The answer depends entirely on who you ask. Jeff Alworth started a great thread last month on Blue Oregon discussing one report that stated that the Portland real estate market is 41% over-valued, Seatle 44%, San Francisco 40% and LA 61%.
A report on CNNMoney.com today places the same locations in a different light. While still over-valued in this report, Portland and Seattle are considered “Fair Market” at 15% and 8% respectively. Santa Barbara tops the list as the most over-priced at 86%. LA is 54% over-priced and SF 51%. Eight of the top 10 are in California.
Also included in the report is that the National Association of Realtors statement that the national real estate market has changed from a seller’s market to a buyer’s market. How does that compare to what we are seeing here? According to the June RMLS Market Action, inventory is up to 2.6 months from 1.5 this time last year (it was 3.2 in January). Average time on market in June was only 39 days (only 25 days in North Portland). Appriciation for the median priced home over the last 12 months was a whopping 17.6%.
I don’t view the above to be signs of trending towards a buyer’s market. Not yet at least. The apprciation is great for home owners but I don’t expect it to continue at this pace. I am not aware of any time in Portland real estate history where prices have declined. Also, according to one of the mortgage broker we use, Portland has lower mortgage rates than the national average due to competition.
One thing we are seeing less of is the single family real estate investor. Rents haven’t kept pace with property prices and the more often than not, 20% down and market rent will not cover expenses unlike a couple of years ago.
Where it all leads is anybody’s guess. I peronally think that the market will remain strong but will trend towards longer days on market and a slow down in apprciation to somewhere between eight percent and 12 percent by 2008. One major question is whether the rapid construction of condos can continue to sell at the pace they have in the past?
Yeah, but my friend’s house in the market for 4 months now and he lowered the asking price twice. His asking price is more than 10% lower than the original asking price…
As stated if the value is up 17% this year and your friend is down 10% from asking that mean they are up 7% for the year. Not bad unless they were fully tapped.
Actually, the last comment is, as on old professor of mine used to say, “exactly wrong.”
If during the time said property should have gone up in value 17% it now cannot fetch more than 90% of its pre-appreciation value, then it has gone down in value not the 10% the asking price has been lowered but by at least 20% or more. The transparency of Portland Realtors’ shell-game reasoning is chilling!