The sign in front of a house for sale in Northeast Portland. (Elliot Njus/Staff, File)
Portland-area home prices grew slower in April than those of the nation as a whole for the first time in more than five years.
Home prices continued to rise, climbing 5.9 percent from a year earlier, according to the S&P/CoreLogic Case-Shiller home price index. The national index rose 6.4 percent.
Twelve of the 20 cities included in the index saw prices rise faster than Portland, led by Seattle, where they climbed 13.1 percent year-over-year.
Portland’s below-average showing is a dramatic reversal from two years ago, when it led the major cities in home-price gains for nearly a year. But it’s also welcome relief to would-be homebuyers, who have watched home prices being bid up far faster than wages or the rate of inflation.
Home price gains have ebbed and flowed since the housing market began to recover from the crash of the last decade, but April saw the slowest annual home-price gain since 2012, in the early days of that recovery.
Prices continue to rise fastest among the lowest-priced homes. The least expensive third of homes, which cost $337,000 or less, saw prices climb 9.5 percent year-over-year. The middle third, from $337,000 to $452,000, saw prices rise 7 percent. The highest tier saw prices rise 4.2 percent.
The median home price in the Portland area was $405,000 in April, according to the Regional Multiple Listing Service, and it climbed to $409,000 in May.
A house with a fabulous view can be hard for a home buyer to resist. But seeing the mountains, water or city lights from the comfort of home comes at a price. The hazy part is figuring out what that added cost is — and whether it’s worth it.
That’s where real estate appraisers and analysts who study home values can help, even though they recognize there’s no simple answer.
“Views are actually really difficult to quantify,” says Andy Krause, principal data scientist at Greenfield Advisors, a real estate research company. “It’s somewhat subjective. What makes a better water view? Do you want it to be wider? Do you want more of the water from a taller angle? You know, some of that is in the eye of the beholder.”
Assigning a dollar value can also be difficult because not all views are equal or valuable, and a view that’s sought-after in one location may not be in another.
In Manhattan, a place that overlooks a green space or woods will cost you a lot extra. In the countryside? Not as much, says Mauricio Rodriguez, a real estate expert who chairs the finance department at Texas Christian University’s Neeley School of Business.
Putting a price on it
So how do you put a price on a variety of views? Krause, who builds automated valuation models that analyze home data, produced these estimates for what five different types of views might add to a home’s price in Seattle:
5 to 10%: For a home on flat ground with an unobstructed view of an open space or a park, a seller could add 5 to 10%. In other words, if an identical home without a view is worth $500,000 elsewhere in Seattle, this view could boost the price to $525,000 to $550,000.
10 to 30%: A home partway up a hill with a partially obstructed water view over neighbors’ rooftops could increase the overall price by 10 to 30%. It depends on how much of your field of vision the view fills, both vertically and horizontally, Krause says. In this example, a home otherwise worth $500,000 might fetch $550,000 to $650,000.
30 to 50%: This time Krause considered the same home as above, in the same location, but with an unobstructed view. “You still have the neighbors above looking down into your house, but you have a nice water view,” he says. With this clearer view, the $500,000 home could sell for $650,000 to $750,000.
50 to 75%: Next, envision a home atop a hill with an unobstructed cityscape or open-space vista. To buy the $500,000 home in this location, a buyer might have to pay $725,000 to $875,000.
75-100% or more: Finally, imagine a house with a stunning, unobstructed view of a big lake or the ocean. This type of prized view can boost the value of a home worth $500,000 in an ordinary location to $1 million or more, Krause says.\
How to shop for a home with a view
If having a view is a must on your homebuying list, here are a couple of tips from the experts:
1. FIND OUT IF THE VIEW IS PROTECTED
Frank Lucco, a residential real estate appraiser and consultant in Houston, once had clients with an expensive home who sued after a high-rise office tower went up across the street. The building disrupted their view and gave office workers a view of their formerly private backyard and their teenage daughters using the pool. The lawsuit was dismissed, Lucco says, and a bit of detective work could have told them that commercial development was allowed.
To avoid a similar outcome, Lucco says before you place a bid on a home, ask planning authorities what the zoning allows and if high-impact developments are planned nearby.
2. LOOK FOR DIAMONDS IN THE ROUGH
Bargain-hunters can occasionally find views for cheap because poor design — walls where a big window or a deck might go, for instance — blocks what should be a nice view.
“It may cost you $15,000 to $30,000 to do a very limited remodel that gives you a better angle, or higher vantage point, or a rooftop deck,” Krause says. But that could be a deal compared with buying a home that already takes full advantage of its view. Lucco suggests inspecting the home’s deed for any restrictions limiting additions to the height. Pay careful attention to homeowner association rules, too.
A view can be one of the most attractive aspects of a home. Knowing that you paid the right price for it can make the scenery that much more enjoyable.
This article was written by NerdWallet and was originally published by The Associated Press.
Homeowners are racking up record amounts of home equity, thanks to fast-rising values in today’s competitive housing market. No surprise, more people are now starting to tap that cash. What are they spending it on? Mostly making their homes even more valuable.
Renovation spending is soaring, and 80 percent of borrowers taking out home equity lines of credit say they would consider using that money to renovate, according to a survey released in December by TD Bank.
“We’re not only seeing more requests for proposals, but more committed projects from home owners,” said Steve Cunningham, a remodeler from Williamsburg, Virginia, in a report from the National Association of Home Builders. “In addition to regular updates and repairs, there’s been an uptick in more ambitious large remodel requests.”
Remodeling spending topped $152 billion in 2017, and renovations for owner-occupied single-family homes will increase 4.9 percent in 2018 over 2017, according to the NAHB. That does not include remodeling done by investors looking to flip or rent properties, both of which are increasing as well.
Suzanne Kreiter | The Boston Globe | Getty Images
A home improvement contractor works on a house in Cambridge, Massachusetts.
“Below-normal rates of home building are creating an aging housing stock,” said Paul Emrath, vice president of survey and housing policy research at the NAHB. “Factors inhibiting stronger growth include the ongoing labor shortage and rising material prices.”
An older housing stock, combined with not enough new homes being built, means more people will choose to renovate.
Homeowners are also using home equity cash for education expenses and to pay down other debt in order to lower monthly payments, but there is a new and increasingly popular use: taking the cash out to make more cash.
“Essentially there is a confidence from some homeowners in the overall market that indicates to them that they can generate a return on their money at a rate greater than the cost of borrowing it,” said Matthew Weaver, vice president of sales at Finance of America Mortgage.
He also said there is now a strong confidence among borrowers that home values will continue to rise, making it less likely that borrowing against their homes even more will not end up putting them underwater on their mortgages in the future.
For some that means investing in the stock market. For others it is buying more real estate. Rental demand is still very high, especially for single-family homes, and a new breed of rental management and investment company is making it much easier to become a landlord.
And of course, “Some are looking to profit from the popularity of cryptocurrencies such as bitcoin,” added Weaver.
In the near future, your home could be battery operated.
This is especially true if you live in New York, California, Massachusetts, Hawaii, Vermont, Arizona or a growing roster of other states and municipalities experimenting with revamping their electrical grids for the 21st century.
You might not even know your lights are being kept on by the same chemical process that powers your smartphone, since the batteries could be tucked into what looks like a neighborhood junction box, or behind a fence in a substation. But now, thanks to efforts by startups and the utility companies they sell to (and sometimes battle), you might get one right inside your home.
The rise of these home batteries isn’t just a product of our collective obsession with new tech. Their adoption is being driven by a powerful need, says Ravi Manghani, of GTM Research: renewable energy.
Without batteries and other means of energy storage, the ability of utility companies to deliver power could eventually be threatened.
Solar power, especially, tends to generate electricity only at certain times—and it’s rarely in sync with a home’s needs. In some states, such as California and Arizona, there’s an overabundance of solar power in the middle of the day during cool times of the year, then a sudden crash in the evenings, when people get home and energy use spikes.
For utilities, it’s a headache. The price of electricity on interstate markets can go negative at certain times, forcing them to dump excess electricity or pay others to take it.
“This is not a long-term theoretical issue that might happen—this is now,” says Marc Romito, director of customer technology at Arizona Public Service, the state’s largest electric utility.
There’s something ruggedly individualistic and inherently American about having batteries in your home. They’re good for keeping power going in a disaster, as customers of the two biggest firms by sales volume in this field, Sonnen and Tesla, demonstrated in the aftermath of Hurricane Irma. And in combination with rooftop solar panels, they free people from total dependence on the grid—a kind of energy cable-cutting that wonks call “grid defection.
The very real possibility of grid defection is changing the power dynamics between utilities and their customers.
Last week, real-estate developer Mandalay Homes announced a plan to build up to 4,000 ultra energy-efficient homes—including 2,900 in Prescott, Arizona—that will feature 8 kilowatt-hour batteries from German maker Sonnen. It could eventually be the biggest home energy-storage project in the U.S., says Blake Richetta, senior vice president at Sonnen.
The homes, which will come with the Sonnen battery preinstalled, will be part of a Sonnen-managed “virtual power plant for demand response” that could allow the houses to stabilize the grid, lower its carbon footprint and decrease peak load, says Mr. Richetta.
While the Mandalay Homes project is still in the blueprint stage, with only one test home built so far, this kind of radical, battery-enabled rethink of the grid is already happening in Vermont.
In partnership with Tesla Energy, Green Mountain Power is offering 2,000 of its customers the opportunity to have a Tesla Powerwall in their home for $15 a month. The 13.5 kilowatt-hour batteries retail for $5,500, but the utility can afford to put them in homes because they help the company save on other grid infrastructure, says Mary Powell, GMP’s chief executive and president. “Peaker plants,” for instance, are fired up only when the grid is strained to maximum capacity, saving the utility from using one of its most expensive forms of electricity.
GMP also uses batteries from Sonnen, SimpliPhi and Sunverge. Ms. Powell says the larger battle for home battery storage will be over how each of these companies—and dozens of others—differentiates itself, selling different size batteries adapted for different uses in homes, businesses and utilities.
Arizona Public Service’s Mr. Romito says not all of these batteries are created equal—though he wouldn’t name names.
The biggest challenge to home battery storage remains economics. Utilities’ current rate structures don’t charge most homeowners for using excess power, nor do they change the price based on time of day. For the overwhelming majority of homeowners, the payback on a solar power system with battery storage could take decades.
Batteries aren’t the only way to reduce the need for short-order energy, or so-called “demand response,” says Mr. Romito. Smart thermostats, managed by the utility company, can precool homes when solar power is at peak production, reducing load on the grid in the evening.
This cannot only be as useful as batteries in certain cases, it can be more cost effective. Other possibilities include remotely determining when electric vehicles charge and even shifting large industrial loads to different times of year.
In states where electricity is more affordable, it’s still early days for batteries in homes. But Mr. Romito says users and utilities will continue to move toward them with the inexorable addition of more and more renewables to the grid.
Mr. Manghani of GTM Research agrees. His battery storage adoption forecasts track closely with states and regions where renewable energy is being generated.
Falling prices also help. Battery pack prices have decreased, on average, 24% a year since 2010. Cheaper batteries shorten the resulting payback period, which in turn makes renewable energy more attractive to home owners. In 2016, solar grew faster than any other energy source, according to the International Energy Agency.
At the intersection of these and other trends is a simple fact: For the first time since the discovery of fire, the way humans get energy is set to fundamentally change.
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