Portland Real Estate Market thread

[MarkDaMan]

as a renter...hopefully not for long, I agree rents have gone up, but not by thaaat much, considering my rent didn't move upward for 3 years. I'm happy to pay my landlord an extra $50 a month as I still see Portland, and the place I live, to be extremely affordable for renters. You can still find a $500 studio in NW, utilities paid, or a 3 bedroom in Gresham, Beaverton or Hillsboro for under $850.

[WestCoast]

just had my offer accepted for a 2 bedroom condo downtown. market is still soft so it seemed like time to buy. I'm so excited, hope to close by the end of the month...one more person (plus roomate) living downtown )

[MarkDaMan]

Dems look to restrict condo conversions
Daily Journal of Commerce
by Kennedy Smith
04/16/2007


It started when Ian Slingerland, executive director of renter advocate Community Alliance of Tenants, noticed an increase in the number of calls to the organization’s hotline.

The calls were about condo conversions, and tenants being displaced by an uptick in conversions were starting to wonder about their rights.

In response to the influx of calls, Community Alliance of Tenants, along with other tenants’ rights groups, wrote House Bill 3186, which would enforce tougher rules on condo converters.

Under the proposed legislation – backed by Northeast Portland Democratic Reps. Chip Shields and Tina Kotek – condominium converters would be required to give 120 days notice to tenants and would not be allowed to evict tenants without cause.

It would also limit the time of day in which improvements on units could be made to a 9 a.m. to 7 p.m. window.

The rule would also force landlords to pay tenants’ relocation fees at three times the amount of a unit’s monthly rent. This requirement, real estate lawyer Howard M. Feuerstein of Stoel Rives said, could make condo conversions simply too expensive to be worthwhile.

Sitting on investment

“The house bill sucks,” developer Marty Kehoe said. “It’s ridiculous. It’s going to run up the costs of construction, and it’s going to close off an entire avenue for first-time home buyers.”

Kehoe, who estimates he’s done about $250 million worth of condo conversions, says the rules now in place are fair.

“Rental rates have gone up, cap rates have gone down, the sales price of condos has returned to a more normal pace,” he said, “so the only thing this bill will do is make conversions just that much harder to do.”

But the bill, Slingerland said, is a positive step toward tenants’ rights. Current law requires landlords to give 120 days’ notice on a condo conversion project. But landlords are free to give tenants 30 days’ notice at the same time, virtually wiping out the 120-day notice rule, Slingerland said.

But real estate investor Greg Frick said “the days of 30-days’ notice with no cause are out” if HB 3186 passes.

The added regulation, he said, would “drag the process on longer and make for a lot more paperwork.”

And renters, Kehoe said, already have plenty of time to move.

“There’s a reason you buy a house, and that’s so you can’t get thrown out of it,” he said. “If you don’t want the responsibilities of homeownership, there’s a downside, and that downside is that you can be asked to move out, just like you can choose to move out.”

Market slowing down

Condo conversions have exploded in recent years, particularly in Multnomah County, according to the Realtors Multiple Listing Service. Seventy-six condo conversions were filed in the county in 2006 after just 18 in 2005 – that’s a 322 percent increase in a year.

But it’s going to be hard to tell whether the bill – if it becomes law – would be responsible for a condo conversion slowdown or if market forces would be to blame, Frick said.

“One of the trends we’re already seeing is that there’s a slowdown in the market anyway,” he said.

That makes the bill unnecessary, Feuerstein said.

“I saw this same thing about 20 years ago when condo conversions were starting to happen,” he said. “There were lots of bills and so forth, but the market did a self-correction. Some were converted back to apartments. It’s the same today; the market seems to adjust itself if there’s rental shortage.”

If you go

Public hearing for HB 3186

1 p.m. today

Hearing Room E, State Capital Building, 225 Capitol St. N.E., Salem

House Bill 3186

• Condo converters must send 120-day notice to tenants and a copy of notice to city municipalities or the mayor or county commission if outside city limits.

• A landlord may not terminate a tenancy without cause and may not unreasonably increase rent.

• A landlord must provide certification that no evictions or rent increases have taken place without cause.

• Improvements to units may only be conducted from 9 a.m. to 7 p.m.

• A condo converter must pay a tenant an amount equal to three times the Section 8 fair market rent, adjusted for unit size and type. Payment must be delivered no later than 30 days after the 120-day notice.

• A tenant may bring action against a converter to recover six times the monthly rent or twice the actual damages to the tenant arising out of termination.

http://www.djc-or.com/viewStory.cfm?...29287&userID=1

[Snowden352]

I posted this already in the Northwest Economy thread, but thought considering its impact on Real Estate, it should be here, too.

Washington Mutual announces $2B program to help subprime borrowers
Portland Business Journal - 10:33 AM PDT Wednesday, April 18, 2007
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Washington Mutual Inc. said Wednesday it is starting a $2 billion program aimed to help subprime loan borrowers avoid mortgage foreclosures.

On Tuesday, when announcing first-quarter earnings, company officials said they were going to rein in subprime lending. Steve Rotella, Washington Mutual's president and chief operating officer, said there was "turmoil in the subprime sector," and told shareholders that Washington Mutual's subprime segment lost $164 million in the first quarter.



In the $2 billion program, the Seattle-based bank (NYSE: WM), which has 105 branches in Oregon, said subprime borrowers who are current with their existing loans but face payment increases may apply for "new discounted fixed-rate loans or other mortgage products," such as a 30-year fixed-rate subprime loan with the interest rate discounted by 50 basis points.

Washington Mutual also said it will offer "prime mortgage product options for borrowers who qualify."

[MarkDaMan]

Portland home market cools
Real estate - Condo and house prices are up over last year, but it's taking longer for properties to sell
Thursday, April 19, 2007
JONATHAN BRINCKMAN
The Oregonian

Kerstin Erickson bought her condominium in The Vaux, a new luxury building in Northwest Portland, in November 2005 for $345,000. Two months ago, she put it on the market for $364,900.

But buyers have been slow to materialize. On Wednesday, Erickson lowered the asking price for the one-bedroom unit for a third time, dropping it from $354,000 to $344,900.

"I want to get rid of it as soon as possible," she said. "I'm very motivated to sell it."

Other home and condo sellers in Portland area might increasingly share Erickson's frustration, based on March statistics released Wednesday by the Regional Multiple Listing Service. The average time it took for a home to sell in the metro area increased by 44 percent over the past year, from 45 days in March 2006 to 65 days last month.

The good news is that sales prices for homes and condominiums in the Portland market continue to rise -- unlike in many other parts of the country. RMLS reports that the average sales price of a house that sold last month is 9.4 percent higher than during the same month a year ago, and the average price of a condominium is up 4 percent.

The bad news is that it's taking longer to unload properties.

Mary Ann McDowell, a real estate agent specializing in urban condos, figures the average time to sell a condominium in the downtown/Pearl District/westside area is up from 43 days the first three months of 2006 to 87 days the first three months of this year.

"It takes a lot longer to sell than when we had a really hot market," McDowell said. "For many years, Realtors thought 60 days was a safe guideline. Right now, we're above and beyond that."

Still, McDowell said that with prices holding their ground here, she doesn't mind the fact that the market has cooled. "It gives buyers more time to think and evaluate," she said.

Tim Duy, an economics professor at the University of Oregon, said that while housing sales are slower in the Portland market than they were a year ago, they aren't "disastrously slower" such as southern California.

One reason the Portland market is doing relatively well, he said, is that it never dramatically overheated. "Sales are off, but have held up very well compared to elsewhere," he said.

Jonathan Brinckman: 503-221-8190; jbrinckman@news.oregonian.com

http://www.oregonlive.com/business/o...800.xml&coll=7

[MarkDaMan]

a little late for this...

State House OKs restrictions on condo conversions
by DJC Staff
05/23/2007


The Oregon House has passed a measure to add protections for tenants displaced by a condo conversion.

House Bill 3186-A, which now moves to the Senate, would require a 120-day displacement notice for tenants forced to relocate because of a conversion and would ban condo converters from evicting tenants without cause.

The bill also limits the time when construction work on a condo conversion can be completed to an 8 a.m. to 5 p.m. window.

The bill when introduced originally in the House called for mandatory relocation benefits for displaced tenants in the form of three months’ rent. That provision was removed from the measure that passed last week.

“We would’ve liked to have seen statewide assistance for tenants with moving,” Ian Slingerland, executive director of renter advocate Community Alliance of Tenants, who helped draft the bill, said Tuesday. “But local jurisdictions still have the ability to help. We’re pretty happy with this measure.”

http://www.djc-or.com/viewStory.cfm?...29467&userID=1

[Snowden352]

To be honest, I'm a little shocked by this; but Forbes has rated Portland the #4 best real estate market in the country (with boring ol' Seattle on top again). Here's the tidbit:


Real Estate Feature
Best And Worst U.S. Housing Markets
Matt Woolsey, 05.15.07, 4:00 PM ET

Live in Seattle? If you own your home, chances are you're celebrating.

That's because the city's median home price in the first quarter of this year hit $380,200, an increase of 12.3% from a year earlier, according to data from the National Association of Realtors (NAR). Median home prices in the Pacific Northwest as a whole soared; in Portland, Ore., prices jumped 8.9%, and in Salem, Ore., they grew 15.6%.

[Leo]

http://www.oregonlive.com/business/o...l=7&thispage=1

Mostly as expected, but it gives details on sales rates in some of our favorite towers... (The Civic, John Ross, Westerly, etc.)

Some quotes are surprisingly candid:

"Nelda Newton, a senior vice president at Wells Fargo, is generally positive on condos long term but acknowledges that current condo sales can barely keep pace with cancellations."

"In the past six years, developers built 4,042 downtown condos, more than twice the figure from the previous 30 years{ emphasis added}. Today, developers have nearly 2,114 condos under construction."

[tworivers]

Very interesting specifics.

Front Porch (Oregonian)
Saturday, November 03, 2007

Portland's home sales fall at faster rate than nation's

Gerard Mildner over at Portland State's Center for Real Estate is out with his third-quarter report, and it's full of interesting notes.

Karen Thalhammer, a grad student, found Portland's existing home values were far stronger than the nation's. Portland's value rose 3 percent in September compared with the same month in 2006, but the nation's values dropped 4.2 percent. But the number of deals in Portland has dropped far faster than sales nationally. Portland is off 32 percent in sales vs. 19 percent nationwide.

Drilling down, Thalhammer found existing homes in Northeast Portland, Oregon City and Southeast Portland reported the fastest home price growth.

The places with declines? Milwaukie and, ahem, Lake Oswego.

Bend also is sucking wind. In the third quarter of 2006, the dreamy central Oregon destination reported a 30 percent jump in the median value of new and existing homes. But in 2007, the values dropped 1 percent. Construction was also way off. Single-family building permits are down nearly 50 percent in August.

In condo land, grad student Greg LeBlanc documents the chill that's fallen over South Waterfront, Northwest Portland and the Pearl. He found the number of condo sales in the first seven months of 2007 is off 21 percent compared with 2006.

After a steep increase in recent years, sales prices are drooping in South Waterfront. From 2004 to 2006, the average condo there went from $216,000 to $548,000. But in 2007, the average sale price fell to $443,000.

On a per-square-foot basis, South Waterfront's median sale price is $337, off 19 percent from the year before. The Pearl, the highest price of the trio, has leveled off at $427 per square foot.

[zilfondel]

Hmm, looks like its falling back to realityland.

[PacificNW]

↑ Good for buyers....

[tworivers]

Thanks to Aya for the heads up.

NYT National Perspectives

A Small-Town Feel in an Urban Locale

By BILLIE COHEN
Published: November 4, 2007

AFTER spending several years in the South, Darrell Wallace and Jennifer Adkins of Greensboro, N.C., decided it was time to move. “We’re both artistic and politically active, and it was really hard to find peers into the same thing in Greensboro,” said Mr. Wallace, 30.

The couple chose to relocate to Portland, Ore., last spring because of “how beautiful it is, and how much the people respect the beauty and put forth an effort to maintain it,” he said.

Mr. Wallace and Ms. Adkins are not the only ones impressed with the city. Last year, there were twice as many people in the 25-to-39 age group moving into the city as leaving, according to Charles Rynerson, a demographer with the Population Research Center at Portland State University.

In all, 23,454 young adults moved in, while only 12,125 moved away, giving the city the fourth highest net migration in the country, after Las Vegas, Charlotte and Atlanta, Mr. Rynerson said. And in the over-55 age group around 12,000 individuals moved to the city.

Part of the draw is that Portland has maintained a small-town feel in an urban atmosphere. There is a vibrant restaurant and cultural scene, accessible public transportation — light rail, street cars and buses — and a population enthusiastic about the outdoors and the environment. Mount Hood is an hour east of the city and the Pacific Ocean is an hour and a half west.

Although the Portland region is home to high-tech companies, like Intel and Hewlett-Packard, along with athletic apparel companies, like Nike and Adidas, individuals often move to Portland for reasons other than work.

“If you really wanted to get rich, you might choose a different metropolitan area,” Mr. Rynerson said. “There are other places with more job growth and higher salaries, but the quality of life is what people come here for.”

Another draw is the affordable rental market. After exploring several neighborhoods, Mr. Wallace, an information technology professional, and Ms. Adkins, 26, chose Portland’s Southeast section, a popular neighborhood for young people. “It is cozy, self-contained, functional and quiet but still has plenty of stuff to do,” Mr. Wallace said.

The couple rent a studio for $595 a month. What they pay is typical for Portland. According to the Metro Multifamily Housing Association, which represents residential property-managers, the average rental price for a studio in the Southeast section is $525, while a two-bedroom apartment leases for $724. In the Northwest area, which includes the trendy Pearl District, studio rentals average $571 and two-bedrooms cost about $971.

“In Portland, people are either Eastside people or Westside people,” said Charles Turner, a broker with of Prudential Northwest Properties, referring to the geographical wall formed by the Willamette River. “If you want to be on the Westside, your price range will start a little higher and you’re going the have trees and bigger lots.”

Buying options are comparatively affordable, as well. While the rest of the country has seen housing prices boom and now fall, Portland has remained reasonably stable.

According to the Regional Multiple Listings Service for Oregon, the average sale price for a condominium in September was $257,200, up from $246,800 in 2006. The median price of a single-family detached home was $308,003, compared with $380,200 in the Seattle-Tacoma area, $595,200 in San Diego and $748,100 in the San Francisco Bay area, according to Portland State University’s Center for Real Estate.

Barnaby Willett, 34, who moved to Portland from Manhattan, found the prices so attractive that he decided to forgo his original plan to rent when he first moved to the city in 2006. “I visited my brother in late 2005, and he lived in Belmont,” said Mr. Willett, an information consultant. “I liked it off the bat. I’ve always enjoyed feeling connected to where I live, but it was harder to do that in New York.”

He said it was easy to meet people in Portland and noted that artistic expression seemed to permeate the culture. Last March, Mr. Willett bought an 865-square-foot condo in the Southeast area for $320,000.

Young people are not the only ones drawn to Portland. Richard Caplan, a broker with the Windermere Cronin & Caplan Realty Group, said that his agents recently have seen a lot of retirees moving to the Northwest district neighborhoods.

Though the city is “not strictly a retirement place,” he said, “Portland allows them to be part of the larger community, not just the retirement segment.”

Richard and Lila Suffoletto would agree. The couple, both in their mid-60s, had been living in an over-55 community in Sacramento, Calif., for three and a half years before buying a town house in the Northwest section last month. “Frankly, we were bored to tears,” said Mr. Suffoletto, who retired from a career in medical and security equipment.

Jan and Juergen Striemer moved to the city after living for more than 40 years in Los Angeles. The couple had become familiar with the area after visiting friends in Seattle and taking a road trip down the Oregon coast, a stretch of land that Mr. Striemer, 67, referred to as “one of the most gorgeous pieces of real estate anywhere on Earth.” The Striemers paid $550,000 for their contemporary house near the Pearl District. “In Los Angeles, it would’ve cost $1.5 million to start,” Mr. Striemer said.

Both he and his wife noted that Los Angeles had become too crowded, too polluted and, surprisingly, too sunny for them. “We never realized how much both of us had missed seasons and trees,” said Mrs. Striemer, 57. “Who needs another beautiful day in paradise? Give me some weather.”

From early-20th-century Craftsman-style houses to converted industrial buildings to environmentally conscious new developments, the diverse mix of housing appeals to both young and old. Two such examples are the Clinton Condominiums and the Belmont Street Lofts, mixed-use projects, developed by Randy Rapaport, where Mr. Willett bought. Mr. Rapaport said he wanted to create a development that embraced the Portland sensibility of low-impact living, clean design and community focus. “It’s about the unwritten philosophy of Portland,” he said, “that this is a do-it-yourself, local, sustainable community.” His retail tenants include a yoga studio, a hair salon and a Malaysian restaurant.

As the housing markets in Los Angeles, San Francisco and Seattle remain high, Portland has become one of the few affordable urban options on the West Coast. Couple that with its natural beauty, its activist personality and its creative sensibility and the appeal is clear. “It’s very common that someone will visit a friend,” Mr. Rapaport said, “and then they’re moving here three months later.”

[sopdx]

Oh my god. It seems that the NYTs has an article a week about us! One goofy comment was “If you want to be on the Westside, your price range will start a little higher and you’re going the have trees and bigger lots.” The last time I looked the Eastside had trees as well.

[Leo]

Fortune just released the "25 real estate market poised to fall." Portland is #23 and home prices are predicted to fall by 19% over the next 5 years. The prediction is based on price/rent ratios, which is the same thing I used for my guesstimate of a 20% drop (it's nice to have Fortune double-check your math for you :-) )

http://money.cnn.com/galleries/2007/...ortune/23.html

[brandonpdx]

their assumption on average rent increase per year is off. rents have exploded in the Portland market just like the cost of homes did over the last 5 years.
The truth of the matter is that no calculation can predict the economic future of Portland's housing market.

[Leo]

Originally Posted by brandonpdx

their assumption on average rent increase per year is off. rents have exploded in the Portland market just like the cost of homes did over the last 5 years.
The truth of the matter is that no calculation can predict the economic future of Portland's housing market.

My rent certainly has not exploded, so I don't know why you think their assumption about rent increases is off. In order for rents to increase significantly, income will need to increase significantly, and that has not happened.

I'm unconvinced that anything has happened in the last 5 years that would change the way this market has worked in the past 20 years. More likely than not, Portland will revert to the historical equilibrium, and more likely than not, Portland will behave like other markets in this country.

I was just surprised that the 19% they came up with was pretty close to what I had expected based on casual observation alone.

[brandonpdx]

Originally Posted by Leo

My rent certainly has not exploded, so I don't know why you think their assumption about rent increases is off. In order for rents to increase significantly, income will need to increase significantly, and that has not happened.

I'm unconvinced that anything has happened in the last 5 years that would change the way this market has worked in the past 20 years. More likely than not, Portland will revert to the historical equilibrium, and more likely than not, Portland will behave like other markets in this country.

I was just surprised that the 19% they came up with was pretty close to what I had expected based on casual observation alone.

I just saw in the Oregonian that the Alexan is going to charge about $2.20 or $2.25 per square foot. To me that is an explosion in rent. I paid about $1.20/sq ft about 5 years ago for a 1 bdrm in NW. I've also read numerous articles where competition is fierce for rentals hence rates are going up.

My thoughts are that the Portland market will return to a historical equilibrium in annual gains. I don't see Portland's home value dropping 19% in 5 years. For one, there's still a lot of folks moving here. Portland is still the cheapest city to live in on the west coast.

[Leo]

Originally Posted by brandonpdx

I just saw in the Oregonian that the Alexan is going to charge about $2.20 or $2.25 per square foot. To me that is an explosion in rent. I paid about $1.20/sq ft about 5 years ago for a 1 bdrm in NW. I've also read numerous articles where competition is fierce for rentals hence rates are going up.

Do you think the Alexan will be comparable in quality, or higher in quality, than the 1bdrm you rented in NW? I also pay more for an apartment today than I did 7 years ago, but it's a much better apartment. My former apartment costs only a little more ($30) to rent today than it did 7 years ago.

I do believe that average and median rents will increase in Portland, but primarily because there will be more high-end apartments. Five years ago, high-end rentals like the Louisa and the Burlington didn't even exist, let alone rentals like the Wyatt and Ladd Tower.

Originally Posted by brandonpdx

My thoughts are that the Portland market will return to a historical equilibrium in annual gains.

Historically, it has never worked that way. Historically, real estate markets return to equilibrium prices, not equilibrium gains. That is why the equilibrium annual gain for same-house sales is only a little higher than the rate of inflation. (This makes sense if you think about it: if real estate really became much more expensive than inflation, there would be fewer and fewer homeowners every year, not more and more.)

Originally Posted by brandonpdx

For one, there's still a lot of folks moving here. Portland is still the cheapest city to live in on the west coast.

There are many people moving to Portland, but is that number larger than the number of housing units they need? The condo slump suggests that it is not. Portland may be the cheapest city with population greater than some arbitrary number, but it is not cheap compared to the incomes people make here. The beauty of the rent/price indicator is that it already factors this kind of stuff in. If in-migration was really "large enough" and prices were really "cheap enough" , then the price/rent ratio would not deviate from historical norms; rents would rise as much as housing prices, and the ratio would remain unchanged. In fact, the rental market would react to changes in supply and demand much more quickly than the housing market, so if there was really a massive influx of population, rent would go up before prices, and then prices would catch up later. That's not what happened in Portland (or anywhere else, for that matter). This is why many people use the price/rent indicator to gauge where prices will return to: it automatically accounts for any changes in the supply/demand balance that may support a sustainable increase in real housing cost.

[brandonpdx]

^The truth of the matter is that no calculation can predict the economic future of Portland's housing market.
-One can certainly have some educated guesses but bottom line is that no one really knows. There are so many unforseen x factors.
-It is just like the stock market.

[Leo]

Originally Posted by brandonpdx

^The truth of the matter is that no calculation can predict the economic future of Portland's housing market.
-One can certainly have some educated guesses but bottom line is that no one really knows. There are so many unforseen x factors.
-It is just like the stock market.

True. Just like the stock market, the best you can do is try to see clearly, assess likely situations and their risks and benefits, and place your bets so you have a chance at winning without incurring the risk that you'll lose your shirt. There are no guarantees.

Really, the most surprising thing to me was that the 19% number in the study, based on price/rent ratio, turned out to be so close to my 20% guesstimate, based on the same method but using a rather anecdotal dataset...