Portland-area
market may be kinder to home buyers
Slowing appreciation and a higher
inventory in the Portland area may prove favorable to house hunters
Tuesday, March 20, 2007
DYLAN RIVERA
The Oregonian
Portland-area home prices increased last month by the smallest year-over-year margin since early 2004, and about 4,400 more homes are for sale than a year ago.
The figures from the Regional Multiple Listing Service portend a spring likely to be easier on buyers than last spring, even as the region's price appreciation continues to outrun the nation's.
The median home price reached $279,000 in February, which was 5.9 percent higher than in February 2006. That's the lowest appreciation rate since April 2004, when the median increased 5.4 percent. The February figure increased 1.5 percent from $275,000 in January.
The inventory of homes on the market was 5.2 months -- about double what it was a year ago -- and consistent with higher inventory figures in recent months. Inventory is the number of months it would take to sell the homes currently for sale at the current rate of sales.
The relatively modest appreciation rate shows a market slowdown far more abrupt than Portland-area housing experienced in the past six months, when appreciation rates dipped into the high single-digit percentages for the first time since the housing boom of 2005 and early 2006. In that period, the area's median routinely increased year-over-year in the high teens and as much as 23 percent some months.
Housing markets in the Northwest, including the Portland area, have remained hotter than much of the rest of the nation, and economists project the trend will hold for the rest of this year, even as the rate of appreciation here slims. Buyers have become pickier, and sellers are working harder on strategy.
The appreciation rate trend also signals the more even-keeled market that economists forecast in December. Several local economists predicted an overall 5 percent to 7 percent rate for 2007.
Not bad in comparison
The region's job growth has overwhelmed effects of a slight increase in mortgage rates, said Lawrence Yun, senior economist with the National Association of Realtors in Washington, D.C.
February's 5.9 percent appreciation rate is "certainly a deceleration" from the pace the Northwest set last year, when it beat the national trend, he said.
"Nonetheless, it is still doing better than the rest of the country -- nationwide there is still a price decline," Yun said Monday. "So 5.9 percent is very respectable price growth."
The RMLS data cover sales of new and existing houses and some condominiums in Clackamas, Columbia, Multnomah, Washington and Yamhill counties. Many condo sales are handled in-house by agents who don't list them with RMLS.
The number of closed sales fell 6.8 percent in February, compared with a year ago, consistent with falling demand since last fall.
The overall number of homes for sale increased by 80 percent, to 9,901 on March 1, from 5,503 a year ago. The sharp increase reflects the backlog of homes for sale for several months as well as a 44 percent rise in new listings -- 4,155 homes in February, compared with 3,397 a year ago.
The cooling market has opened possibilities for home buyers, such as Brian and Starla Goff, a couple who made an offer last weekend on a house in Southwest Portland. The couple want a house where their three kids won't have to share two bedrooms, and Brian Goff said they were pleased to find about 80 houses online meeting their criteria.
"We saw a lot of homes and really almost felt like we could be pretty picky," he said. "You can say, 'I like this neighborhood, or this feature, or they have a nice home theater.' "
The Goffs made an offer on a Burlingame house that is contingent on the sale of their three-bedroom Cape Cod in the Westmoreland area of Southeast Portland. Such a contingency would have been a deal killer as recently as a year ago.
Brian Goff said he's not concerned about selling into the weakening home market, for several reasons. He and his wife have upgraded the house throughout the 10 years they've owned it. On advice from real estate agent Peggy Hoag, they plan to paint a few bedrooms, refinish a bedroom floor and install new kitchen countertops.
Most importantly, the Aloha High School graduate said he knows lots of people moving into the Portland area who, like him, want to live as close to downtown as possible.
"It seems like downtown and central Portland is a great place to work, a great place to dine, a great place to shop, and there's only so many places where you can live to be close to it," he said.
Portland still popular
Economists say Goff is generally right. Portland is a popular place to move, in part because home prices here are the lowest on the West Coast, said Jerry Johnson, of the Johnson Gardner economic consulting firm. Job growth here has beat that of the national economy for more than a year, and local growth constraints keep supply from swamping demand, he said.
"It stops developers from doing what they do best, which is overbuilding a market and inadvertently providing affordable housing," Johnson said.
Southwest Washington's median home price was $255,000 in February, 2 percent over the $250,000 figure from a year ago.
Large subdivisions allowed by Washington growth management laws have enabled developers to contribute to high inventories there, Johnson said. The area, which includes Clark, Cowlitz and Pacific counties, had 7.8 months of inventory in February, far higher than the 4.5 months in February 2006.
Dylan Rivera: 503-221-8532, dylanrivera@news.oregonian.com
©2007 The Oregonian