In the appraisal process, a real estate appraiser is
usually most focused on the specific subdivision,
neighborhood (or market area), and property type. In doing so, appraisers typically deal with micro,
and not macro, economic systems. For
example, the market for a million dollar home in Portland is likely different
than the market for an entry priced property.
Consequently, an appraiser will typically examine statistics for similar-sized
properties to develop an opinion of market segment health. For this blog post however, let’s take the
big view and look at what is happening in the overall Portland market.
The following are some of my favorite sources for gathering
information about the Portland real estate market.
Portland Home Price Index is a monthly index that is calculated
based on verified arm’s length transactions of twice sold single-family homes
(repeat sales of the same property) in three different price tiers. The index is a strong measure of price change
for a market because it is not skewed by more low priced homes being sold in
one year and more high priced homes being sold another year. The drawback of Case-Shiller is that the data
lags by three months.
The most recent Case-Shiller Portland Home
Price Index is for June of 2015 and was published August 25, 2015. The index is currently at 182.14, which is nearly
back to the 186.51 peak reached in July of 2007 before the housing collapse. The index shows that prices have increased by
7.81% from last year, 1.54% from the previous month, and 4.74% in the prior
three months. In an earlier blog post I
examined the seasonal
trends in the Case-Shiller Index. Based on the analysis of that blog, and what
I know about the Portland market, I expect the Case-Shiller Index to increase
in August and September before the seasonal price drop occurs from October
Metro Portland Action Report is a monthly report put out by Portland’s only
multiple listing service. The report features overall statistics including
inventory, pending volume, total market time, and median prices. The most recent Metro Portland Report is for
August 2015 and was distributed September 13, 2015.
The report shows that inventory has been down every month since July
2014 when compared to the same month in the prior year. Inventory seasonally went up slightly last
month from 1.7 to 1.9 months.
Pending Volume: The report shows that pending sales
seasonally declined in August, but are up 24% for the year.
Total Market Time: At only 40 days, the average total market
time for sales in Portland is now at its lowest level in three years.
Median Prices: The report shows that median home prices were
down 0.5% for the month, but up 7% for the year.
State University Center for Real Estate Quarterly is a
comprehensive quarterly report put out by PSU graduate students. The report is supported by the Oregon
Association of Realtors (OAR) and the Regional Multiple Listing Service
(RMLS). The most recent Residential
Market Analysis is for May 2015. Highlights
include trends in local permitting, sales of new and existing homes, and sales
to list price ratios for existing homes.
Building permits for new private housing
in Portland-Vancouver-Hillsboro MSA declined in the past quarter, but have been
on an upward trend since 2009. Even so,
building permits are only about half of the levels seen in the three years
leading up to 2007.
Sales of new homes in Metropolitan Portland
picked up most in 2013, and have slowly increased since then, but remain not even
close to the levels seen prior to 2007, despite a historically low inventory.
Sales of existing homes in Metropolitan Portland
are quite strong and are now close to levels seen in the three years leading up
The ratio of sales price to list price for
existing homes in Metropolitan Portland has been hovering at or near 99% since
of Labor Statistics maintains a Portland-Vancouver-Hillsboro
Economy at a Glance page that includes employment, salary, and
Consumer Price Index statistics.
in Portland for July of 2015 is currently at 5.8% and had
been trending downward, except for a bump up in the past quarter.
in Portland for July 2015 is up 4% from one year prior,
but shows only a 7% increase from July 2007.
Price Index in Portland is up 1% in 2015 compared to the first
half of 2014. However, prices are up 18%
from the first half of 2007.
Affordability Index produced by the National Association of
Realtors measures the median family income in relation to the median priced
home. A value of 100 means that the
median family has 100% of the income to afford the median home loan. The higher the index, the more affordable the
home. In 2011 the index for Portland was
155.5% and by 2014 it dropped to 134.7%.
Portland is still affordable, but not by the margins of just a few years
The consensus is that the Portland single family housing
market is clearly strong with increasing prices, low inventory, and bidding
wars for some properties and areas. The increasing
prices appear to be riding atop favorable economic trends in employment and
wage growth fundamentals. The problem is
that recent price increases are outpacing wage growth and affordability. The current trend does not appear to be a
bubble that will burst anytime soon, but it is unsustainable in the long term. This is especially true if interest rates
rise without corresponding increases in wages.
My hope is that in 2016 there is continued good news for Portland in
terms of wage increases, that housing inventory returns to more historically-normal
levels with additional new construction, and that home price increases are
Did I leave anything out or do you want to join in the
conversation? Let me know in the
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Thanks for reading,
Gary F. Kristensen
Thank you, we'll be in touch!