Tuesday’s front page news article in The Oregonian by Ryan Frank, in which he reported that Portland median home prices had fallen 7.3%, or $22,000, from August, 2007 to August, 2008, is scary news, particularly to those who had thought that Portland was still countering the national trends. The article, placed as it was next to the news about Lehman Bros., AIG, Oregon’s unemployment rate, and Hurricane Ike’s damage, made housing prospects look bleak.  But to twist an old phrase, the angel is in the details. Read on.

First, a correction: Ryan’s article stated that “Homebuilders and owners have planted more “For Sale” signs” this year. That is not correct. There have actually been fewer sellers this year than last. In metro Portland, August, 2008 year-to-date new listings were well below August, 2007’s year-to-date total (41,397 vs 43,567, a 5.0% drop). And there were 4,398 new listings in August, 2008, a 27.1%, drop from the August, 2007 total of 6,031. Portland’s high inventory of unsold homes (9.9 months worth at the end of August) is not due to an excessive number of home sellers, at least not in comparison to last year. The excess is primarily due to a severe decline in closed sales (13,621 vs 20,607, a 33.9% drop), resulting in a larger inventory of unsold homes (17,556 vs 15,782 active listings, an 11.2% increase).

What has this done to real estate values? It depends upon which months you choose to compare. The following graph shows the monthly median sale prices for homes sold throughout the Portland area since January, 2003. The Oregonian article focused on the months highlighted in red. Monthly sale prices fluctuate for several reasons, so we added a twelve month trend line to at least address seasonal fluctuations. Clearly real estate prices have tapered, but it is also clear that the bottom has not fallen out.

RMLS Median Sale Prices

RMLS Median Sale Prices

What about our Portland neighborhood? Bridlemile is holding pretty steady, with a few notable exceptions involving distressed sales. The following graph shows the median quarterly sale prices in the Bridlemile area (50th percentile), as well as the 25th and 75th percentiles, since 2002. In other words, for each quarter 25% of the homes sold below the red line and 75% above, 50% below and 50% above the green line, and 75% sold below and 25% above the blue line. The area between the red and blue lines represents half the sales, the middle half, which is pretty representative. Yes, home values have softened, but nothing like the papers would have you believe. What softening has occurred began at the end of 2006 and the beginning of 2007. Because of continued modest appreciation in 2007, statistical prices are only now dropping to the levels of two years ago.

Bridlemile Elementary Sale Prices

Bridlemile Elementary Sale Prices

You may view the full August, 2008 RMLS Market Action Report by clicking here. We will also post more Portland neighborhood market data soon at www.BridlemileHomes.com.