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The Portland Oregon Sky is Falling

Its True its True its True. The Sky is falling. The real estate market in Portland is going in reverse. All of the terrible media reports are now confirmed. This is the worst thing ever. What we thought would never happen is now happening. The Market as we knew it is kaput.

What is it you ask? Well it's the stats of course. Thats right the RMLS cumulative Market Stats.

The stats for the November Real Estate Market in Greater Portland Oregon for the Last 12 months show the median price for a Portland Oregon Home only rose by 7%. Compare that to the previous years gain of 14% over it's 12 month period.

There I've said it. Now are you happy? Good! Then let's get back to work.

The Stats also showed that in the last couple of months from September though November there was a slight improvement potentially indicating the bottom end is in sight.

Now is a good time to check out those properties that have been sitting on the market with no action. Unless that is you prefer to wait till the market kicks into full swing as it has in the past several years. Do you really want to be on that end of the stick again?

Nothing goes up for ever and nothing goes down for ever. When you recognize an opportunity you should act on it.

Are you busy out making that money? Trying to find that home by running around on the weekend through the neighborhoods? Stop and learn what all the Internet savvy Buyers have found out.

Now you can stay on top of it with WWW.househuntportland.com Where_your_next_home_finds_you!

The above presented by your RE/MAX Agent in Portland Oregon . To view more information about Downtown Portland Oregon and to see why Tens of Thousands of People are pouring into our area Check out Herb's_Portland_area_information_and_MLS_search_Web_Site DO IT TODAY! You won't be disapointed!

Search Portland Oregon Homes For Sale Right Here

Let Your Next Home find You ! Portland Oregon Info

" A Real Estate Transaction with Herb is one YOU will Profit from "

Posted by Downtown Portland Real Estate Broker~Herb Hamilton on 12/27/2007 10:34 PM

Comments (19)

downtown portland real estate, portland buyers agent, portland homes, remax broker, move to portland

Originally posted at: Herb's Portland Oregon Real Estate Blog your RE/MAX Agent: The Portland Oregon Sky is Falling

This post has been included in Oregon Information Multnomah County, OR Information Portland, OR Information
Post is included in group: Portland Oregon Real Estate

19 Comments on The Portland Oregon Sky is Falling

DEC

2007

Herb, how funny our sky is falling also with similar statistics; amazing isn't it.

Hello Marchel,

Yes it is. I actually wrote that piece on the fly as a sort of response to another post that got my blood boiling a little. The other agent was decrying the poor condition of his market. I do not want to think for one minute that there are not trouble areas in our country. You know there is. But writing a post for the world to see encouraging others to write offers at below full price is not my idea of support.

I will support you in any way that I can. If your market is in a steep decline I will think of somethin positive to say in the comment section that will help to be uplifting.

Just don't drag the entire ship down with your individual plight.

Oops! looks like a mini rant in my own comment.

Have a fabulous 2008. I know you will.

DEC

2007

Median home prices in Santa Clara County increased throughout the year due to the impact of the subprime lending crisis on affordable housing. I could tout that as proof that the newspapers were wrong about the local market, but I'd destroy my own credibility and it wouldn't change the market one bit.

I wish I could say the same about the Northern Virginia area - our prices have dropped 7% this year compare to a national decline of 6.1% Karen Kruschka

Herb, I had even thought of writing a post calling it the sky is falling before I saw yours. The problem is I'm too darn busy in the fallen sky to get it done (LOL). I appreciated your rant!

Frank : There are many areas of our country that are in a desperate state of decline. The market is horrible for these folks. In Portland the average and Median Sales prices have been on the increase at least as long as I have been in business ( 20 years ). A seminar that I went to a couple of years ago stated that the History of Portland showed an average increase of 6% over the entire history of the Portland Market.

With such numbers as backing, It is not a disengenous statement. In your case it might be. I do not know your local stats.

Karen : Thanks for reading. In the early 90's a Broker friend of mine was expieriencing a severe decline in his market ( southern California )yet he was having the best year ever. When asked about how he achievd his success, his answer was simple. I need and planned to do 100 deals this year. I made sure that I did.

He went on to say "If you want to do 100 deals this year you can as well. If there are not 100 deals in the area that you work then you should move to an area that has that many deals."

It all depends on how you want to torture the numbers. The Median Price for November 2007 compared to the Median Price for November 2006 was up 2.5% (285,000 versus 278,000). Median prices are down 5.3% from the peak earlier this year. Average selling price is rising faster than Median (6.9% YoY) and closed sales are falling (-20% YoY). My prediction, negative YoY in the March-May 2009 time frame.

I've put together a 2007 price chart if you are interested.

Image of 2007 Media Prices

Ralf,

As you say there are a lot of ways to view ( torture) the numbers. The events of any activity over a small reporting period of a month are not justafiable as a trend. They are however effective as a notification of potential future events.

There is also no mystery as to why sale pendings and closed sales are down. They are always significantly down at this time of year. I would be willing to bet though that if I factored in the difference in the time of year that we would still be down overall.

This is also no mystery. In times of stress and uncertainty people generally sit on their hands. The longer though they wait the greater the rebound will be. Pent up demand is what often drives these radical spikes in the market.

I for one do not see any reason at all to wait. With the market continually expanding in terms of price over the year it does not make any sense to wait. Many of the real estate markets that have seen long term decreases are now begining to report a turn around or at least a severely curtailed down swing.

Just as in buying stocks, the wise investor does not wait till the stock has hit rock bottom. The wise investor buys before it hits rock bottom and then rides it through the curve. Waiting for it to hit bottom specifically when you have factors such as long term closing dates can cause you to miss the very bottom and get caught in a bidding war when prices begin to escalate.

Hi Herb,

When I referred to the dip in closed sales (down 20%), I was measuring Nov 2007 versus Nov 2006 closed sales. That should eliminate the season drop.

I do agree, there is always demand, although I don't think it is a linear model and the occasional dam in the river eventually breaks. There are more funamental issues at stake when looking at the demand for real estate.

The first is affordability. Using the NAR's formula for affordability, Portland is at a 0.92 on the index. This means that a family making the median salary ($63,800) cannot afford the %80 loan. The formula also assumes that the family is putting down 20% ($57,000). NAR Formula

The second is the ratio to price to income. 2.7 is the historical norm for pricing of a home against your annual salary. That would relate to a median price of $172,260 ($63,800 * 2.7) where as right now the price to income ratio is 4.5 ($285,000 / $63,800). The current median price is %65 higher than the historical norm would indicate it should be.

The third is rental costs. According to HUD, a 2-bedroom apartment goes for $737/mo and a 3-bedroom $1,073/mo. Where using the NAR formula above, with 20% down the median monthly payment is $1,441 (not including tax and maintenance costs). It costs %34 more to buy than to rent. Historically in Portland it has been around %10 less in payment to buy than to rent. Add on tax of around 1% of the home value to the monthly payment and the payment goes to $1,678. Putting that back into the NAR formula, it would require a median income of $80,568 in which 25% of your income is going to paying the payment and taxes. It is clearly cheaper to rent.

Demand is greater when the fundamentals are in check.

Herb,

I like the way your sky is falling. I bet many areas around the country would quickly second that. In Vegas we still have some work to do, but there are indications that things are about to turn, or at least stabilize.

Esko,

I was in Las Vegas just before Christmas. The amount of Commercial Construction there is phenominal. Have a terrific 2008.

Ralph,

Granted the affordability of Portland housing is not as low as it used to be. It is however not the worst market either. You can spend all your time crunching the numbers attempting to understand what it all means. But in the end the Numbers are the Numbers. Using your rationale means that Investors should definately be flocking here to purchase renatal properties.

Regardless of monthly affordability or not, the American Dream for the average consumer is not one of being a Renter.

Herb - That title was an attention grabber. I love the way you invited potential clients to search for homes on your site.

DEC

2007

Jennifer,

Wishing you a fabulous 2008. The Above post from top to bottom represents a strategy that I have been working on for greater SEO and clientele. Thanks for reading and your comment.

Herb, this was a great post. I like the positive, uplifting news. Going up 7% is a great number!

Thanks for stopping by and the comment Teri. It was just one of those spur of the moment blogs.

FEB

2008

I did notice that home prices were coming down a bit. I was crusing the net today and noticed that Renaissance Homes is make a big push to sell the homes they have already built. They are entertaining all reasonable offers. Sounds like a good bargin to me. I love their homes, especiall since there now building green. Only in Portland!! For anyone interested I found this info at http://www.renaissance-homes.com/event.html

Best Reguards,

Joy Carlton

Joy,

Unfortunately like many builders they don't have as good as pulse on the market as they should have. How many times have I seen it over the years where Builders overbuild the market and then get got with either slashing prices or losing the product.

Thanks for stopping by. If you are truly interested in knowing what the real estate market is in Portland, then you should sign up at my web site www.househuntportland.com where you can let your next home find you.

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