Tuesday, February 24, 2009

Portland Existing Home Prices Drop 13.1% in December - Case Shiller

The December Case Shiller data was released this morning and November's median price for an existing home in Portland was down 13.1% year over year. (click on any chart to expand it to readable size)

The monthly change was even worse, down 2.5% from November, the largest drop we've seen to date. Or ever.

Portland is now down 15% from the peak in July 2007.

The chart above shows the price index for the past three years. You can clearly see that prices have now dropped beyond 2005 levels and continue to fall. Pop.

The above chart shows Portland, Seattle, the San Francisco bay area (the other areas I consider as closest to Portland) as well as the 20-city composite index. Portland and Seattle are tracking each other very closely, still about a year behind the rest of the market. The 20 city index started to flatten out a few months ago and it looks like the San Francisco Bay area has also started to slow down. We'll need a few more months of data before calling it a trend, but maybe prices have dropped enough for the scavengers to snap up foreclosures and prop up prices.

For comparison, the San Francisco market is down 30.8% in November, but was down 31.1.% in October. It looks like things might be stabilizing a bit down there.

Seattle also saw a massive drop in November, dropping 2.5% from October, and down 11.2% from last year.

This chart shows the price index for the past 8 years. I also added a line inpink this month that represents Portland's average 6.6% growth starting in September 2000. You can see that the current price index is now well below the historic growth line which tells me that our historic growth rate is not sustainable, given that it's nearly double the rate of inflation. Others will try to use this data to show we've reached the bottom (or passed it) I'm sure.

This chart is more for historical curiosity than anything. It shows the previous bubble in the early 90's, and also shows that Portland prices had never dropped over the past 20 years, until 2008. But as they say, past performance is no guarantee of future performance!

The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States. These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family home re-sales, capturing re-sold sale prices to form sale pairs. This index family consists of 20 regional indices and two composite indices as aggregates of the regions.

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Anonymous said...

Thanks for the charts! Is the "median prices existing homes" straight line 6%? If so, can you go back another 10 years and see if 6% is still a good assumption?

I was under the impression 4% was a better number...

But maybe I'm misunderstanding the terms -- the "20 year median appreciation rate" -- is that the first derivative? Otherwise was 1990 a REALLY good year???

PDX Outsider said...

Yes, that straight line starts in Dec 2000 at the same point as the actual data, and just shows 6% annual growth.

Over the past 20 years Portland has averaged 6.6% annual growth by my calculations, even if you stop in 2004 before the recent bubble.

I will run a few other scenarios and post them later today. I will pick a few starting points and a few different growth rates and post those up. What would you like to see?

Anonymous said...

It would be interesting to see the same span as the other graphs (20 years?), but would love the see data since the 80's.

I'm new to the area, and heard some horror stories about how bad the 82 (83?) recession was for Oregon.

Anonymous said...

Yes re: the 1980's recession - I know long time residents who love to tell stories about how houses were cheaper than cars....

bearlee said...

And interest rates were near 20%!

PDX Outsider said...

You can still see some of that history on Portlandmaps, especially in the northeast.

Some houses were going for $10-$20k 20 years ago.

Then again, from what I understand, the NE was a pretty tough place to live 20 years ago due to higher crime rates.

I can't say from personal experience as we've only been here for 2 years, but just 2 years ago our movers told us they were scared to come to our house (near 33th and Alberta) when we were moving in. Suburban wussies.

Anonymous said...

There were houses in "crack alley" that were selling for under $10,000 in the late 80's. Billy Reed bought a few and redeveloped a lot of that area around the Standard Dairy.

I remember a friend buying a house off of Alberta in the mid 90's for around $20K.

Lots of sellers would sell on contract. Most lenders refused to do mortgages under $50K and were accused of racism. They started making mortgages and the area boomed so much that black people could no longer afford to live there.

Look at the appreciation in just 10 years:




oort said...


since you live in concordia, do you shop at the new seasons on 33rd? i work there and appreciate your blog, so thanks for the information.

PDX Outsider said...

Hey oort, thanks for the comment. Yes I shop at New Seasons (and eat at Canon's, mmmm). Send me any interesting stories / houses / articles you find, I'm always looking for more source material as I don't have as much time to surf these days now that I'm a dad.


eln said...

Outsider- like the turn your blog has taken- looking at the micro side of things, house by house while staying on top of the charts and graphs. Thanks for the blog.
The close-in neighborhoods seem to be stubbornly holding on posting much smaller downturns than the outlying areas. One can't help but wonder what the close-in houses will be going for in 12-18 months. Still on that fence!

PDX Outsider said...

Thanks eln. I like the micro side of it, it's harder to find the data, but more interesting and hits closer to home. LIterally. I could use help from the readership on areas outside the NE where I live and know well.

I will be posting Year over Year median prices by neighborhood shortly, once my sister and family leave and I have more time. Stay tuned, it will be interesting!

basil said...

Nice post, but but dose your price index take inflation out? this should be done because that is becoming quite erratic lately-See Shiller's www.irrationalexuberance.com for tricks in the ie_data.xls

When i do this i get an avg real change of 3.89% y/y from 1987