Housing bubble?? (Portland, Beaverton, Tigard: condo, houses, to buy)

[bler144]

Originally Posted by Yankeemama

I am thinking most of the homeowners will have jobs in Hillsboro or Nike so driving Scholl's Ferry to the freeways won't be necessary. Most of my neighbors in Beaverton work in Hillsboro or in Beaverton.

That would be ideal, but from experience (in RL, and on these forums) most peoples' attitude seems to be "I'll live where I want to live, and the commute be damned!" Not to pick on Californians, but they seem to hear "1 hour commute" and say in response "Just 1 hour? That sounds great!"

Even if the hour in question is to go 5 miles.

So even though it would make sense that those developments would attract people going to XYZ, there's no guarantee at all that's actually how it will play.

Originally Posted by oregonwoodsmoke

If Portland needs more housing and everybody wants to live right in the middle of everything, the only option is to go up. Portland could remove height limits for skyscrapers and that would increase the amount of housing available. Because Portland does not require additional parking for new units, expect parking and traffic gridlock to become much worse.

I think ultimately all of this points to an effort to diversify where jobs are in the metro. Obviously OR/Portland has no financial incentive to shunt jobs off to Vancouver, but...it would be a good thing for the metro overall - in the long run - if more of the new job growth were in the areas where the housing growth is happening. Like Vancouver.

If you assume people will live near where they work rather than insisting on living downtown and instead commuting out to Intel, etc. Which many won't, regardless, I suppose. But if I could work/live both in Vancouver, I'd do it, personally.

[AnotherPDXGuy]

"....the only option is to go up. Portland could remove height limits for skyscrapers and that would increase the amount of housing available."

I think there is a misconception that Portland has restrictive zoning. Very few cities in the country have been more on-board with the vision of adding density in the core, for as long as Portland has. Portland is seen in urban planning circles as a pioneer and exemplar of the urban density approach. Our zoning already reflects that attitude and in most places in the central city and along busy corridors already allows greater density than most new developments even take advantage of.

I admit that the single-family areas have protective zoning, but the number of units that would realistically be squeezed into these neighborhoods over time pales in comparison to the number you get from multi-family buildings where they are already allowed. A single new 60-unit apartment building adds as many units as sixty single-family homes being torn down and replaced with two townhomes.

[Cliftonpdx]

Originally Posted by AnotherPDXGuy

"....the only option is to go up. Portland could remove height limits for skyscrapers and that would increase the amount of housing available."

I think there is a misconception that Portland has restrictive zoning. Very few cities in the country have been more on-board with the vision of adding density in the core, for as long as Portland has. Portland is seen in urban planning circles as a pioneer and exemplar of the urban density approach. Our zoning already reflects that attitude and in most places in the central city and along busy corridors already allows greater density than most new developments even take advantage of.

I admit that the single-family areas have protective zoning, but the number of units that would realistically be squeezed into these neighborhoods over time pales in comparison to the number you get from multi-family buildings where they are already allowed. A single new 60-unit apartment building adds as many units as sixty single-family homes being torn down and replaced with two townhomes.

Height isn't the issue in Portland. We currently have plenty of room to have inner Portland full of 325 ft apartment towers, being able to build taller than that wouldn't make these buildings get built.

Portland has been growing tremendously when it comes to large apartment buildings full of tiny units. What it does lack is infill development that applies 2-4 unit buildings being built in single family neighborhoods to increase the density on a much more organic level that would also help to provide units that are larger than the current crop of micro units.

[Port Pitt Ash]

Originally Posted by oregonwoodsmoke

That makes it very unattractive to be a landlord, and so no one invests in rentals.

Knowing Portland like I do I wouldn't doubt it if the city is willing to sabotage itself in an attempt to keep things the same even if the quality of life takes a hit.

After I made comments about how Portland could turn into Seattle part 2 it occurred it me it could end up looking more like Vancouver, BC with everything growing up. Although so far the high rise living hasn't seemed that popular in Portland.

[bler144]

Originally Posted by oregonwoodsmoke

The net result of rent control is that it sharply curtails the available number of rental units and it puts a limit on how much maintenance those units get. No more rentals will be built or come available. Nobody is going to buy a house for $400,000 and rent it out for $1000 because the city puts a cap on rent.

.

You note one potential impact, but the market is more complex than that.

Yes, valuation mostly happens at the margins, but the buying market contains at least a significant number of players who aren't concerned with rising purchase valuations because they think they can eat into the price/rent ratio by raising rents. Moreso if they're using rent simply to cover carrying costs and trying to net profit off overall rising valuations.

Rent controls would largely take those players out of the market, reducing one of the upward price pressures because they would lose a chunk of the cash flow they needed to make the gambit (and gamble) work. But even if rent were capped at $1000, anyone with the leveraging available would still make the purchase if they thought they could still net a significant profit on the hold/resell, just that the current market favors transferring that risk to renters instead.

Yes, to some extent the market will absorb some of what you describe, but the number of factors in play is much larger, and it's hard to predict where things would ultimately settle out.

Edit - and FWIW, the price/rent ratio you're describing ( $400,000 / $12000 annual = 33.33) fits the ratio for modern-day Seattle/D.C./LA., and is lower than NYC or SF. So it's not like it's economically impossible as an outcome, whether or not it's desirable.

[vacuumbed]

Originally Posted by neguy99

Don't live in PDX but know it fairly well.

An anecdote on the 'bubble' question: a friend recently listed his house in what is now a relatively trendy NE neighborhood. Basic 1940s place that they have not updated or even maintained much since they bought it in ~1999. Had something like 15 offers within 48 hours, many above list and with escalation clauses, more than half all cash, several willing to waive all contingencies (i.e., no home inspection), decent number of out of town offers going only off what they'd seen online, and generally willing to bend over backwards in other ways (e.g., one volunteered to close immediately and then let my friend's family stay there rent free the 60 days until my friend can relocate, rather than wait to close).

Usually those would be signs that a market was bubbly like warm cola.

That said, I suspect Portland has more going for it than most frothy markets. It's still a lot cheaper than SFO and significantly cheaper than SEA or LA, and so long as there is an influx of out of state money and jobs that pay well above PDX norms, that can sustain a lot. As was noted above, the housing market is driven by the margins, not the averages. Especially for the inner core; it's not like they can slide extra blocks into Alberta St to create more supply.

Early in the thread someone suggested an "Aspen" future and I think there's an insight there. I've been using the term "Aspenization" for years, though more often thinking of smaller towns like Ashland or Bend. Portland may score so well in amenities both natural and social that housing prices can stay significantly out of whack with typical incomes, on the basis of high-wealth people whose wealth didn't dervive from the local economy. For an even more extreme than Aspen, the county in Montana where Ted Turner and other celebs have their trophy ranches is simultaneously the poorest county in the state.

Anyway, I suspect PDX is primed for a small bubble but I'd buy an argument that long term trend still favors appreciation despite fundamentals that seem misaligned. Then again, maybe a China crash will pull a lot of the crazy foreign money out of CA and Vancouver with trickle-down impacts on Portland.

It's insane that these people are fighting over these old homes in Portland. The same money can get you a way nicer home and a lot more sun in Las Vegas. That said, PDX must be on a bubble. I'm not dogging Portland, I like Portland. I just don't think it's worth that.

[freemkt]

Originally Posted by bler144

You note one potential impact, but the market is more complex than that.

Yes, valuation mostly happens at the margins, but the buying market contains at least a significant number of players who aren't concerned with rising purchase valuations because they think they can eat into the price/rent ratio by raising rents. Moreso if they're using rent simply to cover carrying costs and trying to net profit off overall rising valuations.

Rent controls would largely take those players out of the market, reducing one of the upward price pressures because they would lose a chunk of the cash flow they needed to make the gambit (and gamble) work. But even if rent were capped at $1000, anyone with the leveraging available would still make the purchase if they thought they could still net a significant profit on the hold/resell, just that the current market favors transferring that risk to renters instead.

Yes, to some extent the market will absorb some of what you describe, but the number of factors in play is much larger, and it's hard to predict where things would ultimately settle out.

Edit - and FWIW, the price/rent ratio you're describing ( $400,000 / $12000 annual = 33.33) fits the ratio for modern-day Seattle/D.C./LA., and is lower than NYC or SF. So it's not like it's economically impossible as an outcome, whether or not it's desirable.

Why do so many people here complain about the "risk" of owning property when renters are arguably bearing much greater risk?

[oregonwoodsmoke]

Originally Posted by vacuumbed

It's insane that these people are fighting over these old homes in Portland. The same money can get you a way nicer home and a lot more sun in Las Vegas. ........

The only problem with that plan is that then you have to live in Las Vegas.

[bler144]

Originally Posted by freemkt

Why do so many people here complain about the "risk" of owning property when renters are arguably bearing much greater risk?

I'd wager if you polled the regulars more of them are home owners vs. renters. Indeed, quite a few of them seem to also own (or have owned) rental properties, or perhaps even aspire to do so.

People tend to view the world through the lens of their own experience/priorities.

In a vacuum, I wouldn't say renters always bear more risk, and even owners aren't a homogenous group. The risk for an owner who bought in 1960 (already sitting on significant appreciation, mortgage likely paid off) is very different from someone trying to get into the rental game somewhere up on the bubble.

Not to mention the owners who used their unrealized appreciation gains for re-leveraging and walked into risk quite knowingly.

[Yankeemama]

Originally Posted by oregonwoodsmoke

The only problem with that plan is that then you have to live in Las Vegas.

Location, location... I will say it one more time...location.