Nouveau Ritz

While Portland’s unlikely to make a cameo on MTV’s Cribs any time soon, according to many real estate agents our city’s luxury home market (homes over $600,000) is slowly clawing back from its shadowy nadir. “In 2012, there was a tremendous uptick in the more expensive properties being sold,” says Michael Hasson, founder of Hasson Company Realtors. “Part of what caused that was an abundance of inventory that was just sitting for three years.” But the trauma of the recession has left the luxury market, understandably, changed. “It’s not about the size of the house anymore,” says Jenelle Isaacson, owner of Living Room Realty, one of Portland’s fast-growing real estate firms. “It’s about lifestyle. People are willing to sacrifice a lot of square footage for a neighborhood that fits with their personality.” Beam Development’s Brad Malsin calls the shift a kind of Ace Hotel model of living: “People are willing to put up with less luxury in exchange for cool common places to connect.” As a result, builders who used to work solely in the suburbs, crafting showpiece homes, have begun picking off infill projects. “Now you’re seeing Renaissance Homes and Arbor Custom Homes in Portland,” says Mark Hepner, co-owner of Portland Residential Appraisals. “Ten years ago the only thing they built was a house in a suburb. Now, they’re looking around in the urban district like Sellwood and Moreland and Laurelhurst, buying lots and old houses and tearing them down.” 

New (Seasons) Math

Proximity to urban amenities seems to be the drumbeat of today’s highly desirable neighborhoods. But can having a grocery store or cinema within walking distance really raise the value of your home? In theory, yes, according to a 2007 Metro study. Using hedonic modeling (fancy math to measure complex behavior, like home buying), local real estate consultancy firm Johnson Gardner evaluated more than 400 Portland home sales in 2006 and determined that, indeed, some amenities appear to have a statistically significant impact on home price. Top of the list: cinemas, wine bars and shops, and specialty grocers. But appraisers haven’t embraced the new math in their calculations. “There’s no standard adjustment for proximity to New Seasons,” says Mark Hepner, co-owner of Portland Residential Appraisals. “When you talk about the hip neighborhoods, you’re talking about areas that have diverse housing stock. When you try to narrow down your adjustment to a specific item, like a New Seasons, there’s not enough consistency in all the factors to make a fair comparison.” 

Kings of Division

Andy Ricker’s Pok Pok might have captured the culinary heart of Division, but seven-year-old Urban Development Partners has claimed something more tangible—land. The development firm owns six properties on Division, between 31st and 39th, among them the Reliable, a LEED Gold-certified building with 13 residential units hoisted atop popular eateries like the Sunshine Tavern and Wafu. UDP came to Portland in 2006, after transforming Oakland’s historic  Mutual Creamery building into 26 live-work spaces. Division immediately caught their eye. “When the city puts investment or intention behind an area—with tax incentives, up-zoning, even just cleaning up the streets—it’s a recipe for reinvention,” notes cofounder Eric Cress. The firm’s first Division Street building, the Richmond, opened in 2008, anchored by the Victory Bar. Next came Reliable, in 2010, followed by a 26-unit LEED Platinum mixed-use building at 38th and Division in 2011. Up next: a 39-unit building at 3339 SE Division St, slated for completion this fall. (Salt and Straw and St. Honoré have already signed up for ground-floor retail spaces.) And in 2014, UDP will debut two more mixed-use projects at 3360 and 3330 SE Division St.  

An ADU Explosion

When the Portland City Council approved waiving system development charges and upped the maximum size of Accessory Dwelling Units (ADUs) to 75 percent of the main house in April 2010, the number of completed backyard cottages grew by more than 30 percent: from 52 in fiscal year 2009 to 70 in 2010 and 104 in 2011. The savings—typically several thousand dollars per dwelling—helped encourage a wave of these backyard bargains, but so did the emergence of an übertight rental market. And since the city voted to extend the waiver for another three years, look for more of these charming cottages coming to a backyard near you. 

Cash Dash 

In Portland’s low-inventory real estate market, money doesn’t just talk—it screams. Fully a quarter of all home purchases made in 2011 and 2012 were cash purchases. No financing, just dollar signs. “It’s basically investors getting into the market,” explains Jerry Johnson, principal at Johnson Reid real estate consultancy firm. “They see huge buying opportunities. When cash buyers come in, it typically means they’re reading bottom of the market.” It can be good business for builders, as Keller Williams principal broker Nick Krautter points out: “You can pay $250,000 to $300,000 for a house, tear it down and build another, and still make money,” he says. “That wasn’t the case two years ago.” The proliferation of cash buyers can be frustrating for buyers looking to finance a home, since cash deals are often more attractive to sellers. Krautter relates the story of a recent listing in the low $300,000 range that garnered six offers within 48 hours, all well above the listing price. Two of them were cash offers (and one of those won out). “Sellers are really looking at the bottom line,” he notes. But as the number of foreclosure properties on the market continues to decrease, Michael Hasson of Hasson Company Realtors expects to see cash sales level off.