I think so. Despite warnings of a double or triple dip recession and backwash from the expiration of tax subsidies for home buyers, evidence is mounting that Portland’s real estate market has stabilized and is trending slowly upward.

S&P/Case-Shiller released its April 2010 home price indices Tuesday. The Portland market recovered 1.84% from March, which was also the lowest point of the recession. The 20 City Index rose 0.84% that month and 3.84% from the national low in April 2009.

Overall, Portland is off 21.6% from its high in July 2007, and the 20 City Index is off 30.0% from the high in the summer of 2006. It took 33 months for the national market (July 2006 to April 2009) to trough before beginning a slow steady recovery. Those who argue that Portland has further to fall because it was late to the bubble party ought to consider that 32 months elapsed between the high in July 2007 and the low in March 2010, virtually replicating the national pattern to date.

How has Portland fared with respect to other west coast cities? San Francisco has recovered 18.7% from its low in March 2009, so the opportunity to move to the Bay Area cheaply has passed. San Diego has recovered 11.7%, Los Angeles 7.9%, and Seattle 1.1% from their lows.

The Case-Shiller Index is, of course, just one indicator. Visit the Portland Home Team Market Data Center for more information.

I will summarize the first half of 2010 as soon as the data is available. Early hints are that it’s mixed, but promising. What do you think the Portland real estate market will do?

S&P/Case-Shiller published its home price indices this morning. The C-S U.S. National Home Price Index fell 3.2% in the first quarter of 2010, but remains 2.0% above the first quarter of 2009. Nationally, housing prices have rebounded from crisis lows, but recently have seen renewed weakness as tax incentives end and foreclosures climb.

On a more optimistic note, west coast cities continue to outperform the nation as a whole. Los Angeles, San Diego, and San Francisco have recovered 7.2%, 10.9%, and 16.2%, respectively, from recent lows. San Diego, in particular, has seen increasing home prices for eleven consecutive months.

Portland, on the other hand, reached its lowest index point since April 2005, was 2.8% below March 2009 and 23.0% below the high point in July 2007. Seattle’s recent experience mirrors Portland’s.

What do you think will happen to the Portland numbers next month?

Short answer: No.

Long answer: Not now, based on recent months’ sales.

The best measure of market balance is “months’ inventory,” which Realtors measure by dividing the number of active listings on the market into the number of closed sales in any given month, i.e., how long it would take to deplete the inventory at the current month’s rate of sales. A six month supply is now considered neutral (it used to be eight), less being inflationary and more being deflationary, or at least stagnant.

Portland had a 7.7 month supply of listed homes at the end of December 2009, and was below eight months’ supply for the entire second half of 2009. Not bad for a city that started the year at 19.2 months of inventory.

You can almost read a seven year history of the Portland housing market in the table and chart below. West Portland is also included.

The monthly averages in the last column highlight seasonal fluctuations, and the yearly averages in the last row highlight long term trends.

The following chart displays the same information in a different format:

How are different areas of Portland holding up?

The following table sorts the Portland sub-markets from lowest to highest in months of inventory based on December’s closed sales. Note that some of the recently troubled sub-markets, such as the Milwaukie/Clackamas area, have the lowest inventories. After severe price drops, those markets are stabilizing and selling again.

What does this mean for 2010?

• Tune in tomorrow,
• Visit the Portland Home Team’s Market Data Center for other current measures, or
• Call or email us for up-to-date information about your home.

Portland Housing Market: 2009 Review, 2010 Forecast

• Monday – 2009 Portland Home Sale Prices: RMLS releases annualized 2009 data for Portland metro and sub-area markets.
• Tuesday – 2009 Portland Home Sale Totals: What type and size homes have suffered the most?
• Wednesday – Active Listing Inventory: Is it true that Portland is flooded with “For Sale” signs?
• Thursday – 2010 Forecast: What we think it all means for the market value of your current or future home.
• Next Week – Opportunities in 2010: There are unbelievable bargains out there, but they’re not obvious.

The Regional Multiple Listing Service reported that the number of closed sales in 2009 was down 0.9% from 2008 (18,955 vs. 19,132). That sounds okay.

Compared to the previous six years, however, Portland home sales were down a lot more than that. Total closed sales in 2009 were 63% of the average annual number of closed sales in the years 2003 through 2008. To avoid an overwhelming display of numbers, you can sense this phenomenon in the bar chart below (contact me if you want the raw data).

It’s also noteworthy that the mix of sold homes stayed fairly consistent through the years. The two pie charts below are different. The first illustrates the percentage breakdown of total sales in Portland by number of bedrooms from 2003 through 2008; the second 2009 only. No house type varied by more than one percent in 2009 from the average of the previous six years.

This result is counter-intuitive to me, and certainly contrary to the current conventional wisdom. This nearly constant mix of sold homes in 2009 happened despite: 1) the huge drop in total sales, 2) the difficulty in getting jumbo loans since late-2008 (generally thought to have slowed large home sales), and 3) the effect of the first-time home buyer tax credit (generally thought to have stimulated small home sales).

Why?

I don’t know. Here is my knee-jerk hunch, to be refined after much more mulling: People buying a home need (or at least want) a certain range of space and rooms, sometimes less, often more. Two people don’t usually buy four-plus bedroom homes; young families don’t usually buy two bedroom homes. Both will buy the size they need at a price they can pay. So assuming that the need for various size homes is relatively constant, it’s reasonable that the mix of homes purchased could also be constant.

That leaves the main variable on the demand side to be the price buyers can afford. That price is influenced primarily by employment and interest rates, and secondarily by wealth, in the form of down payment funds, and mortgage availability. Yesterday I showed that Portland home prices had fallen fairly evenly across these same home size categories. Perhaps the impact of these factors is more evenly distributed across buyer profiles than we thought.

I have a hunch that a deeper look into the 2009 home sales in each size category will reveal some good clues. More later.

What about the supply side? I’ll post on that tomorrow.

Visit the Portland Home Team’s Market Data Center for other current measures, or call or email us for up-to-date information about your home.

Portland Housing Market: 2009 Review, 2010 Forecast

• Monday – 2009 Portland Home Sale Prices: RMLS releases annualized 2009 data for Portland metro and sub-area markets.
• Tuesday – 2009 Portland Home Sale Totals: What type and size homes have suffered the most?
• Wednesday – Active Listing Inventory: Is it true that Portland is flooded with “For Sale” signs?
• Thursday – 2010 Forecast: What we think it all means for the market value of your current or future home.
• Next Week – Opportunities in 2010: There are unbelievable bargains out there, but they’re not obvious.

RMLS recently updated the annual market data for Portland metro and sub-area housing markets. By the simplest measure, Portland home values fell 11% in 2009. The 2008 median sale price was $278,000; 2009 was $247,000. West Portland fell slightly less, about 10%. The 2008 West Portland median sale price was $389,000; 2009 was $349,000.

For 2009 Metro Portland is also 14.8% below the 2007 median sale price of $289,900, and 19.4% below the peak month of 2007.  See S&P/Case-Shiller releases November 2009 Housing Indices to find out how Portland fared amongst the twenty largest U.S. cities.

Price adjustments occurred pretty evenly across home sizes, at least when measured by the number of bedrooms.

Those nice smooth lines, however, mask a lot of month to month variation. For instance, the same data for the West Portland sub-market, graphed in detail at a monthly level, illustrates the wild swings that occur within any twelve month period.

Despite broad statistical measures, values have not changed consistently throughout Portland. Visit the Portland Home Team’s Market Data Center for other current measures, or call or email us for up-to-date information about your home.

Portland Housing Market: 2009 Review, 2010 Forecast

• Monday – 2009 Portland Home Sale Prices: RMLS releases annualized 2009 data for Portland metro and sub-area markets.
• Tuesday – 2009 Portland Home Sale Totals: What type and size homes have suffered the most?
• Wednesday – Active Listing Inventory: Is it true that Portland is flooded with “For Sale” signs?
• Thursday – 2010 Forecast: What we think it all means for the market value of your current or future home.
• Next Week – Opportunities in 2010: There are unbelievable bargains out there, but they’re not obvious.

This morning Standard & Poor’s/Case-Shiller released its November 2009 housing indices for the ten and twenty largest U.S. metropolitan areas. The twenty U.S. city index fell 0.2% from October 2009 and 5.4% from November 2008. Portland rose 0.3% over October 2009 and fell 7.5% from November 2008. Four other markets, all western U.S. cities, (Los Angeles, Phoenix, San Diego and San Francisco) rose in November over October and have seen at least six months of price increases. Portland is also up 2.4% in the seven months since its low point in April 2009.

Since the 2006 peak, the 10-city composite is down 30.0% and the 20-city composite is off 29.2%. The Portland market remains 19.4% below its July 2007 peak.

I like referring to Case-Shiller because 1) it uses a three month rolling average (smoothing out single month outliers), and 2) it measures same home resales (thereby attempting to address varying mixes of sold homes). Its methodology is not perfect, and the information is delayed two months, but its worth a look.

S&P/Case-Shiller released their September 2009 Home Price Indices this morning. The twenty largest U.S. cities saw home sale prices increase 0.3% in September from August 2009. Portland saw a 0.5% decline. Both continue the stabilizing pattern we have seen for most of 2009.

Case-Shiller Composite Index September 2009

West coast cities again showed more rebound than the nation as a whole, but also showed another loss. San Francisco saw a 1.3% month-over-month gain, while Seattle saw a 0.4% fall.

Case-Shiller West Coast City Comparison September 2009

Visit the Portland Home Team’s Market Data Center for other current measures, or call or email us for up-to-date information about your home.

October 2009 months inventory, the number of months it would take to sell all active listings at the current month’s rate of sales, fell to its lowest level since August 2007, the peak of the Portland real estate market. 2,009 home sales closed in October 2009 (up 37% from October 2008). At that rate, October’s 13,101 active listings (a 16% decrease from 16,257 in October 2008) would take 6.5 months to sell. Six to eight months inventory is generally considered balanced.

The Portland metro area median sales price has settled between $240,000 and $250,000 for eight straight months, a range roughly 11% lower than this time last year. The RMLS Market Action Report for October 2009, the source of this data, was released this afternoon.

Balanced inventory and steady prices are two strong indicators of a stabilizing market, and at another time would be cause for celebration. But the general economic recovery is young and fragile, and the real estate market will lag in its recovery. The biggest risk facing the Portland housing market: a “shadow inventory” of potential foreclosures related to job losses. More on that later.

The first graph shows the months inventory history for Metro Portland and West Portland. The second graph shows the median sales price history. More data to answer the question “How is the market doing?” is available at our Portland Home Team Market Data Center, or call or email us for up-to-date information about your home.

Nationally, the Twenty City Index showed a 1.2% gain in August over July and a 4.9% increase over the low point in April, 2009, with each month showing a slight increase over the previous month. Portland home prices have also seen four months of modest gains, with the August index showing a 0.3% monthly jump and a cumulative 2.5% gain over April.

Several west coast cities are showing strong rebounds. San Francisco, in particular, increased 2.8% from July to August, and has seen a cumulative 12.5% bounce from it’s low in March this year.

S&P/Case-Shiller released their August 2009 Home Price Indices this morning. Visit the Portland Home Team’s Market Data Center for other current measures, or call or email us for up-to-date information about your home.

First, the headline is true. The September 2009 median sale price for close-in west Portland homes was $371,500, 13.4% higher than the August 2009 median price of $327,500.

The catch is that this statistic derives almost exclusively from the fact that 34% (60/176) of the September closed sales were four bedroom and larger homes, compared to 21% (36/171) in August. Larger homes are generally more expensive, so the median price went up (remember that the median is the “middle” price, sale #86 of 171 in August, for instance). This is the problem I have with local media reports – they usually compare monthly highs and lows to measure market changes, when those monthly numbers were never accurate representations in the first place. Look at the broader trends below.

So what did happen to large home prices? The median price of four or more bedroom homes in Portland that closed in September 2009 was $477,500, 8.3% LESS than the median price of $521,000 in August. How can this be? Put simply, many of the large homes that sold were a little run down in September, so large home price statistics fell, but there were proportionally more of them, so the overall sales statistics rose. And that’s just west Portland! See the second graph below.

Confused? That’s why you should call us. We follow this stuff every day, and we will make sense of it for you.