Suburbia economic downward pressure or News hype? (Portland, Tualatin: real estate market, foreclosed)

[philwithbeard]

News story CNBC:
News Headlines

Ex-urban McMansions have questionable future? Gen-X and Gen-Y seem not to be as interested in 'burbs far into the country. Immigrants, for several reasons, rather have physically closer neighbor's houses than McMansions typically have. Underwater mortgages, multi-generation homes, growth of +55 local housing close to kids and grandkids, yada, yada, yada.

Don't look good for the Ex-urban McMansions all across USA.

Any thoughts on how this affects Portland's real estate market?

Phil

[John Shaft]

Just wait a few years. The pendulum will swing back again as the next generation reacts to the prevailing culture.

[HowGoesIt]

The fact that suburbs are declining is bad news for urbanites. We will see massive gentrification in cities over the next couple years and most hip areas become very unaffordable. I think this is partially why real estate has been hit really hard in the 'burbs, but prices in the city stand firm. This is true in many cities across the country.

[subsound]

No real good comparisons in that article actually. It's not a competition of the extremes, where you have a very nice (and expensive) urban house or condo versus a massive 7,000 foot exurban mini ranch...there are massive ranges of housing sizes, ability to afford the houses, locations in desirability (crime, congestion) that are excluded in the opinion of the writer.

There are many people around who bought expensive urban condos (especially in Pearl or South Waterfront in Portland) that are underwater and being foreclosed on that not even acknowledged. Even those who have decent suburban (or exurban) homes that are not under water, and have no desire to move. It's either broke big home or good urban home, which is just cherry picking data.

Plus it doesn't have any relation to Gen X/Yer's outside of desire, that simply can't afford to buy bigger houses then the homes they come from because the economics don't make sense. A starting grad in the market is not going to out purchase a family unit that has purchasing power after 20 years of experience, promotions, and training. Nor would many want to. A calm family dwelling is not near what many younger people desire in nightlife. Many boomers did this same thing after moving out into the world, and before moving the suburban homes.

[AnotherPDXGuy]

Sometimes it's tough for urbanites to remember that there are many people who prefer to live in the suburbs. They like those homes, schools, quiet, like-minded people, don't mind driving everywhere.

I think that there are a lot of intellectuals who live in cities who keep declaring that the suburbs will fail because they don't understand those preferences themselves. Lot of hot air and wishful thinking in my opinion.

There is certainly an outer limit (how long the average person will willingly commute, for instance) that places some limitations. But it's much farther out than new urbanists admit. In the search for affordability, the LA suburbs now sprawl out so far that people commute for two hours in each direction. Not good for anyone, but the point is that they're still willing to do it, in order to have that suburban house. It's a mistake to discount the viability of a housing type that exerts that kind of draw on people.

My work is related to the urban planning field in Portland and I hear a lot of this stuff from planners. "People will want to live in dense multi-family buildings near the central city." Really? Then why the 50% vacancy in the South Waterfront? There's high vacancy all over the central city with great rental deals on offer. Why aren't they being snapped up? Isn't this how people "want to live" now?

Literally, all the urban planners I know live in detached single-family homes. I don't know any who live in dense condos near the MAX or something like that. So what is this talk about how "everyone will want to live this way"? Even the people preaching it don't want to live that way.

Sorry for the rant, Philwithbeard. In answer to your question, real estate the inner Portland neighborhoods will continue to be attractive and gain in value. It's quite possible that these neighborhoods have already bottomed out in price. (These are the inner neighborhoods mind you.) Affordability for the poor and young families will increasingly be an issue. Gentrification will proceed out towards 82nd and the remaining affordable pockets in North, Northeast and Southeast.

The only thing that could reverse the trend would be rising crime rates, which will depend on how bad the economy/unemployment get. Then you'd see another exodus like the 60's and 70's.

But even without that, I wouldn't expect the suburbs to turn into ghost towns. I think they'll do just fine. The big new homes built out there recently lost the most value over the past few years, but they'll be snapped up once the price falls to the right level. The City of Portland has been losing jobs to the suburbs for a long time now. People will want to live by those jobs.

[jrkliny]

This "article" seems to be one persons opinions with no facts or industry consensus cited.

Those in the young singles social scene are different, but most people seem to want as much space as they can get for their money. That has been the suburban trend for decades and I don't see that changing. Many of us who are getting older and ready to retire may not want a big McMansion but we are hesitant to downsize. I also think the author is wrong about selling houses. The value of houses has declined but many of us still have a lot of equity and can still sell and easily buy something smaller.

[philwithbeard]

Thanks all for your thoughts.

And no, I do not believe Milwaukie will turn into a ghost town any time soon. Or West Lynn either. However, I also believe there are people with the income to live in grand homes far into the distance reaches of Ex-urbia. But that high income population I believe, is a small numeric number. Way below the number of McMansions that were built in the last decade.

BTW: SouthWater front has high vacancies because of Supply and Demand and them's prices are NOT what a buyer is willing to pay. Another huge and long oil supply crunch like the spring and summer of 2008 (regular gas at over $4.35 a gallon back in the Mid-West) and people paying over $80.00 per week to keep their cars running, then the prices for South Water Front will make sense again.

But curious, does anyone posting on this board actually live in a home around Portland that is over 7000 sq ft? With or without the 1/4 acre front yard. I would be surprised. I think most homes I have seen in Portland 'burbs are under 4000 sq ft, maybe 5000 sq ft.

Phil

[LeftCoastee]

Originally Posted by philwithbeard

Another huge and long oil supply crunch like the spring and summer of 2008 (regular gas at over $4.35 a gallon back in the Mid-West) and people paying over $80.00 per week to keep their cars running, then the prices for South Water Front will make sense again.

Well, that would be a valid statement if one assumes most of the jobs are downtown. I'm not so sure thats the case any more. I live in Tualatin and work from home. My wife works in Tualatin 3 miles from my house. High gas prices would make living down town even less attractive for us.

Out of my small group of Portland friends (8), only one works downtown.