Goldman Sachs Global ECS Research published their “US Economic Analyst” on June 4th and they do not like Portland’s real estate outlook:

Our model projects the biggest price declines in Las Vegas, Seattle and Portland, due to high homeowner vacancy rates and/or rising mortgage delinquencies. Conversely, we expect modest house price gains in Cleveland, Minneapolis, San Diego and San Francisco.

The report does not appear to be online except “for those permissioned” at https://360.gs.com.  I am not one them; the report was emailed to me.  Goldman Sachs used Case Shiller data for their findings which lags three months.

Given the excess supply in the housing market and rising delinquencies, our model suggests that the composite 20-city Case-Shiller index will fall by about 3% over the next year and another 1% over the following year. This projection is weaker than the current consensus forecast of a 0.4% drop in the national Case-Shiller index in 2010 followed by a 1.6% increase in 2011.

Goldman states that their findings are more pessimistic than the consensus.  But there’s a second part of Case Shiller that is equally important: Case Shiller uses the seven county Portland MSA in their reporting [previous post on Case Shiller Methodology].  That means that a house in Klickitat (Skamnia County), a house in Sheridan (Yamhill County) and one on Council Crest are all in Portland according to the report.  It’s 137 miles from Sheridan to Klickitat using Google Maps.  You have to decide what is local enough for you when looking at real estate.  It doesn’t mean that Case Shiller data is bad data.  It means that we have to understand what we are looking at; both with good reports and bad reports.