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re:PDX is presented by Claire Widmark, broker affiliated with M Realty LLC in Portland, Oregon.
Phone: 971-275-3691
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Friday Night Lites
Just a few news items to wrap up this week in Portland real estate:
Portland real estate prices stay level, sales on modest climb for May
RMLS official tabulations for May 2009 will come out next week, but my early review shows that closed sales continue a small month-over-month increase (a seasonal effect), and median and average sale prices were essentially flat from the previous month. Closed sales will show to be up 10% over April, but down by ~30% from one year ago. Both median and average sale prices are around 13% off levels from a year ago. Come back early next week for a full report.
Oregon foreclosures nearly double in a year
A recent tabulation of foreclosure activity in Oregon shows a nearly 90% increase compared to May 2008. One out of every 525 Oregon homes received a foreclosure filing in May–the nation’s 12th highest rate.
Oregon to get a head start on recovery?
Really? Why? From research by Moody’s:
High-tech industry is one element. A slowdown in technology spending in 2008 and 2009 has created a pent-up demand for technology — businesses that know they need to upgrade and are waiting for the ability to spend.
“States that have a high concentration in tech-related industries are well positioned to take advantage of this trend, which is particularly true of Colorado, Idaho, Oregon and Washington and to a lesser extent Texas,” said economist Andrew Gledhill of Moody’s Economy.com.
I certainly hope the prediction is true, but I suspect digging out of a 12% unemployment hole will take longer than expected. (And wasn’t Moody’s one of those rating companies that suggested those mortgage-backed securities were AAA rated?)
Bike community letting it all hang out
Last, but not least, the Portland bike community celebrates it’s version of the World Naked Bike Ride on June 13 with a series of events. If you’re in the vicinity of NE 39th and Glisan around 2PM, you’re bound to get an eyeful during the Sunny Nekkid Ride (fair warning!). The big event is at midnight, and last year, 2,000 riders participated.
Photo by jd.inaz. Used under Creative Commons license.
Late Mortgage Payments Rise in Oregon
The Mortgage Bankers Association reports that 7.5% of mortgages are at least one month late in Oregon. And the worse may be yet to come.
As reported on the Oregonian’s Front Porch blog by Ryan Frank, delinquent mortgages are among the highest in the last 30 years.
Since record keeping began in 1979, the only two quarters with higher rates came in 1985 when a nasty recession rocked Oregon’s timber-heavy economy.
Compared to a year ago, the number of troubled mortgages has doubled to 47,700.
The MBA suggests that unemployment rates are fueling delinquencies and won’t subside until mid-2010.
Jay Brinkmann, the chief economist for the mortgage bankers group, said that the number of prime mortgages going into foreclosure would only increase with more job losses expected. “What is the outlook going forward? Well, delinquencies are very much tied to employment,” he said.
California, Arizona, Nevada, and Florida are still among top foreclosure states. These four states account for nearly half of the national foreclosure events alone.
Case-Shiller Shows Portland Prices Off 14%
Standard and Poor’s Case-Shiller index released this morning shows Portland’s home values slipped 14 percent when comparing January 2009 to January 2008. The Portland index is down 3 percent from December alone, and the trend appears to be accelerating.
Remember, the Case-Shiller index reports data from two months back, and it will be interesting to see if the index flattens out in a month or two as the RMLS date did for the month of February. Portland home prices in the index are 17.5% lower than the peak prices of the summer of 2007.
By comparison, Portland is in the middle of the the pack for the 20-city index, and despite the record monthly decline, moved up in the index compared to others. Seattle is down 15 percent annualized and -3.6% for December to January. Overall, the index has declined 19.4% in the 12-month period.
Case-Shiller Report (January 2009)
Metro Area Jan-09 Dec08-Jan09 Jan08-Jan09 Jan07-Jan09
----------------------------------------------------------------
Phoenix 117.11 -5.5% -35.0% -46.8%
Los Angeles 166.54 -2.8% -25.8% -38.0%
San Diego 148.25 -2.6% -24.9% -37.5%
San Francisco 124.33 -4.4% -32.4% -41.3%
Denver 122.33 -2.7% -05.1% -10.0%
Washington 171.97 -2.0% -19.3% -28.0%
Miami 159.04 -3.6% -29.4% -43.1%
Tampa 149.21 -4.4% -23.3% -34.8%
Atlanta 109.44 -3.2% -14.3% -18.0%
Chicago 130.80 -4.6% -16.4% -21.9%
Boston 150.73 -1.5% -07.3% -10.4%
Detroit 77.56 -4.2% -22.6% -34.2%
Minneapolis 120.18 -4.7% -20.4% -28.4%
Charlotte 120.91 -1.2% -08.2% -06.6%
Las Vegas 125.64 -4.4% -32.5% -45.5%
New York 181.28 -1.2% -09.6% -14.8%
Cleveland 102.89 -2.2% -05.2% -13.3%
Portland 153.80 -3.0% -14.0% -14.5%
Dallas 112.75 -2.4% -04.9% -08.1%
Seattle 154.37 -3.6% -15.0% -16.1%
Composite-10 158.04 -2.3% -19.2% -28.6%
Composite-20 146.40 -2.5% -19.4% -27.6%
The Case-Shiller report can be read here.
Buyers Disappointed in this “Buyer’s Market”
In today’s Morning Edition on NPR, Portland is named by as one of the national housing markets whose prices are ‘sticky’ (i.e. not in freefall) by Karl Case of the famous Case Shiller/Standard & Poors housing index.
House prices are falling in most places, but for some buyers in Boston and other cities, they’re not falling far enough. Meantime, many who want to sell their houses are pulling back, waiting for a better market. This has buyers asking, “Where’s my bargain?”
I wholeheartedly agree that Portland falls into this category, and so do some of my buyer clients right now.
Listen to NPR’s Falling Prices Leave Home Buyers, Sellers in Limbo. (length 3:56)
Portland population to double in 50 years?
Given the current economic contraction, it’s a little weird to hear Metro prophesying a doubling of the local population by 2060, but that’s what they’re telling us. And it’s actually a little higher than what they said last year.
From the Portland Business Journal:
In 50 years, the population in the Portland area will likely be between 3.61 and 4.38 million people. As of the 2000 Census, the region’s population was about 1.93 million.
The Metro Council on Thursday released updated forecasts that estimate a range of possible population and employment growth for the seven-county metropolitan region by the years 2030 and 2060. Metro’s projections indicate slower rates of growth in the short term due to current economic conditions with sustained population and employment growth over the long term.
In May 2008, Metro projected a 90-percent likelihood that the population of the region would be between 3.46 and 4.25 million in 2060. That forecast also projected the total employment of the region to be between 1.7 and 3.3 million in 2060.
So, the real estate ramifications are clear, but where are all these people going to work?
Today’s forecasts also indicate a 90 percent chance that the total number of jobs in the region will be between 1.25 and 1.7 million in 2030, and a 90 percent chance that there will be between 1.65 and 2.42 million jobs in 2060.
Here’s the link to Metro’s report.
NPR: Oregon Foreclosures Tied to Unemployment
NPR Morning Edition today picks up a local Oregon Public Broadcasting story about foreclosure in unexpected markets:
Some new states have moved into the top ten in the latest housing foreclosure figures: Illinois, Idaho and Oregon. They are states that had not suffered significantly in the subprime mortgage crisis until now. Growing unemployment may be forcing more and more people to give up on paying their mortgages.
Listen to the 3+ minute story here.
The story asserts the same view that I’ve held that the recent acceleration in distress sales in Oregon is due more to economic contraction, and not so much on speculative ownership or toxic loans.
Hat tip to Patrick Emerson at The Oregon Economics Blog.
Some Camera Time with KATU and the Hounds of Baskerville
I nearly forgot to post this, but I recently had some camera time with KATU News in Portland, shortly after the dismal January real estate market results were released by RMLS. (Sorry to take you offsite, but KATU does not have embeddable video clips.)
The KATU crew met me down by the Encore condos, ironically right after I had written an offer for some clients that live nearby. Right in the middle of the interview, a couple dogs came running at us from out of the foggy mist, and gave us a good sniff and pawing before being shooed off. A little unnerving to say the least…
Down Cujo, down!
Oregon joins top 10 in U.S. foreclosures
The rate of foreclosure in Oregon is increasing. RealtyTrac reports that Oregon had the fifth-highest foreclosure rate in January with a 218% increase in activity over December.
They estimate 1 out of 357 homes has had some notice of foreclosure filing. Oregon joins Nevada, California, Arizona and Florida in the top 5 as a percentage of households. Not a surprise considering the anemic sales results in November through January.
As seen on The Real Estate Bloggers.
News To End The Year On
Notice I didn’t qualify whether it was good or bad news.
October Case-Schiller Index
At one time eagerly anticipated, but now dreaded, the last Tuesday of each month brings the S&P/Case-Shiller Index, which measures U.S. home prices going back to 1988.
In looking at October 2008 results, Portland joins the double-digit loss club, along with Seattle and Atlanta as first-timers. Portland showed a 10.1% year-over-year decline in home values when compared to October 2007.
The national average is -18.0% for the 20-city index, taking average prices back to March 2004 valuations. It is the sharpest annual decline yet in the study’s history. Las Vegas, Phoenix, and San Francisco are all down over 30% in value over 1 year.
The Case-Shiller data (looking at data compiled from 2 months back) shouldn’t be a shock to regular readers. Similar results have been reported here using the multiple listing data. I would expect November and December reports to show similar trajectory into the negative.
December performance
As the year closes, the early warning indicator of low pending sales numbers from the past few months is showing up as corresponding low closed sales for November and now, December.
As of December 29, only 674 homes had sold throughout the Portland metro area and only 688 homes became sale pending during the month. November had 1,041 closed sales by comparison, which was the lowest number since 1993.
Perhaps there will be a significant month-end crush of closings due to last week’s weather, but I suspect the total sold count will be well under 1,000 homes. I will run early December numbers around January 5.
UPDATE 9:15 am – Nifty chart from NY Times (login required), hat-tip to Ryan Frank at The Oregonian’s Front Porch blog.
New President Elected. So What’s Next for the Housing Market?
Later tonight, we’ll finally break the tape, finish the race and elect a new President. (Just in time for the holiday rush, right?)
My close-to-the-vest theory has been that one factor (of many) affecting the housing market is the uncertainty of the Presidential race, and that after tonight, a percentage of fence-sitters will move forward and take advantage of the current buyer’s market with some reduced anxiety.
Inventories are high and interest rates are still historically low. I was taken aback today to hear a local lender talk about the aggressive 100% and low-down programs still available, dispelling the myth that loans are only available to the creme-de-la-creme of borrowers.
I am entirely prepared to be completely wrong here, too. Portland-area employers (Tektronix, Columbia Sportswear, Vidoop, Jive, and Freightliner to name a few lately) are letting employees go. The banking crisis is not settled. The stock market is twitchy, at best. And we’re still at war.
So, what do you think?
