Portland Existing Home Prices Drop 14.4% in February - Case Shiller

The Case Shiller data was released this morning, and Portland prices fell 14.4% in February, down 1.9% from January.

Full details and charts will be released later today Wednesday (work has been busy) when I get a break.

Median Home Price Drop 14% in March - RMLS

The March RMLS data was released this week, and there doesn't seem to be much sign of a recovery just yet.

Ignore the mainstream media comments about sales being up. They always rise in the spring, the real measure is of course how they compare to last year. And in that comparison things are bad. Even the RMLS was unusually stoic stating:

"Portland metro area market activity continued to grow over last month, but fell short of reaching March 2008 levels."

There were 1184 closed sales in March 2009, down 30% from March 2008.

Sales were up 28% from February 2009, but they were up 22% from Feb to March 2008, and I'm sure they were up a similar amount in 2007.

A couple other highlights:

The March 2009 median price was $246,400, down 14% from $286,500 in March 2008.

3685 new properties were listed in March 2009, down 28.5% from March 2008. This is the one bright spot, as new listings fell to their lowest level in 10 years, signaling that the glut of inventory might eventually start clearing up.

Total inventory dropped 8%, from 15,388 to 14,208 in March 2009. This also signals that the bottom might be coming, as inventories shrink prices will eventually stabilize.

Unfortunately prices are still dropping like a rock with no sign of letting up, which is all most folks really care about. And given our 12%+ unemployment rate I don't see things getting better anytime soon.

Portland Existing Home Prices Drop 8.6% in September - Case Shiller

The median price of existing homes in the metro Portland area fell 8.6 % year over year in September 2008 according to Case Shiller, continuing the trend that began in July 2007. This is now down 9.0% from the peak in July 2007, wiping out any gains made since March 2006.

The index also fell 1.3% from August to September. The slight month over month gains we saw over the summer have now reversed and the monthly 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.

Last month I predicted 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 shows the price index for the past 8 years. I also added a line (the light grey line) that represents 5% growth starting in September 2000. You can see that the current price index is still well above the 5% growth line, indicating that we still have a ways to go before prices fall back in line with historic averages. I'm predicting prices won't be back to historic norms until late 2009, but even then if the economy is still in the toilet I wouldn't expect growth to suddenly accelerate.

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!

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.

Portland Existing Home Prices Drop 8.6% in September - Case Shiller

The median price of existing homes in the metro Portland area fell 8.6 % year over year in September 2008 according to Case Shiller, continuing the trend that began in July 2007. This is now down 9.0% from the peak in July 2007, wiping out any gains made since March 2006.

The index also fell 1.3% from August to September. The slight month over month gains we saw over the summer have now reversed and the monthly decline is accelerating.

I will post the charts later today. Stay tuned!

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.

Portland Existing Home Prices Drop 4% in March

The median price of existing homes in the metro Portland area fell 4% year over year in March 2008 according to Case Shiller, continuing the trend that began in July 2007. This is down 6.5% from the peak in July 2007.

The chart above clearly shows the bubble deflating, and also shows a bit of a plateau over the winter as sales slowed and seller's held out that prices would rebound in the spring. Prices have clearly started accelerating downwards as the fundamental issues driving the price declines (lack of financing for buyer's with poor credit or low down-payments, prices vs. income ratios out of whack, too much inventory, etc) have not changed.

The price index has fallen to 174.39, less than the point in May 2006 (175.20).

Prices in Seattle and Portland are still following the national trend with a one year delay, as the previous chart above shows. National price declines show no signs of slowing, which indicates that Portland is likely in for the same ride.

ABOUT CASE SHILLER:
The Case Shiller data focuses on the change in price of existing homes, and tries to exclude the effects of remodeling, or major damage. It tries to exclude investment properties and foreclosures (which would make the data look worse) as well as transfers between family members. It's a much better indicator of how the price of the average or typical house has changed from year to year. For full details on their methodology see their factsheet.

Free Fall Friday - All of Portland?

At least one Realtor blog is now predicting a decline in prices for the Portland metro area in March. "Portland Home Prices Finally Fall in March"

I have some doubts about his methodology, but I give them props for going on record as predicting a decline, and I imagine they will soon be run out of town by the Portland NAR.

Reader sightings - 2241 SE 26th

A reader spotted this house for sale at 2241 SE 26th and wrote in:

"I was driving through SE the other day and passed this house by. It looked very nice from the outside and the area was great. I thought to myself, "That's likely to be a bit out of your price range but it doesn't hurt to take a look..." MLS # 8021444

When I saw the price I couldn't believe my eyes - $625k?! When I got home I looked up the MLS number and checked portlandmaps. They purchased it last year for 340k."

According to PortlandMaps it's had a new garage added (but no pics, shame, I'm a big fan of garages), and had the basement finished. Other than that it looks to have had a full paint job and kitchen redo. If they get their asking price they'll make a pretty penny. My first impression was that it was overpriced, but according to Trulia it's in the ballpark on a price/ sq ft basis ($235, right at median price according to Trulia ) for the Hosford Abernethy area, but it is on a small lot (3750 sq ft).

Am I the only person who's tired of granite counter tops? I'm starting to miss Formica! I'm also not a big fan of the tile around the fireplaces, but that's just me.

It's Not an Inventory Problem, It's a Price Problem

I caught this article in the Washington Post today "The Housing Fix"

"Gloom. Doom. Calamity. Home prices are tumbling. We're bombarded by somber reports. But wait. This is actually good news, because lower home prices are the only real solution to the housing collapse. The sooner prices fall, the better. The longer the adjustment takes, the longer the housing slump (weak sales, low construction, high numbers of unsold homes) will last.

It's elementary economics. Pretend that houses are apples. We have 1,000 apples, priced at $1 each. They don't sell. We can either keep the price at $1 and watch the apples rot or cut the price until people buy. Housing is no different.

Even many economists -- who should know better -- describe the present situation as an oversupply of unsold homes. True, there is about 10 months' supply of existing homes as opposed to four months' a few years ago. But the real problem is insufficient demand. There aren't more homes than there are Americans who want homes; that would be a true surplus. There's so much supply because many prospective customers can't buy at today's prices."

Robert hits the nail on the head. House prices are elastic, i.e. when prices drop, demand increases. Portland's 12 months of supply will only drop when prices come back in line with demand, and now that cheap and cheerful credit is gone, so are lots of low end buyers. They will either need to save more for a down payment (not likely given our credit card society) or house prices will have to drop to affordable levels. Preventing foreclosures, renegotiating loans that people never could afford in the first place only prolongs the issue.

House Flipping Didn't Work, Let's Try Comedy!

It seems like you can't swing a dead rat without reading about the real estate market these days.

This morning I was flipping through this weeks Willamette Week, and without even trying came across three real estate references.

In the editorials on page 4 there is a funny piece about building a wall between us and California to keep out the "professionals, engineers, teachers, techies, etc" with a reference to the misconception that Portland home prices are continuing to rise: "Why should the rest of the nation's home values continue to plummet when Portland's stay steady, and even increase?" The piece is pretty funny, the misconception is not.

On page 15 there is a half page ad for Harrison High Condos, touting "Your home, your price". Come in and name your price. We can't sell these things, so please make an offer so we can pay back our construction loans.

Um, how about you pay me to live there, so the building doesn't look deserted. No?

Finally, on page 31, there is an article about local comics. Under things you should know about Andy Wood is the quote "Turned to comedy when house-flipping failed."

How bad is the housing market when stand up comedy is a better job than restoring (flipping) houses!?! Bad.

Free Fall Friday - 4401 NE Grand, 12.5% off!

Here's a duplex that's just been on the market a while, and now has been reduced $50k, down from $399k $349k, a 12.5% reduction.

http://www.wellcomemat.com/home/channels/kurtzteam/9ABC91FEA1#wrapper

According to my calculations, even at this "new, reduced" price you would still pay over $1000 a year to have the pleasure of saying you own this architectural gem. The price would still have to drop another $30k before it breaks even given current rent levels, let alone turns a profit.

Great chart on homes prices across the nation

The NY times has a great interactive chart that shows the %change in house prices over the past 20 years: "Home Prices Across the Nation".

I've clipped the chart for Portland, but I encourage you to go play with the chart on their site.