Matthew Ricker

The October 29th Addition of The Oregonian talks about the "record tumble" in Portland Home Prices compared to a year ago. The title is menacing and bleak, but you have to take a look at the whole picture to get an accurate picture of the market. The first thing that we need to take a look at is the difference between the Case-Shiller index and the RMLS statistics that I report to you each month.

The major difference, according to the article, between the Case-Shiller index and the RMLS is that the Case-Schiller index compares the sales price of a home to the previous sales price of that same home. The RMLS generally looks at Median and average home prices in the areas. Its arguable as to which index gives the best information, and I think that each is useful in its own way. This article is citing the Case-Shiller index, which in this case seems to be appropriate.

The second important point to note while looking at the article, or any piece of information, is what they are comparing. This article cites the data from Multnomah, Washington, Clackamas, and all counties surrounding Portland. When talking about the issue in such a general way, its easy to make you case and/or lose the point. Saying that Portland home prices are at a record low using all of this data is like saying its raining in the United States.

The fact is, there are still plenty of areas and homes where home prices increased during the 12 month period from August to August. Many of these areas are close in to the city, like parts of North Portland, SW Portland, NW Portland and SE Portland. Finding this information takes a little extra effort and the ability to view the situation from a different angle. I'm not saying that things couldn't be better, because they can. They just aren't as dire in some locations here in the City of Roses. Real Estate is very local, which is why it is important to hire an expert.

Real Estate is local. Yet many of us are still interested in what is going on in other areas outside of our city. Why? Because it does have an affect on what happens locally. Portland has, more or less, avoided the brunt of the housing slump. We have been below the national average in foreclosures, and our inventory has been pretty consistent (between 9-10.4 months) since April. However, the last two months have shown a decrease in the average and median home prices in the city. Additionally, the Oregonian reported on the front page of the Business section today that home sales have increased in the West for September compared to a year ago. However, the article also points out that Portland is "among the cities still in decline". We have had one of the stronger markets during this last year, so how can this be?

First, it comes down to the issue of foreclosures. Many states in the West have had a serious issue with the number of foreclosures. This is allowing people that are buying homes to purchase them at lower prices. The uptick in sales, more or less, can be contributed to the high number of discounted foreclosures in these states. When prices drop, people do react and take advantage of the situation.

As far as our decline is concerned, we have had a drop in the number of sales in Portland. However, our housing values are not dropping at the rate that they are in several Western states. This is good for home owners, as the value of their home has been protected, relative to the experience of home owners in other parts of the country. So, I don't see the fact that the number of homes selling in Portland has dropped over the past year as a complete negative. Stats show that the value of our homes are dropping, but at least we are avoiding the high rate of foreclosures that other states have seen.

Obviously buyers still have an edge. People that do need to move are having to drop their home prices to attract a buyer in the saturated market. Its the simple fact that buyers have so much to choose from right now compared to markets in the past.

A tradition here in Portland, Oregon during October is visiting Sauvie Island and the numerous Pumpkin Patches. With or without children, its a fun tradition. My wife and I have been do this every year. Sometimes we visit the "Corn Maze", but we usually go to pick out our pumpkins, try some apple cider, and enjoy the island. This year our daughter seemed more interested in the tractor ride than anything else going on around her. Judging by the traffic every year during October, its a tradition in many Oregon families.

What is Sauvie Island? Sauvie Island is an island in the middle of the Columbia River, about 15 minutes drive along Highway 30 to the NW. It is a highly agricultural island with plenty of U-Pick farms for flowers, berries, pumpkins and more. It has about 800 residents, its own school, and is also popular for cyclists and runners for its beautiful 10 mile loop. A current client teaches at the school and raves about the fantastic amount of parental involvement and support. The people are proud of where they live. Its a rural oasis close to the city.

Real Estate in Sauvie Island is rare because of the size of the island. There are traditional and farm homes, and on the river you even have some House Boat Communities. Current stats show that there are 6 active listings on the market and 3 homes that have sold in the last year. The lowest priced home sold for $550,000, while the most expensive home sold for $1.25 million. The active homes on the market range from $590,000 to almost $2 million dollars. Each of these properties had at least an acre of land, and one property had 10 acres. Plenty of room to stretch out! Come for a visit and a pumpkin, or purchase a farm and lay down some roots.

Last week I hired a Tree service to come to my home to give me an estimate for trimming back some trees. The wonderful thing about Portland, Oregon is that we have plenty of beautiful old trees in many of the old established neighborhoods. However, you have to make sure that those trees are cared for properly, or you can have problems down the road. So a few tips:

1) Have branches cut back that are touching your home. When the wind blows you can avoid damage to your home by taking care of the issue before it becomes a problem.

2) There should be a four foot clearance from your roof to a branch. Some of these branches are heavy, and if they break free they can cause plenty of damage.

3) Dead branches should be cut back properly to keep them from falling on cars, your home, or pedestrians. Be aware that most areas of the City require that you care for trees in the parking strip, don't expect the City to show up and do take care of it.

4) Get a permit. GO to www.portlandonline.com to get a permit from Urban Forestry, or call 503-823-4489. Call ahead because it can take two weeks or more for the permit to be delivered.

5) Have an expert identify and make plans for trees that are dead or dying. These are the trees that will cause the most issues by falling or by harboring insects that can spread to your home. Be aware that you are required to re-plant with an acceptable tree approved by the City.

6) Be aware of Real Estate implications. When looking to purchase a home, you should carefully consider the property to identify any possible problems and cost in the future. You may also be in for immediate costs if there is a problem situation before the home closes. I have had several clients walk away from homes because we identified some potential issues that would be very costly. If you are taking care of your trees all along, you will not have your sale impacted by an avoidable issue.

Whenever I visit my parents in Arizona, its HOT. I'm told, however, that it's a dry heat. Well the market in Portland is sliding, but it's a SLOW slide!

Pending and closed sales are down around 12% compared to September of last year according to the RMLS Market Action Report. For the second month in a row we are seeing the median sale price ($267,000) and the average sale price ($315,300) drop, this time close to 5% from August. Quarterly stats show that compared to the 3rd quarter of 2007, we have a 15% decrease in new listings, and a 26% decrease in closed sales. We have a little more than 17000 active listings citywide, and with the rate of sales as it is it would take us 10.4 months to sell out of these homes.

The good news is that our 10.4 months of inventory is almost identical to the inventory that we had in April of this year. In fact, we have had a steady inventory level of around 9-10 months since February. This means our balance of new listings and sales has remained consistent this year. That is a lot more than can be said about our financial markets and the state of the market in most other regions of the country. Lots of inventory, lower prices, low interest rates...Why such a decrease in sales when we have such a buyer's market? It's the economy.

Buyers are having a difficult time in the mortgage market because banks and loan packages have gone away that were here a month ago. People are predicting that we will have a tough time well into next year. Money will be tighter, and its predicted that interest rates will creep up.

However, people have been talking about a difficult market in Portland since last year. So far we have not been nearly as slow as 99% of the markets in the country. In fact, there are several areas that have seen an increase in the value of properties over the last 12 months as compared to the same 12 months in 2006-2007. These areas are North Portland (2.7%), NE Portland (2.1%), West Portland (6.8%), and Lake Oswego (5.4%). The fact of the matter is that it has taken us a long time to get to this point, and Portland is still attracting new residents every month. The consensus is that we will be insulated from the worst of it until it finally turns around