip-flopping, with $11 million less to spend. That's the $5 million he pressured the city to cut from a 20-year local improvement district plus the $6 million lost in matching federal dollars. Now instead of light rail bringing a downtown revitalization of new paving, shelters, kiosks, art and events, it will bring two pairs of tracks.

With Measure 37, it's far too early to measure the full impact. But the message sent was clear by its passage even in Multnomah County: The historical protectors of Oregon's land-use system, Portland's urban voters, no longer see a vision.

The reason? A confusion of public process for public leadership. In short, there are too many policy wonks, too few visionaries and a critical dearth of talented salesmen.

Meanwhile, the region's economic outlook will only be further muddied by the legal mess Measure 37 will unleash. Property owners may want compensation or waivers. But developers -- and, most of all, lenders -- prefer certainty about what they can build and where, when the roads will come and sewers will be connected. In short, they like planning and regulation -- most of which will be stuck on hold while the lawyers sort out the measure.

It may take years for the predicted McMansions and strip malls to begin rising on precious farms and beachfronts (though the billboards and trailer parks might move in pretty fast). But the black eye Measure 37 gives to the state's reputation as an environmentally enlightened place will swell fast -- at precisely the moment when Oregon might have looked prettiest to the new generation of pro-environment businesses and consumers.

Highs and lows

In light of such tectonic shifts, individual buildings and planning projects seem puny and inconsequential. But 2004 hatched a few worthy of note.

Gerding/Edlen Development's Brewery Blocks could have been more architecturally compelling. But nearly finished, it stands as the most important project of the new century in other ways. As Gerding/Edlen preserved important pieces of the city's heritage with the renovations of the Blitz-Weinhard Brewhouse and Oregon Armory, the quick leasing of the development's offices and retail defied both the recession and the business community's relentless carping about Portland's business unfriendliness. With the quick sellout of the oh-so-green condominiums in The Henry, Gerding/Edlen proved there is a robust market for environmental sensitivity.

In a subtle-yet-inspired Northwest tribute to Henri Labrouste's 1868 engineering wonder, the Bibliotheque Nationale in Paris, Thomas Hacker Architects made the Hillsdale Branch the crown jewel in the Multnomah County Library's $34 million expansion campaign.

The Portland Community College system brought five new buildings on line, most dramatically transforming its Cascade campus into a bold, new urban extension of North Killingsworth's commercial district. But the pick of the litter architecturally is at the Sylvania campus: the Technology Classroom Center designed by Opsis Architecture. The sleek Euro-styling is just the right move on a campus dominated by '70s concrete Brutalism. But the main attraction is the indoor garden. What a place: glass, grass, trees plus a Lee Kelly fountain -- and no rain.

It raises a simple question: Why don't we build more of these?

SERA Architects proved the lowest of low-income housing can offer opportunities for inspired design. Their recently completed 8NW8 Building offers something all too rare in right-angle-brained Portland: curves -- to both the roofline and the storefront.

But overall, 2004's two most inspired architectural leaps arrived courtesy of Portland's smaller, younger firms. The Lower Burnside club/restaurant Doug Fir, designed by Jeff Kovel, is the most exuberant, self-confident work of commercial architecture this region has seen since Pietro Belluschi's Waddle's (R.I.P. 2004). The Belmont Lofts, by Holst Architecture, is a more globally conscious paean to Northwest Modernism -- not to mention, the city's first condo project laudable foremost for its design.

Too bad such clarity was never found in the year's biggest missed opportunity: the South Waterfront Greenway master plan. What might have encouraged an unprecedented meeting of the urban and the natural devolved into a glorified, designed-by-committee planting scheme that will be implemented mostly by regulation. With too little vision to ever become much of a park -- much less a great work of landscape architecture -- the greenway nevertheless may make a pretty good metaphor for Oregon, circa 2004.

Looking ahead

In the coming year, pivotal decisions will be made on the two most important works of architecture the state has seen in decades: the I-5 Bridge between Portland and Vancouver and a casino for the Confederated Tribes of the Warm Springs almost certain to be built at Cascade Locks.

Flub the bridge and miss the opportunity of a century. Flub the casino and deface a global landmark, the Columbia River Gorge.

Just beginning the long path to replacement with a study funded in the current federal transportation bill, the bridge is a gateway to two states, two cities and the gorge experienced by more than 100,000 motorists every day. But with all the attendant bureaucracies and the 10- to 15-year timeline, building something awful will be easy as melting snow.

Three things are needed: for starters, advocates for great design on both sides of the river; and an architectural landmark as a top priority in the soon-to-be-written environmental impact statement. But most of all, we need an idea. If ever there was a project for an architectural competition, it is this bridge.

With the casino, Gov. Ted Kulongoski is likely to announce that it's a go in early '05. Rather than wasting everybody's time and money fighting it, Columbia Gorge advocates would do better to help make it work -- beautifully. The Confederated Tribes have a great track record of building well. But they're blazing a trail in deep mud here. Nobody -- repeat: nobody -- has built a casino worthy of this location.

As a condition of his approval of the casino, the governor would do well to require design oversight by a blue-ribbon panel of the state's most trusted and aesthetically sharp stewards from the design, engineering, environmental sciences, engineering and financing professions. The tribes say it will be more eco-resort than casino. Great. Let's make it the Multnomah Hotel, the Timberline, the Oregon Caves Chateau and the Salishan of the 21st century.

New year bells

In the central city, look for discussions to start on the fate of 14 prime Pearl District/Old Town acres as the quiet discussions about moving the U.S. Post Office headquarters to the airport become more public. More housing? A corporate headquarters? A baseball stadium? The Burnside/Couch couplet idea will gain momentum courtesy of our growing form of quasi-government: a nonprofit organization like those created to build the streetcar and aerial tram. Speaking of the aerial tram: Look for more bad news as skyrocketing steel prices and a plunging dollar promise to bust the $28.5 million price tag while changing the intermediate tower from steel to concrete. The Portland Development Commission's first big call of the new year will be the Burnside Bridgehead: big box store or small-business incubator?

Memorial Coliseum is at the crossroads: Board it up? Big box it? Take the leap to an amateur sports facility? Hint: The best possible outcome lies in looking, not just at the building, but the entire district. Sure, studies have been done before, but never with a big idea like the sports center at the core and a different, hopefully more enlightened management team calling the shots at the Rose Quarter.

And who will design Park Block 5, the block west of the Fox Tower that Tom Moyer donated to the city, and what will it be? With only $2 million in hand to build it, Portland Parks and PDC officials already are conceding they will break Mayor Vera Katz and Commissioner Jim Francesconi's promise of a design competition.

How profoundly sad.

Sure, that's barely enough money to plant grass, but it's more than enough to think ahead. Why not hold a competition for a two-step design -- interim and long term? (Think about that indoor garden.)

Money follows vision.