Next is the year-to-year change in home values. This is the number that will make the headlines: Portland home values have declined 11.5% between November 2007 and November 2008 and the 20 city composite declined by 18%. 
These data are two months behind, so it will be interesting to see what happens through this spring with the continuing erosion of the economy but with low home prices and low mortgage rates. As always, a reminder that these averages hide a huge amount of variation from neighborhood to neighborhood and even within neighborhoods. As an anecdote, my house, according to Zillow, has gained in value in the last few months (for what that's worth). I imagine that places like Happy Valley are seeing a much larger erosion on average.
Here is some more market data from Altos Research. The first graph is average days on market for houses in Portland proper. This continues to get worse, but the 7 day average is plateauing so perhaps we are turning a corner.
The second is the housing inventory for Portland proper. If there is good news it is that the supply is starting to contract - though there are likely banks with foreclosed properties that they have not put on the market yet and future foreclosures. Fortunately, Portland has a relatively low foreclosure rate. 
Nationally, home sales are up, but many of these are bank foreclosure short-sales and it is hard to know what to make of it all. A key to starting the recovery is to get this housing market back in the black, and the silver lining of the collapse of the residential construction market is that there is virtually no new supply coming on the market. But I have seen estimates of 1.6 million excess homes, so perhaps it will still be a while before the market reaches equilibrium.
Anyway, once home values start appreciating again, the 'toxic assets' may start to become less toxic and the credit markets may start to ease. I would like to see the movement in home values going positive by June, but this is optimistic.
1 comment:
"I would like to see the movement in home values going positive by June, but this is optimistic."
How do you account for home pricing in PDX remaining overpriced? This is true based on affordability or the secular trend in Case-Shiller, before the pricing bubble began in 2004. I think we won't see prices achieve the secular trend until end of 2009 after further declines of 10-12%.
I understand why you want prices to stabilize, in order to end the bleeding of the banks balance sheets. However, restoring conditions for the next housing bubble is not a good idea. I would really like prices flatten, and stay flat for the next 10-15 years. Real estate is not an investment.
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