Tuesday, August 25, 2009

Portland Home Values: Case-Shiller June Numbers

The June Case-Shiller numbers are in and the news is good for Portland: a healthy jump in home values from the month before. No one should get too excited, we are still well down from the peak, the numbers could reflect simply a seasonal bump, and there are still many out there who predict housing prices will continue to fall especially due to the rising foreclosures arising form unemployment. Nonetheless, it is another indication that we are, hopefully, nearing the bottom of the recession. It is also an indication that efforts on the part of the Fed and the Obama administration to stir a little life into the housing market has worked. Mortgage rates are exceptionally low and it appears that many are choosing this opportunity to become first-time homebuyers. All in all, I expect that the erosion in home values is essentially over, we may see a little more in the fall and winter, but nothing too substantial, but it will be a few years before any really healthy appreciation happens again.

The above graph charts the raw numbers and this graph below shows the year over year percentage change in home values for Portland, Seattle and the 20 city composite.

Oh, and by the way, apropos of the previous post, the stabilization in the housing market should help stabilize the MBS market, perhaps restoring the market for those 'toxic assets.' Maybe the Fed was right after-all...


nixzusehen said...

You also forgot the effect of the tax credit, which expires Dec 1. As much as I love the Case-Shiller numbers, they don't tell the whole story.

Prices at the higher end and for condos in the Portland area still have a long way to fall - especially condos - there are enormous gluts of condos already, and more scheduled to come online soon. Apartment prices continue to fall (and according the PSU Center for Real Estate, will continue to do so well into 2010), which would be a further indication that house prices are out of whack.

It's also interesting to compare median incomes with median house prices. Median income has been nearly flat - $41,278 (1999) vs $46,811 (2007) in Multnomah County (non-adjusted dollars), while the Case-Shiller index has gone up 46% (also non-adjusted) since the end of 1999 and the most recent numbers.

Now, there may be an argument to be made that housing was cheap in Portland relative to incomes in 2000, but I don't think it is enough to account for that gap, and with the recession and a local unemployment rate around 10%... it just seems hard to imagine that this bump is sustainable in the long run.

Gprofessionals said...

It is clear from the graph that home prices after being reached the ground started to bounce once again. It is the same time when the home prices were up by few points just for several days. And immediately after that prices followed the same path toward.
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