Also known as the Sunnyside District with an easy-going and hip culture, Hawthorne is frequently 
compared with San Francisco’s Haight Street. Located in the southeastern section of the city, this neighborhood is filled with funk, from the locally-owned coffee shops and restaurants to the boutiques and used clothing stores that give a whole new meaning to fashion. It’s also a favorite on the nightlife scene, but that’s not all. With home styles that include bungalows, four-squares, and uniquely vintage Portland architecture, it’s clear that first and foremost, this place is a neighborhood. Read the rest of this entry »
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While there are some people out there who may never leave the hustle and flow of the city, and still others 
whose lives are bound to farm lands and gravel roads, most of us are after the middle way. Sure, we want the diversity of the city life: the art galleries and dance shows, the music, the nightlife, all that delicious food. But we’re also after some amount of green in our lives. Some fresh air. A hike up the mountain, a float on the river, a ski or even just a breathtaking view. And rather than craving the anonymity of the city life, many of us want to know the person who delivers our mail, who sells us our milk. And we want to be known by our community, too. Basically, we’re after big city life with small town charm. In other words, we’re after a place like Portland, Oregon.
One of the country’s leading Real Estate Trends experts gives his assessment on the Portland Real Estate Market. He says the market has remained stable. Dr. Lawrence Yuni was also interviewed for this story, which we thought was very positive.
If you’re unfamiliar with Portland and don’t know where to start your home search, here are a few tips to get you started.
Consider Your Commute To Work
There are several main freeway arteries in Portland but some are more congested than others, although Portland traffic is nothing like California there are some areas you want to avoid depending on where you live vs. where you work and play. Here are some notes:
Highway 26 West: (AKA “The Sunset Hwy”) is heavily congested, even on the weekends there is an abundance of traffic flow. This Hwy connects the far West side of Portland (areas such as Beaverton, Hillsboro, Tanasbourne) to other arteries that connect near the center of Portland. I don’t recommend living on the East side of the River and then commuting to the far west side unless you work off hours and enjoy listening to a lot of radio in the car.
Do I need a car?
Many people are moving to Portland with the intention of beginning a carless lifestyle. Portland invites many lifestyles but our growing theme, especially in areas of inner SE Portland is “go green”. Because there are so many areas within Portland that you can work, live and play all within a single community it is easy to adapt. Segways, scooters, and “smart cars” are commonly seen around Portland and we have an enormous number of bike paths. Many of our main roadways (including the freeways) have a paved separate path that runs parallel to the main arteries for those bikers who take their health and gasless commute more seriously.
Commuting to Vancouver: There are only two bridges that commute between the cities, unless you work off hours I highly recommend living and working in the same state until a third bridge is built. There is a lot of discussion in Portland about how to remedy the traffic flow problems but city officials can’t get beyond the argument of whether to have more lanes for cars or to limit the car lanes and run Portland’s mass transit Max Train System and bike lanes instead.
Next, I’ll write additional “Relocating to Portland Tips” on a weekly basis. But in the meantime, to receive a Portland map that has the various main arteries and areas of Portland highlighted, contact us and we’ll send you a free map.
I’m beginning to see and experience sales fail due to appraisals not meeting the sales price; I think this will become more problematic as time passes. Some homeowners are selling extremely low to get out of the game in anticipation of a worsening market, other homeowners having to sell short……. there’s the homeowner that is having to reduce his price significantly to stay competitive with the surplus of homes on the market (especially with the abundance of new construction)….. and then the paranoid home buyer fearing that he’s paying too much and should have waited. With all this, layer in the fact that not all homeowners are able to reduce their price to the buyer’s expectations without having to sell short. NOW we have appraisers getting too tight on the appraisals. The appraisals coming from the banks in particular seem to tighter than others.
I am currently in a situation where the appraiser measured the rooms of the home and rounded the numbers down, whereas the listing, taxes records and sale price w ere based on the county measurements that had been rounded “up”. As a result the appraisal measured 27 feet less than what was noted on the tax records and it resulted in the home’s value being diminished by $4,300 due to the difference in sq. footage. I disputed the report since this difference would be enough to save the sale but the appraiser, because of a percentage of error allowance stated the difference was mostly covered in the variance contractually allowed and so the adjustment would make little difference. He wouldn’t adjust the appraisal.
As the market begins to improve, buyers are going to be willing to pay more for a home than the neighboring sold comps; that’s part of the recovery of the housing market. However, unless those buyers have cash or larger down payments the buyers we need to jump start our housing economy are going to be fighting the appraisers, and desperately needed sales will fail. If the appraisers continue to tighten the grip, our housing market will become more suffocated and motionless at a time that it would be just beginning to breath.
- Kristie
Portland’s Daily Journal of Commerce ran an interesting story on one of Portland’s newest condo development. The 937 Condominiums in the Pearl District. It discusses the role of developer Patrick Kessi, who has taken an asymmetrical route to development. His first major project, the fast-developing 937 Condominiums in the heart of Portland’s Pearl District, represents an asymmetrical development for the assiduously planned neighborhood.
The design of the 16-story, 114-unit condo tower that’s squeezed on two sides by the Brewery Blocks and the north Pearl District takes its cues from the shapes, shades and chaos of the natural environment.
We normally don’t just re-post articles, but this has too much depth to try and summarize. And we don’t want the link to expire which tends to happen with Wall Street Journal articles from time to time. The article is from the May 6th article, which was written by Mr. Moulle-Berteaux who is a managing partner at Traxis Partners LP, a New York hedge fund firm.
“The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won’t happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what’s going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in “months of supply” terms. That’s the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won’t stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they’ve been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one’s income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today’s house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets’ perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets’ perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.”
According to a Wall Street Journal article I read this weekend, there are some very positive things that are coming along with the slow down of the real estate markets. Developers are dropping plans to build on some choice pieces of land and instead are selling it for such uses as public parks and nature preserves. It even contains an example that took place here in Portland Oregon, where a developer had approval to build 65 homes on a 27-acre parcel agreed in February to sell it for $4 million, a 20% discount to the land’s appraised value before the housing market softened. While I don’t necessarily see this to be sustainable, I’d rather see us building parks and nature reserves rather than power plants.
According to an April 16 article in the Wall Street Journal, 77 percent of the wealthiest people think that real estate presents a “real opportunity” right now. And 40 percent of those said they are in the market to acquire real estate right now. As we’re heading into the busy real estate season, these are very positive news, especially in conjunction with Portland’s still strong market.
The Oregonian is running a very positive story on the investment opportunity of Portland Real Estate.
The Oregonian ran a really interesting story about the current state of the different condo developments in the Portland Pearl District. We’ll write a further analysis on this, but it seems like some of the new buildings are doing really while others bear lots of opportunities for prospective buyers. Anyways, more coming but we wanted to get this in front of you.
The Daily Astorian ran an interesting article today encouraging people to not believe the Gloom Merchants. The article points out that Oregon and Washington didn’t experience the excesses of house speculation that are now hindering real estate growth in places like California, Nevada, Arizona or Florida. And our economic conditions aren’t nearly as bad as what has been happening in states such as Michigan and Pennsylvania. So, while it might take a little longer to sell your home and it might be a little bit harder to get a loan, overall we seem to be in a good situation here in the Pacific Northwest.
The Oregonian recently ran a story about the potential re-development of the current Post Office operations center, which currently takes up 13 acres of prime real estate in Portland’s Pearl District. It clearly seems there’s momentum building for what could be the biggest real estate development ever in the Pearl District. And if you ever find yourself strolling the Pearl District during the day, you probably won’t disagree that any development in place of our giant Post Office would be a welcome addition. We’ll keep you posted.
We initially posted a summary style comment/blog entry on the article “Portland Home Values Take First Dip” that was on the front page of the Oregonian on March 26th 2008. I want to further comment on this. Specifically I want to address, or rather point out, the media’s effect on the market and how this article is a great example of the problems we’re seeing.
As Realtors in Portland, we work with other Realtors, lenders and other real estate industry professionals every day. Whenever a conversation turns to the current market conditions we find most of us hold the same opinion about the media’s role in this market; they are a big part of the problem.
Is inventory high? Sure it is. Are prices falling? Sure they are. Nationally it really is a tough market, locally in Portland the real estate market is down, but not out. And thus what we hear from the media both locally and nationally is “the sky is falling!!!”…it’s not.
We are in a market that’s not good for sellers, prices are down, inventory is high, homes aren’t selling like they use to - all bad right? Wrong…bad for sellers, great for buyers!
The media is just hammering the presses with bad news piled on bad news with regards to the real estate market and the “mortgage meltdown” when in reality that is only half the truth and only covers half the activity in the market. What we aren’t hearing from the media is that rates are low, the selection of homes is excellent, first time home buyers that have saved up a little cash still have a good selection of loan programs to choose from, prices are low…All of these conditions make for an ideal buyers market. Unfortunately we are not hearing that from the media.
The doom and gloom reporting the media is currently engaged in is scaring buyers away, it’s translating to “stay away from real estate or else…” at a time when we need to be encouraging buyer activity to reduce the inventory. To balance a high inventory market we need to increase demand and the media is working against that goal.
If the media wants to see this real estate market slump continue then they are doing a great job to that end. If, however, those in the media would like to see the market, and our economy, recover faster they should consider becomming part of the solution. There is good news out there to be shared, report it.
We just read the Oregonian story titled Portland House Prices Show Slight Dip and it has some interesting insights coming from Standard & Poor’s/Case-Shiller reports. Prices in January 2008 fell a half percentage point compared with January 2007. During the nationwide real estate boom (2004 - 2006), Real Estate prices in Portland Oregon increased by about 36%. While mortgage rates were favorable, these kind of price increases presented a real challenge for first time home buyers. Especially since median incomes weren’t rising at near that rate ( until the boom, on average a real estate purchase equals about 3 times annual income). These boom times also presented opportunities for spotty homebuyers who ended up buying properties they really couldn’t afford as well as homeowners who took more equity out of their homes than financially responsible.
Here’s our take. Right now is a good time to buy for qualified home buyers, especially if it’s in a promising neighborhood. And there are many good neighborhoods in Portland. Plenty of our clients have experienced significant gains in market value even while the market has been supposedly down. As long as you’re smart and financially responsible about your real estate decisions, we really believe that real estate is always a good investment, especially in the long run.
The April issue of Portland Monthly (called “Buy Here Now”) has just hit the news stands and it contains some great data about Portland’s Real Estate scene. Sadly, none of the content is available on the web, so you’ll just have to go pick one up. Regardless, here are their top neighborhoods for 2008…all for different reasons. You’ll just have to pick up a copy to learn what those are. Or email us this week, and we’ll send you a free copy.
Here are the top Portland neighborhoods by category according to Portland Monthly:
Fast Lane (soon to be hot spots):
South Waterfront
Pearl District Extension
Damascus
Charmed Corridors:
Ladd’s Addition
Portland Heights
St. Johns
Sauvie Island
Smart Streets (mass transit/urban living/cycling):
Orenco Station
New Columbia
Richmond
Piedmont
Family Circles:
Sellwood-Moreland
West Linn
NW District
Mt. Tabor
Cultural Crossings:
Alberta
Pearl
McMinnville
Multnomah Village
Ok, I might be slightly biased but I just read a good entry on the Investor Centric Blog, which was called Investing in Portland Real Estate Isn’t A Bad Idea.
Here are the main points of the article.
- The Portland Real Estate market has kept moving its prices along, while most of the country’s markets have been on the decline.
- Portland’s public transportation system is superior to Seattle, the big brother up north.
- Last but not least, Portland is just as beautiful, has better infrastructure and still is more affordable than Seattle.
Good news for us Portland Real Estate Brokers.
Reading through the West Linn Tidings I read an interesting editorial about the expected population growth in West Linn. The projections estimate for an additional million people to live in West Linn by 2030, which of course, are welcome news for us Real Estate folks. While that number seems high, it’s not really that surprising considering that a recent survey (350 West Linn residents) said West Linn is an excellent place to live.
Of course with that growth come concerns about how it will affect the area. 36 percent of survey respondents said that growth’s was the city’s biggest concern. Hence, Urban Growth Boundary, Rural Reserve, growth concepts, sustainable planning; all buzz words amongst West Linn residents these days.
Things continue to look up for the Portland Pearl District, which doesn’t surprise me. Every time I wander through the Pearl District, I recognize a new business or two. And it’s not just art galleries and boutique stores anymore, but larger restaurants, business services and a soon-to-come Safeway have entered the mix. When opening the Portland Business Journal on Friday, I read that financial firm Ernst & Young is joining a number of other professional services firm by opening an office in Portland’s Pearl District Brewery Blocks. Interestingly, their current office is downtown Portland. This is a very positive development for Pearl District residents.
Some good news for the Portland Real Estate Market by the Office of Federal Housing Enterprise Oversight. While nationally declines during the fourth quarter erased earlier gains, pushing U.S. housing appreciation into negative territory for the year for the first time in 17 years Portland’s home value and appreciation are continuing to hold up. Nationwide, prices were down 1.3% compared with the third quarter, the OFHEO said, and down 0.3% from the fourth quarter of 2006*. But in Portland/Vancouver/Beaverton (which by the way ranks number 61 in national home price appreciation), home values actually increased by 0.30% in the fourth quarter. Our one year gain in home appreciation is 4.24% while over the past five years home values have appreciated by 66.54%. The fact that market prices are still increasing coupled with low interest rates is good news for prospective Portland home buyers. Read Home prices by city.
*City rankings are listed by metropolitan areas. The OFHEO’s House Price Index is published on a quarterly basis and tracks average house-price changes in repeat sales or refinancings of the same single-family properties. The index is based on analysis of data obtained from Fannie Mae and Freddie Mac from more than 30 million repeat transactions over the past 30 years.
The winner of our latest iTunes gift card drawing is…..!!!
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The Register-Guard in Eugene, Oregon wrote a very encouraging article for Eugene home buyers, which assesses the real estate market in Lane County, Oregon. The market is flush with homes and sellers are bound to continue lowering their prices.
Home sales in Lane County fell by 31 percent in January compared with a year ago, while pending sales were down by 24 percent, resulting in more homes staying on the market for longer periods of time. Median prices for homes in Lane County continue to rise, however, to $225,000, up 4.4 percent from January 2007. Median means that half the homes sold for more than that price, half for less. The average price was essentially flat in January compared to a year ago. The number of new listings fell by 6.1 percent, with fewer owners putting homes on the market. Although still low by national standards, foreclosures are increasing locally and banks are selling some homes for less than the original loan amount.
This sounds like an interesting opportunity for prospective home buyers in the Portland area.
Buena Vista Custom Homes today announced that it will conduct a second auction of the company’s inventory of completed homes. 52 homes from nine of Buena Vista’s neighborhoods and 18 buildable lots from three different developments in the Portland metropolitan area will be auctioned on Saturday, March 8, 2008 at the Ambridge Event Center in Portland. The inventory is located throughout the Portland metro area including: Scappoose, Beaverton, Happy Valley, Sandy, and Hillsboro. The 18 buildable lots are located in the developments of Shadow Hills and Jackson Hills, both in Happy Valley along with Carson Crest in Beaverton.
A while back, I read this interesting editorial piece in the Oregonian about the city of Gresham, past, then and now. As Gresham has changed from a town of 10,000 to a city of 100,000 over the past 50 years, there have been a lot of very positive developments alongside with some minor concerns. Here’s a summary of the article’s main points.
Historic Downtown Gresham
There are a lot of attractive townhomes and condominiums close to downtown Gresham now, but there is not enough population density to attract a decent market , yet, and the quality and variety of shops aren’t quite there yet, either. This development is happening and downtown Gresham presents a good opportunity for potential home buyers.
Mount Hood Jazz Festival Site
The two-acre grassy site of the Mt. Hood Jazz Festival is proposed as the home of the Gresham Center for the Arts. With approval from the City Council, the project would bring a full complex of indoor and outdoor entertainment and event sites as well as a promising public-event plaza.
Leadership at City Hall
There now is unaccustomed potential at City Hall, too. For the first time in a long time, there is a uniformly bright, reasonably experienced and business-oriented council. There is great potential for quality development.
A developing multicultural population in Gresham
As far as a new multicultural population, Gresham used to be pretty homogenous — white — and mostly came from the Midwest. Now Gresham is an almost a polyglot population from around the world, still primarily white, but one can hear various Latin languages, those from Eastern Europe and a variety of Asian conversation on your average bus or MAX adventure. What we need are some stalls for these new citizens at the Saturday Farmers Market, some Latin or Cuban jazz at the festival and some enthusiasm among parents to encourage the schools to require a second language in their curricula. The potential for integrating and welcoming these new citizens to participate in Gresham is enormous.
The Gresham Outlook recently reported on the Gresham Redevelopment Commission decided to negotiate with a firm that’s earned a national reputation not only for its Pearl District work, but also for its projects in Portland’s rapidly developing South Waterfront area. A few people have dared to hope that the Rockwood urban renewal district could mimic the fabulous success of Portland’s now-famous Pearl District, but this is a very positive development and definitely something that we’ll keep our eyes on for prospective home buyers in that area.
Carla Muss-Jacobs writes in her column in American Chronicle about her predictions for the Portland Real Estate Market. Here are a few points that stood out to us:
- The downtown Portland condo market is losing on some quick sales now. They should return to listing the units and allow first-time buyers a chance at Downtown living.
- Higher-end homes (for example, in neighborhoods such as Lake Oswego) are going to look attractive to buyers when prices continue to drop.
- Homebuyers will realize that Metro Portland is a great market, a good investment, and a great place to call home. They will be out this Spring!