Portland Real Estate Blog

In what seems like a sea of bad real estate and economic news, the Case Shiller Index reports for the third consecutive month slight increases in the Portland real estate market, mirroring the national indexes.  The report, which lags 60 days and uses the seven county Portland MSA to define “Portland,” shows that housing prices are at  June 2005 levels.  Pricing has been essentially flat since February 2009, never dropping below 146 or hitting 151.  The current 148.73  shows signs that pricing is holding its ground.

The Portland real estate market ranks sixth of the 20 cities tracked by Case Case  Shiller report that came out this morning for May.  It may be surprising to many but the 147.98 (up from 146.25 in April) lags behind only five cities since 2000 when the Index was set to 100 across all 20 cities.  A dollar invested in the Washington DC real estate market would be worth $1.82 or $.69 in Detroit according to the Index compared to Portland’s $1.47.  The current Portland index is close to June 2005 and May 2009 pricing.

The graph shows the last four years compared to the 20 City Composite Index.  The Composite was 40 points ahead of  Portland at one time but almost matches Portland now, actually lagging by a point-and-a-half.

Case Shiller reports “Portland” as the seven county MSA.  The report, released on the last Tuesday of every month lags 60 days.  It’s not possible to drill into the data like we can RMLS data to see how the City of Portland is fairing.

Case Shiller for April 2010 came out this morning and Portland saw a bump up from March.  The current report puts Portland real estate prices at 146.25.  That’s up 46.25 points from when the index was reset to 100 in January of 2000 but down 40.26 from the July 2007 peak.  It also stops a two month slide.  The index is at May/June 2005 levels.

Case Shiller uses the seven county Portland MSA for its reporting on closed sales with a two month lag, this has changed from a previous three month lag:

The monthly S&P/Case-Shiller Home Price Indices use the “repeat sales method” of index calculation – an approach that is widely recognized as the premier methodology for indexing housing prices – which uses data on properties that have sold at least twice, in order to capture the true appreciated value of each specific sales unit.

New construction and condos are not considered in the report.  April was a strong month for the Portland real estate market by most metrics.  The contracts for eligibility for the Home Buyer Tax Credits had to be signed by April 30th and must close by tomorrow, June 30th, without a vote by Congress to extend it.  There is no current indication in the news the closing date will be extended.  Starting Thursday, the real estate market must stand on its own two feet without being propped up by the tax incentives.  Low interest rates, the “seasonal selling season,” and lower prices may give some confidence to people that now may be their time to enter the market.  Educate, understand and decide.

Click here for previous posts on the Case Shiller Index.

“Portland real estate.”  We use the phrase all of the time. So where exactly is Portland? Wikipedia lists 21 Portlands in the United States but what is that we are talking about once we decide we are talking about Portland, Oregon real estate?

The Case Shiller Index uses the Portland MSA, the 23rd largest in the country, for its reporting on the Portland real estate market. It encompasses seven counties. The is a map of the Portland MSA on last week’s post. A drive from the southwest corner of the MSA to the northeast corner would be over 140 miles.

RMLS, according to Market Action: “Statistics reflect reported activity for the greater Portland, Oregon metropolitan area, to include Multnomah, Washington, Clackamas, Yamhill, & Columbia counties; Lane, Douglas, Coos & Curry Counties in Oregon; portions of other Oregon Counties; and Clark, Cowlitz & Pacific Counties in Washington.”

So how local do we need to be? How broad of a brush stroke answers your questions? Case Shiller Index numbers are national news. RMLS Market Action stats are big news here each month An appraisal looks at houses within a half mile of a property.  Market data is readily available for zip codes as well.

If we take RMLS Market Action from April, the report shows Portland has a 7.3 months inventory, the ratio of active listings to closed sale. But if we take a closer look at the five RMLS areas that make up Portland another picture is painted:

This means if the theory that the shift from a seller’s market to a buyer’s market at six months is accurate, four of the five Portland areas were in a seller’s market in April and the fifth, West Portland, is more of a buyer’s market than the overall picture shows . When May’s numbers are published, I’ll run the same calculations.

The most important consideration is that you understand what the data is reporting for any given report.

The Case Shiller Index for Portland remained flat in March 2010.  The Index for Portland is 143.61, down .08 from February.  Seasonally adjusted, the Index was up .16.  The Index is at the same level as April/May 2005.

Since March of 2009, the Portland Index has dropped from 147.68 to 143.61.  The National 20 Composite climbed from 140.60 to 143.35 during the same period .  The Composite 20 Index peaked at 206 in July 2006.  The  Portland Index peaked at 186 in July 2007.  According to this month’s Case Shiller report:

New York, May 25, 2010 – Data through March 2010, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index fell 3.2% in the first quarter of 2010, but remains above its year-earlier level. In March, 13 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down although the two composites and 10 MSAs showed year-over-year gains. Housing prices rebounded from crisis lows, but recently have seen renewed weakness as tax incentives are ending and foreclosures are climbing.

My post yesterday regarding lockbox activity underscores that there was a drop off in showings after the tax incentives expired.  Case Shiller reporting lags three months so “renewed weakness as tax incentives are ending” doesn’t make a lot of sense vis-a-vis their own reporting as they are reporting 90 days back and eligibility for the incentives expired 25 days ago.  Foreclosures are a valid concern.

The January 2010 Case Shiller report came out this morning.  Nineteen of the 20 real estate markets tracked lost ground compared with the previous month.  San Diego was the only market in positive territory.  The Portland market dropped to 143.69, down from 147. 29 in December.  Case Shiller reports come out the last Tuesday of each month with a 90 day lag.  The August 30th report will report May which will be the first month without the Home Buyer Credit.

The first graph shows Case Shiller data since the index was reset at 100 across all markets in January 2000.  The second graph shows a shorter time frame for clarity in the more recent years.  I created the graphs from the Case Shiller Excel data.  The third graph is from the March 2010 RMLS Market Action.  Case Shiller and RMLS use a different area and methodology so a direct comparison of the graphs is not possible.

The Case Shiller Index for January 2010 in Portland is 147.29.  That’s a drop from December of 1.8% and a 12 month decline of 4.9%.  The current index is about the same as May/June 2005.  That’s in contrast to the 10 City Composite and 20 City Composite indices which have both returned to “autumn 2003 levels.”  Portland reported and index of 120.49 in September 2003.

The graph to the right is a compressed version of the lower graph.  The question is whether Portland’s real estate market is late to the party and will continue its decline or if now that the Composites have returned to roughly Portland levels the trio will continue to track closer in the future?

Ryan Frank reported on The Front Porch this morning in more detail about the report.

When we talk about the Standard and Poor’s Case Shiller Index we are most often talking about the National index (there are 10 and 20 city composite indices) or the Portland index from the Home Price Value report (as I wrote yesterday).  Case Shiller also publishes a more targeted report which breaks each reported MSA into three tiers:

S&P Indices publishes supplemental tiered price data for 17 of the metro areas it covers. Tier breakpoints – price levels that divide recent sale prices in each market into thirds – are calculated for the period covered by the latest, most up-to-date index points. A closer look at these data shows, as was the case with aggregate home prices, that MSAs did not behave the same across and within tiers.

In Portland, Low Tier houses had the highest increase since 2000 and has remained higher than the other tiers.  In both San Francisco and Atlanta, the Low Tier had the highest (or close to) peak but now lag behind the Mid and High Tiers and the Aggregate.

The monthly Case Shiller report (what is Case Shiller?)was released yesterday for December 2009.  Standard and Poor’s website was having server problems yesterday and the report was unavailable for some of the day.  Portland’s real estate market ended the year flat with a slight drop to 149.95 from November’s 150.38.  The questions we can’t quite answer are 1) are we looking at the bottom in April/May and 2) is Portland starting to trend with the national market?  It has oft been said, accurately, that Portland lags about a year behind the national market.

I expect we’ll see continued seasonal increased activity and a push to come inside of the $8000 First Time Home Buyer Credit and $6500 Buyer Credit’s April 30th deadline with the assumption that it will not be extended (again).  If the Credit is not extended, we won’t have a clearer picture of whether the market can support itself until the end of summer.

The Case Shiller real estate report was released this morning for November 2009. Overall, results were mixed with relatively small gains and losses nationally. Portland’s Case Shiller Index is now 150.38, up half a point from October’s 149.88. Only five of the twenty tracked markets saw gains. Four cities hit new lows in the last four years of reporting. Portland’s low was 146.85 in April. Portland’s current index puts prices at July 2005 levels.

The following graph just show Seattle and Portland’s Case Shiller Index since January 2004.