Helping Families One Home at a Time

Portland Metro Area Home Prices

Home Prices - February 2008

Activity in the Portland metro area picked up over the last month, but remained slow when compared to February of 2007.  The level of inventory also fell 2.4 months from its record high in January (12.8 months) despite an increase in the number of active listings. The decrease can be attributed to increased sales volume in February compared to January.

The 14,407 active residential listings at the end of February would last approximately 10.4 months at February’s rate of sales.

Compared with January 2008, closed sales were up 27.6% (1,384 v. 1,085) and pending sales rose 9.9% (1,837 v. 1,671).  On the other hand, compared with February 2007, the number of new listings grew 4%, while closed sales declined 27.1% and pending sales fell 35.2%.

Home Prices and Appreciation  When comparing prices for the 12 months ending with February 2008 with the prices for the 12 months ending in February 2007, the average sale price appreciated 5.8% ($344,700 v. $325,800). Using the same formula, the median sale price in the Portland metro area has appreciated 5.5% ($290,000 v. $275,000).

Year-to-Date Average and Median Home Prices for 2006, 2007, and 2008   Below is a graph showing the year-to-date average and median homes prices for the last three years.  Note how the curve slowly ascends until August of 2007 and then begins to level off.  The median price took a sharp dive down in January of 2008 (a $10,000 decrease in price over December of 2007).

Subscribe to the Moving to Portland Month Newsletter  Should you desire more information about home prices for different Portland neighborhoods and suburban communities, you can read the current as well as past issues of my monthly newsletter.  View the newsletters at Susan's Newsletters.  You can subscribe to my monthly newsletter at Moving to Portland Newsletter - just give your name and e-mail address.

Standard & Poor Case-Schiller January 2008 Report

Standard & Poor's Case-Shiller, a highly respected economic consulting firm, released their monthly report in late March (2008).  They reported that home values in the Portland metro area dropped in January, 2008 for the first time since record keeping began in 1987.

They issued a warning that home values could fall as much as 15 percent in Portland, Salem and Eugene and up to 25 percent in resort or retirement communities on the coast and in Bend, Hood River and southern Oregon.

In the Portland region, home values grew by double-digit percentages for 28 straight months. During that time, the home values grew 36 percent, according to the Case-Shiller index. Nationwide, the housing run-up ran earlier, longer and higher. 

So far, the Portland region's home values have fallen four percent from their July 2007 peak, according to the Standard & Poor's report.  Our data shows that the average home price in the Portland metro area has fallen 2.8 percent in the same period.  The July, 2007 average price was $352,900 and the January, 2008 average price was $342,900.  The July, 2007 median price was $300,000 and the January, 2008 median price was $280,000 – a drop of $20,000.  This is a decrease of 6.7 percent. 

Despite the troubles, Portland joined Seattle and Charlotte as the only U.S. cities still reporting annual price growth through December.  Now, Standard & Poor says, Charlotte is the only city left.

Why the Difference in Numbers?  The Standard & Poor's report comes from data gathered at county recorder offices. The home sale prices are then compared with the home's previous sale to show growth or decline in value. Standard & Poor's uses that rate to calculate the monthly and yearly change in values. The firm provides the data for the 20 largest U.S. markets monthly. 

The Regional Market Listing Service (RMLS) is an organization governed by local real estate brokers in the Portland metro area, and it provides sale data on the price for home sales closed in a given month.  To calculate the median price, the average price, as well as appreciation, the Regional Multiple Listing Service includes home sales from the five metro area Oregon counties (Clackamas, Columbia, Multnomah, Washington, and Yamhill).   RMLS does not include Clark County or Skamania County in Southwest Washington state to arrive at their numbers. The Case-Schiller index includes Clark and Skamania counties because they used the U. S. Census Bureau metropolitan statistical areas (MSA).

2007 Prices

Comparing market activity in 2007 with that of 2006, the Portland metro area saw an 8.1% increase in new listings.  However, pending sales decreased 15.7%, and closed sales dropped 13.1%. Portland had its third highest total sales volume in residential real estate, at $9.7 billion, a 6.7% decrease from the $10.4 billion in 2006.

The average sale price increased 6.3% ($342,900 v. $322,600), and the median sale price appreciated 7.2% ($290,000 v. $270,500).

The Portland metro area figures above encompasses these five counties in Oregon: Clackamas, Columbia, Multnomah, Washington, and Yamhill.  The RMLS report includes separate data for Southwest Washington's Clark and Cowlitz counties.

City of Portland 2007 Prices

In West Portland (southwest and northwest), the average price was $468,100, and the average price increase was 3.6 percent.  North Portland was the leader in appreciation as the average price increased 8.4% - $266,600 in 2007 v. $245,400 in 2006.

Suburban Communities 2007 Prices

The two appreciation leaders in close-in metro areas suburban communities were Lake Oswego/West Line along with Gresham/Troutdale.  Milwaukie/Clackamas was the only communities in the 5-county area to record negative appreciation.  See the chart below for figures.

Clark County (Vancouver, Washington) 2007 Prices

The RMLS report also included separate data for Southwest Washington's Clark and Cowlitz counties. A comparison of 2007 with 2006 shows that there was a 1% decline in new listings. Closed sales fell 18.1%. While pending sales also decreased 17.7%. On the other hand, the average sale price climbed 1.7% ($305,500 v. $300,500) and the median price rose 0.9% ($262,300 v. $260,000). Total sales volume for Clark County was $1.9 billion, down from $2.3 billion in 2006..

Condo Prices in 2007

2007:  Average sales price was $272,900, and condos appreciated 13% over 2006.  2006:  Average sales price was $241,800, and condos appreciated 14% over 2005.  2005:  Average sales price was $212,000, and condos appreciated 14% over 2004.  2004:  Average sales price was $186,600, and condos appreciated 12% over 2003.

Portland Metro Area¹ Residential² Home Prices for the Last Six Years

Portland Metro Area¹ Residential² Average Home Prices and Appreciation³

Other Sources of Housing Information

Portland State University Quarterly Real Estate Report

The Portland State University (PSU) Center for Real Estate publishes the PSU Quarterly Real Estate Report each quarter. The first issue covered the last quarter of 2006. You can find copies of the report at:

• PSU Quarterly Real Estate Reports

The report is the product of a collaborative effort by the PSU Center for Real Estate and the Oregon Association of REALTORS® to provide service to the local community. The intention of the report is to provide useful information about trends in commercial and residential real estate to the real estate community in Oregon and Southwest Washington.  It is very comprehensive and covers the local economy as well as housing.

The report is made possible thanks to a donation by the Oregon Association of REALTORS® along with the participation of RMLS, Cushman & Wakefield, Norris Beggs & Simpson and Grubb & Ellis.

DataQuick

Since 1978, DataQuick has built a reputation as a provider of real estate information.  Although much of DataQuick's information is available only to its paid subscribers, some of the information at their Web site is accessible to all visitors.  The site covers the California market extensively but it also releases quarterly information on the Portland housing market.

Affordability in Portland

In March, 2008, Bizjournals compared median home payments and household income levels in the nation's 50 largest metros. The study was based on statistics from the U.S. Census Bureau's 2006 American Community Survey.  Bizjournal said this was "the most up-to-date source of federal data on housing costs."

Portland ranked as the 37th most affordable market, with median monthly household income at $4,373. The median monthly mortgage payment is $1,449.

In the Los Angeles area, the median owner-occupied home was valued at $604,500 in 2006. A 6 percent, 30-year mortgage on such a house (after a 10 percent down payment) would cost $3,262 per month. Property taxes would drive the total payment up to $3,491.

That monthly tab would consume 75.5 percent of the median household income in the Los Angeles area, $4,626 per month. (Median is a midpoint, with half of all households earning more, and half earning less.) L.A.'s rate is more than two and a half times the national average of 28.3 percent.

Most of the expensive areas are located along or near America's coastlines. Home costs in 13 U.S. markets run higher than 40 percent of the median household incomes for those areas. Twelve of the 13 -- all but Las Vegas -- are within 100 miles of the Atlantic or Pacific oceans.

Reasonably priced homes, on the other hand, are concentrated in inland regions of the South, Midwest and industrial Northeast.

If home costs exceed 30 percent of income, according to the U.S. Department of Housing and Urban Development's guidelines, a family might find it difficult to afford food, clothing, transportation and other necessities.

Portland Development Commission and Affordability House

In early 2007, the Portland Development Commission (PDC) finalized its recommendations for spending the new tax increment set-aside from urban renewal districts that the City Council earmarked for affordable housing.  The amount: $162.6 million over the next six years. PDC increased its commitment to build as many as 1,450 units specifically for people who pay no more than 30 percent of their income for rent. That means citywide and not just downtown.

A Formula for Affordable Housing

• Affordable Housing:  Rent or mortgage that consumes no more than 30 percent of income.

• Median Income:  The formula uses U. S. Department of Housing and Urban Development (HUD) median figures for cities across the country.  In 2006, the Portland median income for a single person in Portland was $46,850. A full-time minimum-wage worker earned $15,600.

• What is Affordable in Portland for a Median-wage Worker:  For a median-wage worker ($46,850) an affordable rent (30 percent of their income) would be $14,055 per year or $1,171 per month.

• What is Affordable in Portland for a Minimum-wage Worker:  For a minimum-wage worker ($15,600) an affordable rent (30 percent of their income) would be $4,680 per year or $390 per month.

Early each year, HUD release new median income figures. This usually triggers rent increases in income-restricted buildings, since landlords are allowed to raise rents whenever the medium income rises.

Northwest Pilot Project tracks the number of downtown affordable housing units and for 2007, it is about 3,400 units.

Urban Boundaries and Home Prices

The cost of housing is one of the most contentious issues related to Portland's metro planning.  With an median sales price of $237,500 in 2005, this is beyond the reach of many people.

Does the Urban Growth Boundary (UGB) cause Higher Home Prices? (see Portland Planning for a discussion of UGB).  The NAHB desire more land on which to build homes.  In their document called The Truth About Regulatory Barriers to Housing Affordability the NAHB identified 42 markets with barriers, Portland being one of these markets.  They called the UGB the "Wall of Portland" and attack it accordingly. The Home Builders Association of Metropolitan Portland, has been among those critical of Metro for being too restrictive in its UGB.

2000 Census Bureau figures indicates that the density in downtown Portland has increased by 30 percent, which is what planners had in mind.  Only a few cities in the USA have increased their core city population.

Applying Science to the Debate  Sightline Institute, an environmental organization located in Seattle, used some science to compare urban sprawl in Clark County in Washington State and Portland. Clark County is just across the Columbia River and part of the Portland metro area. Sightline used satellite imagery of open space, farmland and pavement, along with digital mapping of US Census data to track patterns of growth during the 1990s.  They found that if Portland had taken the same approach to land-use planning as Clark County in the 1990s, an additional 14 square miles would have been developed.  Click here to read the full report.

For a review of Washington State's Growth Management Act, visit the 1000 Friends of Washington Web site.

Rating Portland's Density

A study released in August 2003, called "Measuring the Health Effects of Sprawl," commissioned by Smart Growth America, a national advocacy group, and financed by the Robert Wood Johnson Foundation, a health promotion group, found that U.S. adults who live in compact cities are more likely to walk or bike to work, school, stores and other everyday destinations than they are to drive. This translates to slightly lower weights and blood pressures.

As part of the study, researchers from Rutgers and Cornell universities used six variables, including housing density and block size, to create a "sprawl index" for 448 urban counties across the United States. The index was set with 100 as the average; more sprawling counties had lower scores.

New York's boroughs had the least sprawl - especially Manhattan, with a score of 352. The most sprawling place was Geauga County, Ohio, near Cleveland, which scored 63.

Multnomah County (where the city of Portland is located), the Northwest's most compact county, ranked 24th densest among the 448 urban counties, just missing the top 5 percent.

Groups with Different Positions on Housing Costs

Read the opinions of the Cascade Policy Institute, a Portland group that advocates a free-market approach. 

1,000 Friends of Oregon feels that the Oregon regulations work well.  1000 Friends of Oregon is a nonprofit charitable organization, founded in 1975 by Governor Tom McCall and Henry Richmond as the citizens' voice for land use planning that protects Oregon's quality of life from the effects of growth.

Oregonians in Action (OIA) is a non-profit lobbying organization that leads the fight for land-use regulatory reform and protection for private property rights. OIA authored two ballot measures in 1998: one to require landowner notification and another to give citizens the right to petition for legislative review of "bad state regulations."  In 2004, OIA passed Measure 37, a constitutional amendment that requires compensation to landowners.

Resources

• The Community Development Network CDN is an association of nonprofit community development organizations in Multnomah County located in Portland, Oregon. Their Web site states that "CDN strives to strengthen nonprofit community development organizations and to provide a collective voice for healthy, diverse communities."

• Home Ownership a Street at a Time (HOST) 3835 NE Hancock, Suite 101, Portland OR 97212. Phone 503-331-1752.  Fax 503-961-9924.  HOST is dedicated to providing affordable homeownership opportunities for low- to moderate-income families. HOST believes strong, healthy communities are created and sustained when homeowners have a stake in their neighborhoods.

• Housing Authority of Portland  HAP is committed to providing safe, decent and affordable housing to individuals and families in Multnomah County, Oregon, who face income or other life challenges. HAP offers support through a wide variety of programs and services. HAP's Web site is designed to educate citizens about these programs and services, and to share how HAP is working to build a stronger community.

• Portland Bureau of Housing & Community Development  Their goal is "To make Portland a more livable city for all by bringing low-income people and community resources together."

• Portland Housing Center  The Portland Housing Center is certified by the U.S. Department of Housing and Urban Development as both a HUD Certified Counseling Agency and a HUD Certified Non-Profit Provider of Secondary Financing.  It offers resources on how to buy a home.

• Oregon Housing and Community Services Home buying information to include first-time home buyers, low-interest programs, and grants/tax credit programs.  Phone 503-275-3660.

• U.S. House and Urban Development - Oregon  HUD's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination.

• Washington County Department of Housing Services  Extensive information for finding affordable homes in Washington County (west side of Portland).

Compare Cost of Living Between Metro Areas

There are a number of free sites that allow you to compare living costs between metro areas but the numbers don't always make sense.  We recommend using the ACCRA Web site (the acronym means nothing it was created by a group of US Chamber of Commerce researchers years ago).  Its a member organization whose mission is strictly research.  For under $20 you can compare the cost of living with where you're living to five other USA/Canadian metro areas.

Office of Federal Housing Enterprise Oversight (OFHEO)

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 mandates that OFHEO publish a House Price Index (HPI), a measure designed to capture changes in the value of single-family homes in the USA.  It also includes a HPI in various regions of the country, individual states, and the District of Columbia.  You can view the HPI by the state of Oregon and by the MSA (Metropolitan Statistical Area).

National Association of Realtors (NAR)

NAR is the "Voice for Real Estate." It is America's largest trade association, representing one million members, including NAR's institutes, societies and councils, involved in all aspects of the residential and commercial real estate industries.  Their "Existing Home Sales Data" measures the health of the residential real estate industry. Each month, statistics on sales of existing single family homes are reported for the national and four regional levels. Statistics on existing condo/co-ops are released quarterly, and figures on existing single-family home sales (detached and condo/co-ops) by state are released quarterly.

Case Shiller Weiss

To learn more about housing cost, visit the Web site of Case Shiller Weiss, Inc.   CSW is a home price research company, founded in 1991, that serves a client base principally comprised of leading mortgage lenders, insurers, and Wall Street firms.  The New York Times called CSW ". . . The country's leading residential real estate analysts."