Forbes says housing prices in Portland will fall further (Eugene: sales, real estate)

[Rob Allen]

From Forbes.com via Yahoo Finance:

"It's very hard to overbuild in this region, because of urban growth boundaries and a fairly limited supply of developable property," says Randall Pozdena, managing director of ECONorthwest, a Eugene, Ore.-based consultancy. "Wages are 20 to 30% below what wages in the Bay Area are, but home prices are relatively high. We've created an artificial scarcity situation."

In Portland, Ore., homes are overvalued by 31%; in Bellingham, Wash., housing is 22% overpriced and in Eugene, Ore. homes are 21% more than they should be. Local Market Monitor expects prices in Portland to fall 9% in the next year; Eugene prices to drop by 8%; and Bellingham to see a 9% fall.

Full article: tomorrows-real-estate-trouble-spots: Personal Finance News from Yahoo! Finance

[PNW-type-gal]

Interesting outlook - wages in the big cities in Oregon have always been about 20% lower - the trick is the houses are 50% less.

[philwithbeard]

Originally Posted by Rob Allen

From Forbes.com via Yahoo Finance:......

OK article, but I still firmly believe in supply / demand for Real Estate prices. So I ask, what standards are used to determine Portland housing is overpriced by 31%, or 21% or whatever.

And as far as market forces go, I am still unclear as to why real estate prices will fall 9% as opposed to 10%, or say only 6%. What are the forces in play specifically in Portland to cause the prices to drop? I haven't been aware of the foreclosure rates in Portland to be as high as other cities in USA; am I wrong?

I got the impression from the quoted article that the rating company had come up with a national averaged estimate on housing costs per square foot of the home, and a 2nd estimate on cost per sq-foot of land the home sits on, and added the two estimates together. Then compare with each market's homes to that estimated standard costs. Due to the heavy weighting of that standard due to price drops in Detroit, Cleveland, LA, Las Vegas, etc due to population sizes, any such standard would be on the low side.

Once, long time ago, I read something about real estate occupancy rates of something like 90% to 95% is an ideal rate (from the view point of makers of Public Policy), so landlords and sellers of homes and condos had an incentive to settle for less than they ask for, and maintain upkeep on vacant property.

I would be curious to hear a real estate professional's take on this expected 9% drop. Does any one concur, from their own prospective this would be an accurate expected drop for all of the Portland area, or just for the city of Portland?

Phil

[Portland Home Remodeling]

Not many areas were jammed with new homes that would jack up the prices compared to some other cities. About all the gains of the past 10 years will be wiped out so that seems to be the watermark. As an area fares against this standard they will get hit.
Portland Kitchens and Bathroom Remodeling

[tigerlily]

The latest S&P's Case-Schiller index statistics are not too encouraging for the Portland area either. Markets may be showing an increase in sales because of the federal tax credit.
Clip:
Portland, Charlotte, Las Vegas, New York, Seattle and Tampa posted new lows for home prices.
Portland home prices have dropped 23 percent since the market peaked in July 2007.
Nationally, home prices have returned to mid-2003 levels after peaking in mid-2006.
...
Home prices were up 1.4 percent nationally in the index's 10-city composite and up 0.6 percent in its 20-city composite. It was the first time both indices showed positive growth since December 2006.
For the month, home prices fell in 18 of the 20 cities in the index, including Portland, where prices fell 2.4 percent, the biggest month-to-month decline in the index.
Home prices fall 4.8 percent - Portland Business Journal: