Beach Blog

NAR SETTLEMENT  March 23, 2024

As much as I am loathe to admit it, I have been in real estate since February 1974… yes that is 50 years ago.  For 50 years, I can vouch for the fact that, despite what recent media reports would have you believe, real estate commissions have always been negotiable. 

Last week the National Association of REALTORS (NAR) settled a historic lawsuit which has fueled wild media reports that suggest NAR has always mandated policies which resulted in real estate commissions being higher than they should be. 

In fact, for as long as I have been in real estate, just the opposite has been true.  NAR’s education has always pounded into our heads that we must scrupulously avoid any actions that can be construed as price-fixing, or even the hint of price-fixing.  NAR has never in the last 50 years (in my personal experience) recommended or suggested commission amounts.  Individual brokerage firms have made their own decisions about what commission rate they will charge for the services they provide.

The misleading media reports are suggesting that only now, ostensibly as a result of this settlement, will Buyers be able to negotiate their broker’s compensation.  Not true.  Buyers have always been able to negotiate what their agent will be paid.  I personally have handled many transactions where the buyer negotiated to represent themselves in exchange for a commission reduction which the Seller passed along to the Buyer either as a concession or a price reduction.

Most of us in the Realtor world are stunned by the settlement but are 100% willing to adapt to the new way of doing things, which really won’t be that much different than what most of us have been doing for many years. 

The big winners in this settlement?  The attorneys.

Sadly, the biggest losers in this settlement are home-buyers.  The new rules starting in July will require that Buyers must negotiate their own written agreement with their real estate broker which specifies how and how much their broker will be paid.  This will result in many homebuyers having to bring more cash to the table than ever before.  Up until now, the Buyer typically needed to have cash for their down payment and closing costs. That amount is usually in the tens of thousands of dollars.  Adding another several thousand to the buyer’s upfront cash requirement will put the American Dream that much farther out of reach for the average homebuyer.

Meanwhile, I am suggesting to my Seller clients that they budget for the possibility (and likelihood) that when these rules kick in come July, Buyers will make offers asking the Seller to pay the Buyer’s broker’s fee.  The end result will be the same as it has previously been (contrary to the media hype) with the money to pay the Buyer’s broker still coming from the transaction proceeds. 

Business as usual… more or less.

 

  

I have this great listing in Oceanside, Oregon, which is now being offered in fractional interest shares for ownership by 5 entities.  If you are not familiar with how this can work, it is an excellent way to procure a vacation home for your family without breaking the bank.  It is not likely that you would use your beach house more than 10 weeks in a year anyway, so why not just buy with 4 other families and divide up the use into 10 weeks per year for each family? 

This NOT a timeshare.  A Fractional Interest can be compared with buying a vacation home with your sibling.  You would likely have a written agreement with your sibling that dictates what happens with the ownership of the house if one of you expires… is there right of survivorship, or does your half go to your heirs?  What happens if you decide to sell your half?  Those and other issues are spelled out in your ownership agreement. 

What if your sibling has more money than you to invest and is willing to pay 75% of the purchase price and you pay 25%?  Your ownership agreement can spell that out, too, and could spell out how decisions are to be made. You may decide to allow the majority owner to make the final decision about the ongoing operation of the property… like when to sell or when to replace the roof. Maybe it provides for the 75% owner to also receive 75% of the profit on sale.  The ownership agreement can include any provisions the owners agree upon.

In a timeshare, the real estate is owned by someone else, not you, and you are simply buying a license to use someone else’s property for part of the time. With a Fractional Interest, your name is actually on the deed and you retain all the rights and benefits enjoyed by fee simple property owners in your area, such as any applicable tax deductions, equity buildup, profit on resale, etc.   

A Fractional Interest can be purchased with people you know, or you can buy into a property and end up as a partner with people you do not know.  As long as you have a solid ownership agreement and a commitment from everyone to abide by the agreed rules for using the property, it shouldn’t matter that you do not know the other owners.  In most arrangements, you would not be using the property at the same time as the other owners and would rarely, if ever, find yourself face-to-face with the other owners.  On the other hand, if you purchased a duplex as a fractional owner, then maybe your ownership agreement could say that you are entitled to 100% use of your designated side of the duplex 100% of the time.  In that scenario, your partner could occupy the other half at the same time you occupy your half. 

There are many creative ways a Fractional Interest can be structured to suit the parties’ needs and the unique characteristics of the property. 

If you think you may want to consider a fractional ownership, take a look at my listing in picturesque Oceanside at 1410 Sunset.  One-Fifth share of this 5275 square foot ocean view architect designed luxury home can be owner for only $375,000.  Check it out at this link:   www.1410SunsetOceanside.bhhsnw.com. 
   #affordablebeachhouse #fractionalshare #buyabeachhouse #oceansideoregon #oregoncoast  #beachvacationhome #oceanviewhouse #liveinluxury

 

 

 

Oceanside is a sleepy little town of over 1000 individual homes and building lots.  Because this is a beach town, about 2/3 of those properties are owned by people who do not live full time in Oceanside.  To be a registered voter, you must be a full-time resident.  Therefore, fewer than 350 people in Oceanside are registered to vote and will be making this decision and future decisions which impact the lives and livelihoods of over 1000 property owners.

 

This tipping of the scale sets up a very undemocratic rule-making dynamic.  If Oceanside’s voters choose to incorporate, then there will be 5 City Councilors in power who will make decisions for their neighbors and friends, all 1000 of them.  When you live in a small village, everyone in the village is your neighbor.  If we become a city, the rule-making process will pit neighbor against neighbor. 

 

Imagine that you own a lot in Oceanside, and you discover you need a variance to build your house.  You apply for the variance only to discover that the house you’ll be building will affect the ocean view from the homes of 3 of the city councilors who will be deciding whether your request is approved.  Wouldn’t it be better if the people making those decisions were not your neighbors who will themselves be personally impacted by the decision they make?  Currently those decisions are made by the Tillamook County Commissioners.  That provides a more “arms-length” distancing from the potential for personal bias.

 

If we vote to incorporate, we will want to elect councilors we are convinced will rise above their human failings by being selfless and scrupulously unbiased in their decision making.  When you have only a small pool of people to choose from, the odds of finding 5 human beings with those superior qualities can be low.

 

The solution is to leave everything as it is.  Keep Oceanside unincorporated.  Keep the rule-making arms-length at the county level and allow us to continue enjoying the peace, beauty, and serenity of living in a tiny hamlet by the sea.  Please vote “NO.”

 

#Oceanside #Election #Unincorporated #VoteNo

 

July 2022 saw a setback for home sales on the Coast in Tillamook County.  The County Commissioners implemented what they termed a "pause" on the issuance of new Short Term Rental (STR) licenses in the unincorporated areas of Tillamook County.  They deliberately avoided calling it a moratorium, although the net effect is the same.  It has put a damper on beach home sales in this area because 90% of the buyers want to be able to defray the cost of owning a second home through deriving income from short term rental use.  The pause is set to last for a year, or until such time as the county's Short Term Rental advisory committee provides to the Commissioners an acceptable plan for revamping the county's STR licensing program.  The STR advisory committee meets once a month, so the process is moving along at a snail's pace... in my opinion, not likely to bring relief before July 2023. 

One of the revisions being strongly considered is applying a percentage cap to the number of STR licenses allowed in each area.  It seems likely that a cap of maybe 20% or thereabouts may be implemented.  Some areas, such as Pacific City and Oceanside, have already reached 20%, so in July if the county resumes issuing new licenses, there will almost certainly be some kind of waiting list for new license applications.  Currently, during this pause, a buyer can assume an existing STR license if the home was previously licensed.  The ability to transfer a license is available at this time, but is also at risk of disappearing when the Commissioners reach a final conclusion on the revision of the current ordinance.  As of the date of this post, the only area in Tillamook County where new STR licenses can be issued is within the city limits of Rockaway Beach.  

How can Summer already be over?  I didn’t really notice that Summer ever arrived this year, and now it’s already over.  I think we had one day when the temperature rose almost to 100.  While it has not rained much at all this Summer in Tillamook County, the heat in the valley kept us shrouded in the marine layer of fog… far more than any Summer I remember since I came to Oregon in 1972. 

 

       

Surely all this means that this October will be beautiful, as it so often is here. Coincidentally, October is also usually my best sales month all year.  I think it has a lot to do with the frequency of beautiful weather days.  And it seems that people who want to buy on the Coast may spend all Summer going to different parts of the Coast to help them determine which area they like best.  Then as the end of Summer arrives, they have that all figured out and they are ready to make buying decisions.  So, I am gearing up for some good sales activity in the next 6 weeks.

 

Looking at the MLS market stats, however, it is clear that someone flipped a switch somewhere and the market activity has taken a very distinct turn.  Listings are staying on the market longer with an average market time now of 2.5 months, as compared to 4 weeks average back in January this year.  Also, just 3 months ago, the average Sale Price to List Price ratio was 102%.  Now it is 92%.  Prices, too, have undergone an adjustment, with the average list price of Sold homes at around $500,000 in May declining to an average of around $400,000 in August.  That is not telling me that the price of a specific house has gone down, it is just telling me that the houses people are buying right now are in lower price ranges as opposed to the higher price ranges.

 

Our market is actually still really good!  I don’t see any problem with taking 60 to 90 days to sell a house.  That feels normal and manageable.  And interest rates, compared to the early 1980’s, are fabulous.  Inventory is still pretty low, so that should keep prices somewhat steady. 

 

A few more blue sky days and buyers will be lining up to buy that special beach house for the beauty and serenity, and for the clean salt sea air that let’s you BREATHE.

This beautiful quarter acre lot in Oceanside has a view of Three Arch Rocks.  The lot gently slopes down from the street, but is not steep.  This is a pic of the lot (click on the pic for details):



Call me today to view this property.
Pam Zielinski 503.880.8034

Is the salt air and climate at the beach a big problem for home maintenance?

There is no question that the salt air is corrosive.  Outside fixtures and hardware don’t last long here. Even stainless steel rusts at the beach, it just takes a lot longer to rust! When home shopping on the Coast, if you find a house where the owner spent the extra money to use stainless steel hardware in construction, pay attention to that feature. There is tremendous value in that kind of quality and pride of ownership.

 

Besides corrosion, wind driven rain can wreak havoc on your siding.  Our winter storms can drive horizontal rain into the tiniest cracks and crevices in the exterior of your home, therefore caulking every year becomes mandatory.  Moisture collecting behind the siding can cause rot in the wood sheathing or substrate.  If allowed to continue this can result in a very expensive repair job when its discovered. 

 

Another frequent maintenance item cause by the high wind involves thermopane windows.  The vacuum seals are easily compromised causing foggy moisture between the double panes.  While some home inspectors suggest this is more of a cosmetic issue than a critical repair item, when you have a view of the ocean you don’t want it compromised by a cloudy window. 

 

Finally, rodents are continually looking for ways to get warm and cozy in your crawlspace and can make a terrible smelly mess of everything.  Keeping the grates on your foundation vents in good shape will help keep the critters out of your house.  However, they are pretty smart and sometimes will still invade by burrowing down into the sand from outside your foundation and come back up on the inside!

 

If you are right on the beach, the sandblast effect can also require more frequent painting.  Why do you think we all love that weathered Cape Cod look with natural cedar shingle siding?  Yes!  Then you don’t have to paint every 3 years.

 

I hope this isn’t scaring you away from having a house at the beach. I promise that the benefits far outweigh the inconvenience.  Think of the incredible sights and sounds and smells, and the fresh cool air, and the relaxed and casual ambiance of just being at the beach.   Hakunah Matata!

If I buy in a hot market, will my property appreciate in value?

The soaring prices in recent times may cause a buyer looking for a second home to step back and wait for a better time to buy, worrying that if they buy now the value may then decline. 

When you look at a graph of property values, over the long period of years it tends to go up, even though there are fluctuations along the way.  For example, during the Great Recession, our property values in many areas of Tillamook county dipped to around 50% of what they had been in 2006.  For years, during the recession, the values stayed low.  Then when they began to increase, they increased rapidly and now are close if not above some of the 2006 prices. 

When buying property in any rural area, it seems that one will be best assured of protecting their investment if they buy for the long haul and then wait for the right time to resell.  If forced to sell when the market is down, then losses occur.  If one can wait out the lows and sell during the highs, it’s a good way to protect your investment.  And, it seems to me that coastal property has higher highs than inland property. 

Timing is everything.

Why has this lot been on the market for years?  What’s wrong with it?

During the Great Recession the housing inventory ballooned and prices went to rock bottom.  Building costs, however, did not go down and in fact continued to rise.  Therefore, it made sense for a buyer to purchase an existing home at a low price rather than buy a lot and spend a lot more money to build a new house. 

For years, that kept buyers from buying building lots and the inventory of lots for sale grew and grew.  Only since early in 2020 did the housing inventory begin to shrink enough and prices increased enough to finally convince consumers that building a new house would be a financially viable option. 

Only recently have lots begun to sell, resulting in many listings showing histories of thousands of days on the market.  That does not mean something is wrong with the lot.  It simply means that until now, it was easier and cheaper to buy an existing house.

What is the weather really like here on the Oregon Coast?

Every time a newcomer from out of state has asked me this question about what the weather is really like, and I give my personal overview, Mother Nature decides to make me look like a fool and she does the opposite of what I said!  So, at the risk of upsetting her and having another weird weather year, I am still going to share with you what has been my general experience over the years I have been either visiting the beach or living at the beach, starting in 1974 when I moved here from Alaska.  If there is one thing that seems to be true of most years, it’s that you cannot realize how much beautiful weather we have on the Oregon Coast unless you live here.  Generally speaking, because the ocean is the great equalizer, our weather is cooler in Summer than in the valley and it’s warmer in winter.  There are many winters where we get no snow at all and only a handful of nights where the temp even dips slightly below freezing.  There are few summers where we get up to 90 to 100 degree days, and when those happen the high temp lasts maybe one or 2 afternoons at the most.  Then it cools off at night.  Thanksgiving seems to me to be stormy most years, and oddly enough, the week between Christmas and New Year’s Day seem to often provide a surprising warm sunbreak.  When it rains other than the major storms, it’s usually a drawn out drizzle.  When it’s stormy in winter, the wind gusts can often be 60 to 70mph.  The worst storm I’ve been in here had gusts to 107mph, and one year I watched a water spout travel North just offshore.  Fortunately that was a rare occurrence.  In the winter, the storms come from the Southwest, so the SW corner of your oceanfront house will take the most abuse.  In the Summer, there are often strong breezes coming in from the Northwest in the evening.  So, having a deck on the South East side of your house will give you a nice warm spot to barbecue which is sheltered from the Summer’s evening breeze.