Portland Real Estate Conference: State of the Economy

Summit Mortgage and Lawyer’s Title hosted a real estate economic conference Wednesday afternoon @ Columbia Edgewater’s Country Club in Portland. The event featured local economist Jerry Johnson of Johnson-Reid consulting firm and one of my former teachers at Portland State University’s Urban Planning program. Jerry  was full of interesting tidbits about the national and local markets. Here are some of the highlights:

• People new to Oregon generally move into Multnomah County. Over time, those people who become affluent move to Washington or Clackamas County
• Home builders in Portland and nationally are not building – this is good for the real estate market. Less supply is good in a down market such as this one
• Large corporate home builders can’t get a new home to pencil out financially so they are not building homes. The small local home builders find it difficult to get loans for building, reducing the amount of new construction
• Portland home builders and not building high-end homes, rather homes that sell less than $200,000
• There are 7600 vacant lots in the Portland Metro area. 6% in Multnomah County
• There is 2-4 years worth of lot inventory, but in 5 years we may have a shortfall
• Home ownership rates reached 69% at the height of the market and are returning back down to normal levels (63-65%). Leads to more renters
• The perception of owning is changing: public no longer believes that real estate will “always go up”
• More renters in the real estate market. Those renters will be the futures home buyers
• Rents are increasing and there will be a point in the near future where it will be cheaper to buy than to rent
• The move-up buyer (those who sell their home and buy a bigger, more expensive home), that drove the real estate market, is gone. These home owners used to have $300,000 in equity in there home to use to buy a bigger home have lost most or all of their equity and cant afford to “move-up”
• The lack of move-up buyers have severely hampered the higher-end market
• Homes over $500,000 in Portland sit on the market almost twice as long as those under $500,o00.
• 17.6% of mortgages in Portland are under water, 65% in Las Vegas
• 1/3 of homes sold in Portland are distressed homes
• Portland real estate prices have dropped 25% from their peak
• Portland real estate prices have dropped 10%, year-over-year
• The current prices are below the long term trend. Will we bounce back or start a new trend?
• Portland real estate market needs more high income people in the metro area to lift the real estate market
• People with high income will be driven by an increase in jobs in Portland. Jobs are KEY!