Tuesday, April 29, 2008

Portland Home Prices Continue Falling - Case Shiller

The median price of existing homes in Portland declined 2.0% from February 2007 to February 2008 according to the S&P / Case Shiller Home Price Index, continuing the trend that started in April 2006 when price growth peaked, and increasing the decline that started in January. The median price declined 1.4% from January. None of this is surprising given the record high inventory levels, 40% drop in sales, and tightening of the credit markets.

The chart also shows what looks to be a small plateau at the end of last year. This is likely due to the seasonally slow months, and seller holding out for better pricing in the spring. When that didn't materialize buyer's relented and dropped their price.

The median price of existing homes in Portland is now lower than it was in June 2006, wiping out over a year and a half of appreciation.

This chart shows the median price over the past three years, making it easier to see the comparison to April 2006.

Nationally, the 20 city index declined 12.7% in February and shows no signs of slowing. While prices in other regions around the nation are well on the way towards correcting (see the recent National City report), Portland is just beginning its correction.

My advice for sellers? Look at where similar houses were selling in the Spring of 2006 (not 2007) and price 5-10% below that, or else you risk following the market down even further.

My advice for buyers? Look at where prices were in the Spring of 2006, and offer 5-10% below that. Or just wait, those prices will be here soon enough.

The Case Shiller data focuses on the change in price of existing homes, and tries to exclude the effects of remodeling, or major damage. It tries to exclude investment properties and foreclosures (which would make the data look worse) as well as transfers between family members. It's a much better indicator of how the price of the average or typical house has changed from year to year. For full details on their methodology see their factsheet.

Add to Technorati Favorites

No comments: