Tuesday, September 30, 2008

Portland Median Existing Home Prices Slip Again - Down 6.6% YoY (Case Shiller)

The median price of existing homes in the metro Portland area fell 6.6% year over year in July 2008 according to Case Shiller, continuing the trend that began in July 2007. This is down 6.6% from the peak in July 2007. The month over month declines are also accelerating, as the index dropped 0.5% from June to July 08, vs. 0.3% from May to June.

I'll post the charts later today.

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Wednesday, September 17, 2008

Open Thread - Vacation Time

We're off for a little vacation to visit family, so here's an open thread for y'all to discuss the latest Wall St. meltdown or whatever else you feel like. Catch you in a few days!

Tuesday, September 16, 2008

Portland Market Dashboard - New Feature

This is something I've been thinking about for a number of months, and finally got around to putting together. It's a dashboard that shows which direction the Portland market is heading, based on a number of leading indicators. We use the same basic format at the company I work for to track the business (sales, inventory, revenue, units, etc)

There are a number of leading indicators that drive the increases or decreases in housing prices. They basically come down to supply and demand. Supply being the number of homes on the market, demand being the number of qualified, able buyers.

The top part of the chart shows the leading indicators, the bottom half shows the lagging indicators, or the results.

I will keep refining this and adding to it monthly and with it we should be able to predict when the market has hit bottom and is ready to rebound. I don't believe you can predict the bottom of the stock market, but I think we can predict the bottom of the housing market relatively easily. What will be harder to predict is how much prices lag the bottom, and when things actually pick up. We might bounce along the bottom for a looong time.

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Portland Median Prices down 6.7% in August - RMLS Market Action

RMLS released their August sales data and in what shouldn't be a surprise at this point, median Portland prices continue to decline, falling 6.7% in August compared to last year. Average prices are also declining, falling 9.7% compared to August last year.

One major change to note is that the RMLS is now reporting the total time a property has been on the market, not just the most recent time since a re-listing. The change from 56 days to 121 days is largely due to this change, although some increase is due to more properties on the market and fewer buyers. This should help reduce the number of re-listings as re-listing a property will no longer reset it's time on the market, unless the property is off the market for over 30 days. Charles Turner talks about this in more detail on his blog.

Inventory in Months seems to have stabilized around 10 months of supply. I believe a "normal" market should be between 3-6 months of supply, but this is a metric that seems to change regularly.

The above chart also shows changes in th emarket by sub-region. This shows that some areas such as North Portland and NE Portland are holding up a bit better than areas such as Milwaukie/Clackamas. However take this data with a serious grain of salt, this is 12 month rolling data, not monthly data, so any significant changes are still being masked and areas such as N and NE Portland might be negative Year over Year, but won't show up for a few more months.

I'd love to see the RMLS report their data monthly instead of a 12 month rolling average. I bet it changes once the market picks up, as they'll want to highlight the increase. I'd like to see the change now.

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Thursday, September 11, 2008

Free Fall Friday - 5219 SE Belmont St now $999k

Sent in by a reader:

"There's a pretty interesting house on Belmont Street on the lower slopes of Mt Tabor (5219 SE Belmont). MLS# 8088100.

It was purchased in June 2004 for $1.14 million. It's been listed several times since then, first (without a sign, but on the MLS) for something like $1.85 million, then a long period where I think it started at $1.5 million and dropped by degrees. I didn't keep track of the exact numbers. This summer there was an "estate" sale, and the lawn turned brown, a bad sign because the owner was a Willamette Week "Hydro Hog" in 2006 (http://wweek.com/editorial/3247/8039/) who disparaged his neighbors' brown lawns. Now I see that the owner since July is Deutsche Bank Trust which seems to have "paid" $1.3 million for it. Is that a foreclosure? [Yes, that means that was the loan balance and nobody bought it at auction so it went back to DB.]

It's for sale for $999,000, I went through it in 2004 and I'd say it's a lot of house for a million dollars. The current listing really sells it short, as It's formally known as the "Blaine Smith House" and was designed by Ellis Lawrence, a renowned Oregon architect who founded the School of Architecture at U of O and designed many of the buildings on campus. It was a lot better deal in 2004, though, as a historic property tax exemption ran out last year and the taxes went from $2,900 to $19,500, the assessor's Real Market Value being a whopping $1,735,990.

Schadenfreude bonus: The last owner was apparently a mortgage broker."

Trulia lists it as a 7 bedroom, 5 1/2 bath and 6700+ sq ft on a 27,000 sq ft lot, so yeah it is a lot for $1,000,000. It also has 3 kitchens I believe, which I guess is handy if you're hungry and don't want to walk a 1/4 mile to the main kitchen.

It's a beautiful house on a huge lot, I just wouldn't want to heat it. Or water the lawn.

Thanks for the tip Tom, keep them coming everybody!

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Wednesday, September 10, 2008

Update - Hokoya Lofts Now for Rent!

John points out that the Hokoya Lofts featured in a previous post "Hokoya Lofts - N. Williams" are also now for rent for $1750/ month. Craigslist Posting

So I plugged it into the Rent vs. Buy calculator...

You could pay $21k per year, with probably $5k in upfront costs to rent the loft. Or pay $24k per year to own it, with $65k up front. And take on all the risk of the market decline (or increase!).

Here's the listing in case the craigslist listing gets pulled:

$1750 / 2br - Be the first to live in this beautifully designed building (Portland) (map)

The building is centrally located a short distance to several North and Northeast Portland retail areas including the Mississippi Historic district and Alberta Street. Major connector streets to downtown, Northwest Portland and freeway entrances to I-5 and I84 are within blocks. MAX light-rail train on Interstate Avenue is minutes away as is Portland Community College campus.

The units include floor to ceiling double sliding glass doors to connect the kitchen and living space to the private front alleyway, making the space feel larger while providing a place to dine or relax just outside your door. An aluminum grate floor above the first floor, allows light to reach farther into the ground floor while encouraging airflow up through the entire unit. The second floor is one large light filled space with a smaller bedroom or office space on the north side. The third floor master bedroom has a floor to ceiling window with an etched lower section for privacy and a large closet along one end.

Also available are 2 Live/Work units with ground floor retail space. http://portland.craigslist.org/mlt/off/835690122.html (office & commercial) for information.

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HELOC's and Small Business Loans Rise and Fall Together

One of our readers sent this in:

Here is an article from the Business Section of Sunday's Oregonian. It's about small businesses having trouble getting loans. HOWEVER, note that all the personal stories in them have one thing in common: the businesses were started with sizeable HELOCs as a source of funding.

I think you've mentioned this on your blog before - there are a lot of small businesses that have been funded by home equity. The banks are realizing that all of this lending was inter-related and as a result, the credit risks that were often viewed in a vacuum are now being exposed as inter-related and deeply troubled by the downturn in housing.
Reggie brings up a great point here. If banks are holding small business loans and HELOC's that are funding those businesses, they have much higher risk than they think they do. I believe some of the recent decisions are an overreaction to realizing that risk, but that's typical. It's going to be rough for a lot of small businesses as the economy tightens and they can't support themselves.

Clint beat me to this post, and has lots of great comments already on his blog, but I still wanted to bring this point out. Thanks for the tip Reggie!

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Tuesday, September 9, 2008

Price Reductions and Equity Dipping - 5789 SW Salmon St.

Bearlee sent this in:

How's this for price reductions and equity dipping: MLS#8009198


I drive by this one on my way to work each day. Initial listing price $450K, reduced to $399K, and now listed at $300K.

Purchased 08-01-1989 for $35,950.

And now it's a short sale.
The property is located at 5789 SW Salmon St. It's listed at 1476 sq ft, but PortlandMaps only shows 720, so I can assume the basement was finished without a permit. No photos of it either.

I wonder where all the money went?

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Incompetence Pays

The NY Times recently reported that the heads of Fannie Mae and Freddie Mac stand to take home up to $14M in severence pay after running both companies into the ground.

I certainly hope the guvmint doesn't allow these payments, it's about time to stop the policy of rewarding CEO's for performance, and even more for poor performance.

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Thursday, September 4, 2008

Hokoya Lofts - N William St. Corridor

I've driven past this building, (the Hakoya or Hokoya lofts, even the builders don't seem to know. Marketing 101 people, spell the name right! You say tomato, I say tomoto, I say you're wrong, etc. etc...) a few times, and just saw it pop up on the RMLS. There appear to be 6 2-3 bedroom units in the building, but don't know how many have sold yet, and it appears that all six are still available, albeit poorly marketed. (see RMLS #8082053)

I was a little shocked to see the prices, starting at $300k and going up from there (that's $290 / square foot for this 1034 sq. ft. loft). $300k will buy almost any house in the immediate neighborhood, and I'm pretty sure I'd rather have a yard and basement for my $300k. I'm not sure that this is the greatest location for lofts, but then again there must be a market for new construction/condos/lofts in a more residential neighborhood. I'm not sure why people don't love old houses as much as me, but I guess it's theoretically possible.

Anybody seen the inside or braved the "hardhat tours"? Anybody out there considering one? This stretch of Williams looks kind of funky/hip (and scary in places) but we haven't really explored it yet.

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