Thank God we don't live in Detroit

From ABC News:

Nearly 3 in 10 residents of Detroit need a job.

The unemployment rate in the city of Detroit rose to 28.9 percent in July, the highest rate of unemployment since Michigan started keeping modern numbers, according to the Michigan Department of Labor, Energy, and Economic Growth.

113,008 people in Detroit are without jobs, 277,815 people are currently employed.

Despite news of an improving economy, many residents of Michigan haven't felt the impact of the nation's stimulus programs. The state of Michigan has the highest unemployment rate in the nation at 15 %. Other large cities in Michigan are extremely challenges as well. The city of Highland Park had a 36% unemployment rate in July, Pontiac 35 % and Flint 28 %.

Portland is down to 10.9% last month.

August Case-Shiller data shows improvement for Portland

The S&P Case-Shiller Index is based on observed changes in home prices. It is designed to measure the increases or decreases in the market value of residential real estate.

For each home sale transaction, a search is conducted to find information regarding any previous sale for the same house. If an earlier transaction is found, the two transactions are paired and are considered a “repeat sale.” Sales pairs are designed to yield the price change for the same house, while holding the quality and size of each house constant.

Sales pairs from the following counties are included in the Portland index: Clackamas, Columbia, Multnomah, Washington, Yamhill, Clark (WA), and Skamania (WA).

The first graph shows all historical data for Portland, Seattle, and the 10 city index. The Portland residential real estate market has fallen 12.6% in the last year.

The second graph highlights the changes since the Federal Reserve stopped lowering interest rates in June of 2003. The Portland index is currently at 148.51; a decline of 19.85% since the market peak. The last time the index was this low was June of 2005.

The final graph shows the year over year percent change since June of 2003.

It looks like Portland is following the national trend and might be bottoming out soon. There is some concern that the Case-Shiller data is not correctly adjusting for the positive seasonal trends so there might be some more negative news as the slow winter months get added to the graph.

Even if this isn't the exact bottom we are certainly closer to the bottom than the peak.

One month left to claim tax credit

From The Oregonian:

Boye Oshin is gambling with a bank to win $8,000.

The 24-year-old Intel engineer has tried since June to buy a three-bedroom Hillsboro home. But the seller is still waiting for approval from the lender who would lose money on the deal. The house is underwater with the seller owing more than it's worth.

Oshin, on the other hand, needs the deal to close by Nov. 30 to score an $8,000 federal tax credit for first-time buyers.

Can he make it?

That's anyone's guess.

Oshin joins a backlog of buyers trying to close a home purchase before the tax credit deadline.

Home purchases -- when there's not a single glitch -- can move as fast as a month from the date the seller accepts an offer to the date the deal closes. With the housing market in tatters and underwriters under pressure to scrutinize deals, most sales aren't moving that quickly. Most deals need 45 days or longer to close.

For those still hoping to get the credit, mortgage bankers and real estate brokers warn that buyers should have an offer accepted within days -- at the latest
...
The National Association of Realtors has estimated that about 1.8 to 2.0 million first-time buyers will use the credit this year. But of those, the group said, only about 350,000 are people who wouldn't have bought without the credit.

Based on the group's math, the true cost of the credit is not $8,000 per buyer. It's actually $43,000 per each net new buyer, according to an analysis by the financial blog Calculated Risk.
...
Rick McDowell, Oshin's real estate broker, expected the bank would decide within three months of making the offer in June. But they're still waiting for what the bank calls a "Phase 2" and final approval.

"It's a bureaucratic nightmare," McDowell said.

With weeks to go before the credit expires, Oshin reluctantly paid for an appraisal. If the deal fails, he'll have lost the $500 fee.

"When I think about potentially getting that $8,000, it's worth it," Oshin said.

The appraisal alone can take two weeks. New federal rules limit mortgage brokers' contact with appraisers. The goal is to prevent brokers from pressuring appraisers to issue a favorable report, but it also makes it more difficult for brokers to control how fast the work is done.

Emory, Oshin's mortgage banker, said: "He's going forward because it's the only chance he has of making it."

This isn't the first horror story about trying to buy a short sale. Most people who are racing the clock to get the $8,000 tax credit have passed on any 'third-party approval' properties because of the uncertainty involve. My guess is that Oshin will not get the home.

A little more good news

From the Oregonian:

Dick’s Sporting Goods, a Pittsburgh-based chain with 409 stores in 40 states, will on November 8 open six stores in Gresham, Tualatin, Hillsboro, Salem, Eugene and Bend in spaces formerly occupied by the now-defunct Joe's.
Dick’s, while declining to disclose specifics, said its Washington Square location has done extremely well since opening in March 2008. The company said that each of its new Oregon stores will employee between 40 and 60 people.

500 new jobs is always welcome but most of these positions won't help the real estate market out.

Green shoots appear in Oregon

From the Registerguard:

Uni-Chem, a South Korean leather fabricator that is diversifying into the solar business, told the Associated Press Saturday that it plans to buy the west Eugene plant from Hynix for $50 million.

Uni-Chem could invest up to $1 billion to convert the Eugene plant to solar production and employ up to 1,000 employees in Eugene, said Roger Little, CEO of Spire Corp., a Massachusetts company that is working with Uni-Chem to retrofit the Eugene plant.

Local community, business and work force leaders all were cheered by the prospect of Hynix’s mothballed Eugene computer-chip plant churning out solar cells in a couple of years.

It would bring much-needed jobs to the community, help rebuild the anemic tax base, and strengthen Eugene’s position in the clean-energy industry, they said.

It also would give a tremendous “psychology lift … to our regional business community and our citizens,” said Dave Hauser, president of the Eugene Area Chamber of Commerce.

From the Oregonian:

SolarWorld, the German photovoltaic giant, is expanding its solar manufacturing foothold in Oregon sooner than expected, with a second facility nearing completion on its Hillsboro campus.

On Sunday, the company announced its new 210,000 square-foot facility, to be done in November, will house module assembly lines, the last step in the production of finished solar panels.

The expansion, which comes just a year after the company's launch in Hillsboro, will make SolarWorld the only company to sell solar panels made entirely in Oregon, starting from the first step of growing crystals out of silicon.

In Hillsboro, SolarWorld's new facility will help reduce costs with a greater economy of scale. By 2011, the company hopes to have 350 megwatts of capacity, a measure of a solar factory's output, and 1000 employees.

"The bottom line is that its sooner and more than we planned," said company spokesman Ben Santarris. "We're moving faster and doing more. We'll be fully-integrated in Oregon."

Both projects are legitimate good signs for the state. Both plants are a few years away from reaching their full potential but they are good signs nonetheless.

It is all but certain green energy will lead us out of the recession but what role with Oregon play in this? Green technology isn't competitive with traditional energy sources yet. The only reason we use it is because it is subsidized by the government.

If the industry's expansion and immediate future isn't based on fundamental factors such as cost per kilowatt, what is it based on? There is a high probability that this will be the next bubble and Portland could be one of the epicenters.

I have a lot to learn in this area and I'm sure you have a few stories and web links that might help all of us understand the economics of green energy and Oregon's role in it.

Please post in the comment section.

Baby boomers plan to retire in the country

From the Oregonian:

It was balmy Honolulu, he was CEO of a life insurance company, and they lived in a spectacular penthouse with beach views – but it was still 800,000 people and gridlock traffic. When it came time to retire, Dick and Laurie "Lou" Fisk jumped to an acre of land between Medford and Jacksonville.

Now they know their neighbors by name, have room for dogs and say the area's medical facilities are outstanding. From the Medford area, they can visit their children in Boise and Portland, and can reach San Francisco in a seven-hour drive. They can golf and fish all they want.

At 74 and 62, they are the advance guard of an army of retiring baby boomers who researchers say will leave suburbs and flood rural America over the next 10 years. If past migration patterns hold, the population of 55- to 75-year-olds in rural areas will increase to more than 14.2 million by 2020, nearly double what it was in 2000.

Oregon's small towns, ranging from Joseph in the northeast and Klamath Falls in the south to Tillamook on the coast, will be changed and challenged by newcomers who arrive with their time, money and expertise intact.
They represent a migration that turns conventional wisdom on its head. Urban planners have until now proceeded on the assumption that retiring baby boomers will downsize to a high-rise and spend their days lapping lattes and taking the streetcar to the art museum.

A lot of them will. But new data from the U.S. Department of Agriculture says baby boomers will head to the country in big numbers, in the Northwest changing the face of rural Oregon, Washington and Idaho.

And it's not just because the 83 million boomer generation is the largest in U.S. history and all of their movements are out-sized. Demographers are talking about a genuine "deconcentration" of population near metro centers. Urban areas will see a net loss of people age 55 to 75, while in non-metro areas that age group will increase by 1.6 million nationally during the next 10 years.

Duy: The government is doing everything it can to re-create a housing bubble

From the Oregonian:

Portland's housing market showed solid improvement in July as prices climbed for the second straight month, reversing what had been a 17-month run of record declines.

The closely watched Standard & Poor's Case-Shiller index published Tuesday showed Portland-area home prices were still down 20 percent from the 2007 peak. Small upticks this summer, even after accounting for seasonal swings, has economists wondering if housing is on the mend. Outside of Oregon, Case-Shiller's 20-city composite index also rose for the second straight month.

"No matter how you measure it, house prices looked to have bottomed, which is the much-needed ingredient required to bake this housing market recovery," wrote Jennifer Lee, economist at BMO Capital Markets.

Not every one is as rosy.

University of Oregon economist Tim Duy said the housing market is seeing a "speculative frenzy fueled by the government."

The market has been buoyed by a drop in supply thanks to homeowners reluctance to sell in a down market. There's been a bump in demand thanks to federal enticements. Those two factors helped stabilize prices and even prompted small growth, Duy points out.

But how sustainable is that growth?

"The government is doing everything it can to re-create a housing bubble," Duy said.

The federal government's aid includes low interest rates, an $8,000 first-time buyer tax credit and 3.5 percent down payment loans from the Federal Housing Administration. The tax credit is set to expire at the end of November and the Federal Housing Administration is having its own financial troubles.