Tuesday, March 31, 2009

Portland Existing Home Prices Fall 14% in January - Case Shiller

The January Case Shiller data was released this morning and January's median price for an existing home in Portland was down 14% from January 2008. (click on any chart to expand it to readable size)

The monthly change was even worse, down 3% from December, beating December's month over month 2.5% decline.

The median Portland home price is now down 17.5% 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 to levels not seen since July 2005 and they continue to fall.

The above chart shows growth rates for 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.

While the price index continues to fall everywhere, the growth rate (or decline rate) for the 20-City index as well as for the San Francisco Bay Area markets appears to have reached an inflection point. We need a few more months of data before calling it a trend, but it looks like there are signs of a bottom approaching for the Bay Area as well as the entire country.

This chart shows the price index for the past 8 years. I also added a line in pink 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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Thursday, March 26, 2009

Investors are Idiots - Monday's Stock Market Gains

Did anybody else feel that something was fishy about Monday's stock market bounce?

Headlines like this - "Stocks surge on bank plan, rise in home sales" made me a little curious about what they were using as a sign of a rise in home sales.

As usual, the media is making a hash of the statistics.

Yes sales rose in February over January, they almost always do as housing sales are seasonal.

In reality, according to the NAR housing sales were DOWN 4.6% from February 2008. That's the important statistic, not that they were up 5% from January.

How is Portland doing? While the number of closed sales were up 17% from January they were DOWN 38.1% from February 2008. (Clint's charts show this well here.)

So while the overall US market is showing signs of nearing a bottom, Portland is still showing signs of being in the throes of a major decline.

And once again I'm left shaking my head at the quality of the journalism in the US.

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Monday, March 16, 2009

Lying with Statistics - Why All Newspapers Will Be Bankrupt Soon

The February RMLS report was released a few days ago, and this is how the Oregonian reported it:
"The good news: Home sales up in metro area"
Jeff Manning starts the article with "Closings jump 17.1% in a month" and of course the headline is skewed to be positive. To be fair he does talk about the fact that closed sales are DOWN 38.1% from Feb. 08.

That's the real news. Closed sales are way down, and don't show any sign of increasing. The increase from January is meaningless, and Jeff should know this.

Real estate sales are seasonal, so comparing month to month variations are meaningless. Of course sales were up in February, they always are. That's not news.

So then why report it? Is it because the Oregonian is heavily reliant on ad revenue from the Real Estate industry, and is afraid of offending them?

I can only assume so.

Frankly, the need to pander to advertisers is why I have lost all respect for serious newspapers. Bloggers might not always get it right, but you can be sure that I don't have any hidden agendas or advertisers that I need to protect.

I honestly believe that most newspapers will be gone soon (as do others) and I can't say I'll miss them. I don't trust much of what I read these days (certainly not on Fox, but also on the mainstream outlets) as most papers are too tied to their advertisers to be neutral.

The Oregonian's web site is also a joke. I can rarely find articles that are in the print section, the front page is a mess, there is no structure, content is hard to find, it's just sad and pathetic all around.

I'll post more about the results later.

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Tuesday, March 3, 2009

How Well is Your Neighborhood Holding Up?

While most people here are interested in the monthly RMLS reports and Case Shiller data, what they really want to know is "how is my neighborhood holding up?"

To answer this question I was able to get a year over year view of median prices for the Portland market by RMLS neighborhood for January 2009, and the results are interesting. (click on the chart for a larger view)

[edit] Tom at Agent503 has year over year data for a few zip codes here.

A few highlights:

For the 4 inner Portland neighborhoods, NE Portland is holding up the best with median prices down 1.8% from Jan 09 vs Jan 08.

Columbia County is faring the worst, with median prices falling 26% in Jan 09.

If you're interested in a beach house, coastal prices are down 17.4%.

The overall Portland market is down 10.7% year over year.

I'd love to hear your thoughts on the 'why's behind the differences.

Next up I'm going to look at why I belive the RMLS methodology for calculating growth rates is seriously flawed, and why you should ignore them - something I have mentioned repeatedly. I will also look at sales rates by neighborhood. Stay tuned!

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