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And by Ron Ares, re:PDX founder / editor and marketing specialist.
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Portland Market Activity – February 2008
Although sales activity picked up in February throughout the Portland metro area, the fact remains — a bulge of housing inventory continues to pile up.
As I mentioned the other day, only a little over 1,300 properties changed hands in the Portland metro area in February, leaving 10.4 months available inventory on hand — over 14,400 residential listings. For the year, closed sales are down almost 30% from this time in 2007.
The inventory overhang is having an effect on prices. Comparing the year-to-date median price of $280,000 to this time last year, it’s up a little (from $277,000 in 2007), but remember, the market was at $290,000 YTD back in July 2007. However, it isn’t the precipitous double-digit decline some have predicted.
Year-to-date, the average sale price was $342,800, up from $323,800 this time last year. Average time to market a home was 85 days (vs. 66 in Feb. 2007).
North Portland appears to be the darling market area right now. At just 55 days average time on the market and only 17% fewer sales than last year at this point, it’s perking right along. Yamhill County and Lake Oswego / West Linn are off to particularly slow starts with respect to volume (down 46%).
Below are the February 2008 results for average and median sale prices, appreciation, and time on market (or DOM*), sorted by average sale price. (Remember, the appreciation numbers are a 12-month rollup compared to the previous 12 months.)
| Area | YTD Avg. Sale Price | YTD Median Sale Price | 12-Mo. Apprec. | DOM |
| Lake Oswego / West Linn | $576,800 | $504,000 | 8.5% | 80 |
| West Portland | $503,200 | $397,500 | 4.5% | 101 |
| NW Washington County | $393,800 | $370,000 | 6.5% | 97 |
| Tigard / Tualatin / Sherwood / Wilsonville | $376,700 | $345,000 | 3.5% | 78 |
| Milwaukie / Clackamas | $371,200 | $311,700 | -6.7% | 87 |
| Northeast Portland | $311,900 | $260,000 | 6.5% | 68 |
| Oregon City / Canby | $306,300 | $286,000 | 0.7% | 92 |
| Hillsboro / Forest Grove | $292,800 | $260,000 | 4.1% | 94 |
| Yamhill County | $288,600 | $222,700 | 4.3% | 114 |
| Southeast Portland | $284,300 | $249,500 | 7.2% | 68 |
| Beaverton / Aloha | $279,700 | $255,000 | 3.5% | 78 |
| North Portland | $268,300 | $250,000 | 7.6% | 55 |
| Gresham / Troutdale | $254,400 | $242,000 | 3.9% | 91 |
| Columbia County | $228,300 | $216,000 | 10.1% | 118 |
Source: RMLS, March 2008.
* Note: DOM or days on market may exhibit reporting inconsistencies and should be used to analyze trends only.
Comments
25 Responses to “Portland Market Activity – February 2008”
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High priced markets get hammered with the new lending guidelines – it’s hard to get a Jumbo these days – hance Oswego for hammered sales wise.
As the spring progresses the inventory will continue to pile up – the industry insiders will talk up the month to month gains as a “clear sign we’ve hit the bottom” but in reality it’ll be well down YOY – sales ALWAYS increase MOM in the spring- but hey maybe they can get a few knife catchers off the fence and get their 6%.
Once prices start to drop in earnest the foreclosures will start to pile up – we are about 12 months behind California as our boom was lagging theirs by 12 months or so – ergo the mortgage resets lag theirs by 12 months as well.
Game time for PDX – I suspect we’ll be in a similar position to So Cal come this time next year with record foreclosures and prices 15% down YOY.
With banks starting to collapse the lending environment will continue to tighten this year – again putting more potential buyers out of the market.
>we are about 12 months behind California as our boom was lagging theirs by 12 months or so
Interesting.
California has 37 HUD recognized MSAs and 58 counties, ranging in median price from a low of $200k to a high of $995k. Is there one in particular you’re comparing, or were you thinking of lumping all together?
Jeff : does it matter ?
Pretty much all the MSA’s and counties in California and Florida are now in freefall…
Location isn’t as important as local demographic changes were not the cause of this boom – just compare price / wages compared to historical normals for any location and you’ll end up with roughly how overvalued a market is.
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Intended to post this link -
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Ron – please feel free to delete the previous comment.
[Done - RAres]
> Jeff : does it matter ?
Good heavens, no. At least not unless you want to establish correlation to back up your prediction. A prediction, incidentally, with which I disagree.
Here’s a NYT piece from last August, complete with Case/Shiller interactive charts. Go back to 1988. Since then – if we extrapolate September through February – San Francisco has had 31 months of YoY declining prices; Los Angeles, 33; San Diego, 35.
Portland? 0.
We’re in a tough market, certainly from a sales standpoint. But Portland’s UGB restrictions on growth – which held back the 40% spikes but, coupled with a high percentage of incoming population, tempers declines – argues seriously against trying to predict future based on what’s happening in, um, ‘California’. That’s naive, and unproductive to those that are looking for accurate information.
UGB? What UGB? Look at all the developments in Happy Valley to the east, Hillsboro, Aloha to the west, Yamhill, Newberg to the south and Ridgefield to the north and front and center the 1,500 condos downtown(Pearl, SoWa, Cultural District, NW 23rd). And what’s our inventory sitting at? And how many of those developments are not accounted for because they lack individual RMLS numbers? UGB is not an issue. As for 40% spike…my house doubled in value in 8 years, sold it last spring at the peak (IMO). Prices are wayyyyy out of line with incomes and the eazzzzyy money is gone. We are in for a correction, big time. And a possible depression. Portland is not so special, just late to the punch bowl.
So Ron, you buying the beers at the MeetUp? How was your January and February, and heck, half way through March, how’s it looking for you?
Ron, my apologies. I have no use for those who cower behind anonymity and define their success as putting me out of business, especially when they’re manifestly uninformed. I won’t tolerate them on my blog; I should never have responded on yours.
See you in a couple weeks!
JK
Greenie is not Uncle Grit.
Ron is known for deleting posts that do not agree NAR’s sunshine campaign. I am sure he will take care of it. It’s a great time to buy!
Even though Realtors won’t admit to a slow down, a big slow down, on their advertising blogs I hope they at least admit it in their personal lives. Hope you saved up for it.
P.S. I would never hope that someone would go out of business. I only hope that during the good times one would be wise enough to save up for the bad.
Don’t worry about my name. You will never meet me anyway. I have a growing list of Realtors that I would never give my business to. Can’t trust them for some silly reason. Just don’t seem to have the buyer’s or seller’s best interest.
It’s a great time to buy!
No harm done, Jeff.
I don’t have the time or interest to debate trolls (by his/her own admission) like Greenie.
I am all for thoughtful comments, but the rest is just chaff.
Jeff:
A lot of that is to do with the way Portland calculates the median price for any given month.
They use a 12 months moving average worth of prices and the previous year’s 12 months MA of prices – this has the effect of taking a lot of the volatility out of the numbers and makes them significantly slower to react to changes in pricing – especially after such a steep runup in prices like we’ve seen over the last few years.
Most other realtor associations I see just uses a straight YOY comparison – much faster to respond to a markets change in direction.
If you take a look at Portland’s raw RMLS asking prices you can see a decline is already well under way – we are probably between 5-10% down from last year.
http://housing-watch.com/regionview.aspx?city=Portland&pct=50&g=m
This site pulls from RLMS every few days and calculates straight point in time percentiles.
If there is so much demand that’s going to support prices then why are we sitting at 10 months worth of inventory? The only reason the months of inventory dropped last month is a seasonal pickup in sales from Jan’s dismal number – but it was still 30% down YOY and really nothing to cheer about.
We are still getting more houses coming onto the market than we are selling – so long term the clearing time is increasing ignoring seasonal trends with sales.
I’d also like to see what the going forward in-migration is with California stumbling and home prices crashing there – one of the big drivers for the migration was cheaper housing.
As I said before – the price run up was a direct result of the credit boom – that’s in reverse now and we are starting to see a strong reverse wealth effect and that’s going to bring the economy down badly over the next year or two.
Hopefully I come across as reasoned and not a troll – I enjoy discussing economics and am always open data points I may have missed – but the UGB line of thinking supporting prices doesn’t seem to fit with a record pile of unsold inventory.
For the UGB to have an effect it needs to constrain supply – that’s clearly not happening at this point in time.
As an example – take a few years worth of RE prices medians -
In Jan ‘05 home prices are $125k median
By Jan ‘06 home prices are at $250k median
By Jan ‘07 they hit $500k median
By Jan ‘08 they crash back to $250k
Using the 12MA method we see this -
06-07 home prices rose by $187.5k
07-08 Home prices stayed flat.
Tell that to the guy who bought Dec ‘07 who’s now a quarter of a million in the hole. The 12month MA masks the real increases and declines.
Silly numbers – but it illustrates the point I’m trying to make regarding the different way PDX calculates it’s price medians.
BTW in that NY times piece from August click on “Inflation adjusted” and see what happens to PDX prices
Also note the lag between Portland and for example San Diego – SD hit it’s peak appreciation in 04/05 Portland in 05/06 – more or less a year after – SD started the runup earlier as well.
Also I’d point out Case Schiller is rearward looking by at least a few qtrs due to the time needed to collect, collate and publish the data – I’d expect PDX to be -ve in actual and inflation adjusted next time the report rolls out.
UG – no troll assertions directed your way.
I appreciate that you took Jeff’s challenge to put some wood behind the arrow. I’m not sure he or I agree with the prediction, but thought-provoking, nonetheless.
You guys might get a kick out of this site also – it adds some extra data such as REO and afordability bases on historic normals.
http://www.housingtracker.net/askingprices/Oregon/Portland-Vancouver-Beaverton/
http://www.housingtracker.net/reo/oregon/portland
http://www.housingtracker.net/affordability/
I find it fascinating that bubble watchers have to provide data to back up their statements yet bubble denial people don’t have to prove why Portland is so immune from the down turn in housing and the economy in general. Go figure.
Ron & Jeff – I understand you guys disagree with the theory I’ve presented – do you mind specifically saying why?
I’m curious given the data I’ve provided what part of the economic analysis you actually disagree with ?
The UGB theory just doesn’t seem to hold water when the inventory numbers are at all time highs for Portland and sales are 30%+ down YOY…
Housing’s largely a classic supply/demand scenario – supply is growing and demand is diminishing now the capital appreciation is no longer making up for rents not covering the mortgage on investment properties and the lending landscape is returning to sanity and thus removing the ability of people to temporarily defy the reality of that kind of debt load through “creative finance”.
Let me echo what Ron said, UG; you’re at least trying to present a reasonable case. Now that I have a second I’m going to write a one-time only post on my own blog re what I think about people like greenie; please understand you’re not under that umbrella.
> lot of that is to do with the way Portland calculates the median price for any given month.
They use a 12 months moving average worth of prices and the previous year’s 12 months MA of prices
You’re mistaken. You’re confusing the way RMLS calculates appreciation, which involves the use of YoY median price, but in no way determines its calculus. Case/Shiller, of course, calculates all 20 MSAs exactly the same; no matter how you measure, Portland Metro is still YoY positive, in Feb a paltry 0.6%, but positive nonetheless.
Does that mean we’re in a healthy market? No. Homes for sale have been dropping price for over a year. The limitation of using only median price as a guide is that it measures the mix of homes sold. The downward pressure on prices via high inventory and low sales is going to have an effect.
Does that mean we’re going to follow in the footsteps of ‘California’, as was your original premise? Not a chance. You still haven’t shown correlation, and even inflation adjusted changes nothing since all markets changed proportionally. What’s happening here is dynamically different that what’s happened in San Diego; real estate is local.
RE UGB: Where UGB has held building in check, it’s held prices in check. Portland proper YoY in Feb was up .6%; absent the flood of condos it was up more than 1%.
But in Happy Valley, where building was essentially unchecked? Down 21%.
It’s a constant theme of mine, so let me repeat this: Real estate isn’t just local, it’s hyper-local. As I said initially, trying to predict what’s going to happen here based on what happened a year ago in ‘California’ is fallacy at best, and dangerously misleading.
Best.
[...] I have a point I want to make and want to make only once, but I didn’t want to make it on Ron’s site; he’s much, much nicer than I am. This fits. [...]
Jeff :
They calculate median price for a given month – but the appreciation numbers we all hear about use the 12 MA method of calculation – thus leading to a smoothing of the curve and underestimating both runup and price drops and making the number significantly less responsive to the changes in market direction.
Assuming a drop occurs at the same pace as the runup did using the 12MA method a drop will be a year old by the time we see numbers go -ve. Using straight YOY comparisons of the median will report the change in market direction in 6 months.
This is the reason I believe why we are yet to see -ve numbers in the headlines for portland – won’t last for long though.
Surely the UGB would increase prices as it constrains supply ?
I think the reason Happy Valley is falling faster than elsewhere is that the builders are more ready to cut prices to move inventory.
Building is a cash flow hungry business – inventory sitting is a nightmare for them as they have to cover the carrying costs of the construction loans etc. So when they cant sell they drop prices until they do sell – private resellers have an emotional attachment to the home that a builder will never have – they tend to chase the market down “I’m not going to give it away” or “it’ll sell when the market comes back in the spring”
Builders *always* lead the charge down.
Jeff, I noticed on your blog you were announcing to potential buyers in LO that it was a great time to buy in October 2007?!?! You also stated that you saw the end in sight of the liquidity problem?!?!?
In October of 2007?!
Don’t worry, I don’t expect a response. I’m just a troll, you know.
Jeff, I found your September 18, 2007 post even more amusing. “Rates Down, Confidence Up”
Here are a few numbers for you:
Dow Jones Average
9/18/2007 13739.39
3/14/2008 11951.09
Where did the confidence go?
“ You still haven’t shown correlation, and even inflation adjusted changes nothing since all markets changed proportionally. “
The burden of proof lies on the claim that one particular thing will behave differently from all others, not that each thing will behave like all others. I don’t need to prove that every hydrogen atom in the world behaves the same. By default, the simplest assumption is that they will all behave similarly unless you can prove otherwise (Occam’s Razor).
“RE UGB: Where UGB has held building in check, it’s held prices in check. Portland proper YoY in Feb was up .6%; absent the flood of condos it was up more than 1%.”
“In check?” Seems to me that the UGB is frequently used to justify inflated housing prices. How is severe price inflation “in check?” Besides, the UGB argument is logically flawed. You can logically argue that prices in areas with a UGB can be higher than prices in areas without UGB, but you cannot argue that prices in areas with a UGB can never be too high. When prices become too high, it is inevitable that they’ll fall, with or without UGB.
“It’s a constant theme of mine, so let me repeat this: Real estate isn’t just local, it’s hyper-local. “
Real estate may be hyper-local, but finance is global. Most real estate is bought with borrowed money. If you restrict your analysis to real estate bought with cash, I’ll agree with you.
greenie= Suzan Harris, mother of two, bubble watcher since Summer of 2006, currently a renter though a home owner in the past, and blown away by the comparison to ALF!
Did you really think these prices were sustainable?
Lots of good points already made by UncleGit and Leo.
I’m also at a loss as to how the UGB is constraining supply at this point. How does the UGB influence prices in inner SE, for example? People who want to buy “close in” don’t care about the UGB because it’s too far away from their target area. I see plenty of land still available in and around Beaverton, for example. Take a drive out through Hillsboro, Cornelius, Forest Grove and then down to Newberg and back through Sherwood to Tualatin. Lots of new building in those areas and plenty of land still available. How is supply being constrained?
Leo’s point is important: finance is global and the current credit crunch doesn’t know anything about the state boundaries of Oregon.