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!

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.

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.

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.

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!

Contests Come to Oregon - Dallas Oregon

This poor homeowner has taken to an essay contest to sell their house:

Win the right to buy this Oregon property in the heart of wine country. 1 hour to the beautiful Oregon beaches, and 3 hours to either the Desert or the Mountains. The 1900 sq ft house has 3 bedrooms and 2 baths. It is a 1995 triple wide mfr home. All vinyl flooring. It needs some projects finished, but it does have a new roof with new skylights and fresh paint. The Commercial building in front was stick built in 2007. 1550 sq ft with a single car garage. Skylights and a concrete floor. It is unfinished, ready for your creativeness. This all sits on 1 acre of land that is fenced on 3 sides. It does have a 14gpm well with a 2000 gallon holding tank. If you want city water, then you have to apply to be annexed into the city. The property is the first property outside the city limits, so you have more freedom with this commercial property than you would have if you where in the city. The school district is a really great one, that doesn't seem to be hurting like other districts are because of the economy.

The essay needs to be 25 to 50 words, to make it simple, as to why you would like to own this property. There is a $25.00 nonrefundable processing fee. If your essay is chosen as the winner, then you will be given the opportunity to purchase our property for $1.00. We must receive all essays by March 15, 2009.Look at the photos on f l i c k r, watch the videos on you tube, guess what KEY WORDS we will be looking for in the ESSAY.http://youtube.com/k9sleepy1 http://flickr.com/photos/25-25essay http://www.facebook.com/album.php?aid=2004221&id=1417668550&l=052b8

Any legal experts out there want to comment on the legality of a $1 entry fee but a $25 processing fee? Let me guess, the $25 fee is non-refundable. So even if the house doesn't sell, they keep the fees.

Some more gems:

"Our Timing goal is 45 DAYS, SO DON'T DELAY"

Ah yes, the calling card of every deseperate seller and/or scammer, ALL CAPS! HURRY! HURRY! HURRY! SEND IN YOUR CHECK BEFORE YOU REALIZE THAT YOU'RE BEING SCAMMED!!!!

"We reserve the right to extend the Contest in order to reach the desired number of entries"

Of course you do. It's no fun to sell your house for $50 is it?

I'll be checking back on March 15 to see if it sold. Given the timing I can't wonder if they need money for taxes.

Thanks Mark for the link!

-Edit, here is a comment from a local Realtor:

"As far as that "auction" is concerned...it is probably legal - at least it can be. Typically they are either set up as a game of chance or a game of skill and require the seller to team up with a non-profit. In most cases the seller cannot make more than the appraised value of the house. Anything above that goes to the non-profit. If the minimum number of tickets doesn't sell by the final drawing date, the organization is obligated to refund everyone’s money - which is what happens in most cases. There was one not too long ago at the coast that ended up shutting down: http://www.win-this-home.com/

More info on this subject at:
http://www.nytimes.com/2008/09/25/garden/25raffle.html?_r=1&ei=5070&emc=eta1
"

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!

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.

$61 per sq ft near Alberta? - 5137 NE 14th Pl.

According to Trulia, this little gem (RMLS # 9014589) is selling for $61 per sq ft in a zip code that averages $215 per sq ft.

Of course that's misleading, because if you calculate the price / sq ft for the finished space (1500 sq ft) you get $98 per sq ft.

Still, it's 50% below recent market activity. There are no photos to judge the condition, which is never a good sign although in the Google Map view you can see the flatbed with an old pickup on it, and even though I'm a car nut that still makes me wonder what's going on there.

The $64 question is how much will it take to bring it up to average condition, and what will it be worth when it's done?

Anybody seen the inside?