October 2011’s Portland Case Shiller Index was released yesterday. Portland slipped slightly over the previous month from 136.10 to 135.44. October’s pricing nearly mirrors January’s 135.80 but the 12 month average still makes the Portland Business Journal’s headline, “Home prices down 4.7% in past year.” True but this time last year it was down 7.8% over the previous 12 months and the 12 month rolling average was at its worst between May 2009 and May 2008 where it dropped 16.3%. The market’s health is improving but years of abuse isn’t going to allow it to recover overnight. The reality for 2011 is that, “flat is good.”
I has a long conversation yesterday with a reporter from Reuters. Among the things we talked about was the ability to buy at at historic low interest rates with down payments at 3.5% for and FHA loan. There’s the mortgage insurance hit but not much, if any, interest rate hit for these types of these loans. Lending requirements are more stringent but for those that qualify (and want t0) money is available. In Portland, we’re looking at January 2005 pricing according to Case Shiller. A CS report recently pegged Portland’s 2012 potential price rise at 5.9%.
We also talked about the return of the single family property investor. We’ve got clients looking to take advantage of a really strong rental market in Portland. Buyer’s are using conventional financing but also self directed IRAs to purchase. I’ll write an updated post on using an IRA to purchase real estate soon.
There are certainly positive signs for a strong 2012 but we’ve still got to be wary of Portland’s unemployment rate, local and national politics/elections and global economic problems. Any one of these or in combination could hamper recovery.