Monday, December 22, 2008

Oregon real estate correction is one year old but we still remain 'overvalued'

National City released the third quarter 2008 report last month. The good news is that we are one year into our price correction; the bad news is that we still remain ‘overvalued’.

Only three metro areas met our definition for extreme overvaluation during the third quarter of 2008; only the Pacific Northwest remains overvalued across a wide region.

The three extreme metro areas are:

Atlantic City, NJ
Bend, OR
St. George, WA

Atlantic City and Bend tied for the most overvalued city in the nation.

Here is a quick summary of Northwest markets and their overvalued ranking out of 330 markets. The only Oregon city to not break the top 25 was Corvallis.

The second chart shows the median home price for Oregon metro areas; all areas now show a downward trend. All cities have dropped below the permanently high plateau which they were supposed to maintain.

Now that prices are falling in Oregon we can look at the declines since the market peak. Medford peaked in the second quarter of 2006 while Corvallis peaked in the third quarter of 2007 so this chart aligns their peaks at zero and compares the rate of decline since then.

The next graph shows Oregon metro valuations since the mid 80’s. Anything above zero indicates overvaluation, but doesn’t guarantee a price correction.

Finally, The National City report covers 330 metro areas and encompasses 93% of all housing units. The overvalued regions are in yellow while the undervalued regions are shaded gray.