Tuesday, November 24, 2009

Portland existing home prices fall again in Septermber - Case Shiller




Wow, I miss one month and everything goes crazy. Back in July we were looking at 3 months of price increases. Prices peaked in August, but fell a bit again in September. I would expect prices to continue to increase through the end of the year, so we'll see where they go in October.

September's median price for an existing home in Portland was down 11.8% from September 2008 at 149.72. (click on any chart to expand it to readable size) This is a significant improvement from the 16.3% decline in May.

The monthly change was down 0.5% from August, reversing the increases we saw through the summer.

The median Portland home price is now down 19.7% from the peak in July 2007.

HOW PORTLAND PRICES COMPARE TO OTHER MARKETS


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 is now doing a little better better than Seattle, but note how the price declines in the Bay Area are really starting to slow. The negative price growth appears to have bottomed out in the Bay Area, but it's too early to tell if prices won't slide again once the tax credit expires and the next wave of foreclosures hit.

The above chart shows how Portland is faring compared to other cities. Our maximum price decline is still below average, and I'm starting to think we'll remain below average.

CURRENT PRICES VS HISTORIC AVERAGE
This chart shows the price index for the past 8 years. This month the pink line represents an average of 4% growth starting in January 2001. That puts us right about where we are today. A year ago we were well above 5% for the past 8 years. Why 4%? Why not.

FULL PORTLAND PRICE HISTORY

This chart 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.

Any thoughts on the latest stats? I'm thinking that most first time buyers have taken the plunge, and that prices will hover or drop another 5% over the winter, even with the extended tax credit.

ABOUT CASE SHILLER:

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.

Data presented in the Case Shiller spreadsheets are calculated monthly using a three-month moving average and published with a two month lag.

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16 comments:

Anonymous said...

Regarding the use of 4%/year growth....

A chart of 100yrs of Shiller data below. It looks like using a starting point 8yrs ago would be starting from an inflation adjusted all-time-high in 2001 when the remainder of the 100 years is relatively flat. Shouldn't we see 0% growth after inflation long term (but only after the crash is completely over)?

http://www.ritholtz.com/blog/2009/07/update-case-shiller-100-year-chart/

Yalova Emlak├ži said...

Shouldn't we see 0% growth after inflation long term. Yalova Emlak

Anonymous said...

I don't understand the PDX market. Higher unemployment, lower wages relative to cost of living, and yet house prices remain well above the nationwide average and semi-resist the drops.

How does that pencil out? Especially considering that "people want to live here" and "hip" don't pay the mortgage bill.

PDX Outsider said...

Yalova, if all else was equal 0% growth is probably right. But we do plenty to distort the market. Things like 30, 40 year mortages, low interest rates, etc. allow more customers to buy houses. More demand = higher prices.

Prices are also affected by demand from a growing population. So while Portland might be more expensive now, Detroit is less expensive as people leave Michigan to move to Oregon.

So the simple answer is no, we shouldn't revert to 0% growth.

PDX Outsider said...

"I don't understand the PDX market. Higher unemployment, lower wages relative to cost of living, and yet house prices remain well above the nationwide average and semi-resist the drops."

A couple thoughts. Part of our higher unemployment is due to people reentering the market, not losing jobs.

Also, if you bought well before the runup your costs are lower and you don't necessarily need to move if you lose a job, or are making less.

People will rent out rooms to get by, and lots of other tricks.

I believe much of the growth in prices in Portland are due to factors like the development of the Pearl, NE PDX gentrification, and continued immigration to the PNW.

While we did have a bubble, it was nothing like the speculation seen in Phoenix and Detroit. We've seen significant price drops and seen lots of speculators get burned. And while prices might not drop much further, I also don't see them taking off again anytime soon.

I'm also seeing a bigger trend to working remotely. I know a few people that "want to live here" but work for companies based elsewhere. So they aren't necessarily tied to the local economy as much as say a logger. I expect we have more virtual knowledge workers than say, Detroit, which will help PDX avoid 50% price declines.

Your thoughts?

Anonymous said...

NY Times article (January 5, 2010) has a last sentance that says "northwest and midwest" are the weakest markets in the country (based on -26% November 2009 numbers)...

http://www.nytimes.com/2010/01/06/business/economy/06econ.html

Anonymous said...

Any plans to revive this blog?

Anonymous said...

or the "PortlandHousing" blog?

Both seem to have died while "Seattle Bubble" is thriving.

I have bookmarked a Craig's List search for rentals in the core area. It seems to me that rates are dropping. No analysis, just a gut feeling.

Letting Agents Eastbourne said...

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Glen Allen Va foreclosures said...

Despite a significant housing shortage exists, an oversupply in some cities prevails due to a mismatch between the type of units available, and the preference of the population. In addition, developers do not seem willing to reduce prices to affordable levels. Other banks have reduced their maximum loan to value, warranty conditions tightened, increasing the cost of interest-free loans and the reduction of the maximum terms.

Philippine Real Estate said...

Based on the graphical representation, there is a sudden change on home prices. What could be the possible reason?

invest in real estate Baltimore MD said...

This kind of scenario happens all over the world. That is why reading news and information about real estate will help so that you will be updated.

realestate properties said...

Now the cost of staging is so high. People selling their house are facing many problems to make their property look good to the buyers. I guess that's the only way to deal with the realestate holders.

Doral real estate said...

I don't understand the PDX market. Higher unemployment, lower wages relative to cost of living, and yet house prices remain well above the nationwide average and semi-resist the drops.

Costa Rica Real Estate said...

The graph stats show the variation in the prices,The prices variate as time pass.

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