The median price of existing homes in the metro Portland area fell 7.6 % year over year in August 2008 according to Case Shiller, continuing the trend that began in July 2007. This is down 7.8% from the peak in July 2007, wiping out any gains made since April 2006.The index fell 1.3% from July to August. The slight month over month gains we saw over the summer have now reversed and the decline is accelerating.
The chart above clearly shows that there was definitely a bubble in Portland, and it is now deflating.
Last year in one of my first posts I predicted that price appreciation would go negative before March 2008, and looking back it looks like I was right.
The chart above shows the price index, and you can clearly see the bubble forming in 2004, accelerate in 2005 and then start to slow in 2006.I am now predicting that prices will be down 9% by the end of the year (down from my 10% estimate a few months back).
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 nicely, still about a year behind the rest of the market. While the 20 city index has started to flatten out the San Francisco Bay area has really fallen off the cliff and continues to plummet.
This chart above shows the price index for the past three years. You can more clearly see the seaonality, as well as the fact that prices are back to April 2006 levels and dropping.
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. But as they say, past performance is no guarantee of future performance!
(EDIT) - I have added the charts and more analysis. Sorry for the delay, I lost the post a few times and had to find the time to recreate it.
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.
