Tuesday, March 30, 2010

Oregon Foreclosure Rates and Unemployment Rates Are Now Among the Highest in the Nation

Although the Pacific NW and Oregon real estate prices have fared rather well in the housing bubble/bust thus far, recent data suggests that our turn at the whipping post has arrived with respect to mathematical reality. NPR provides the latest data via Realty Trac and the BLS with excellent interactive heat maps of foreclosures, unemployment, and median household incomes:

Better yet, the data can be drilled down to the county level, and with a quick mouse over, it's rather apparent that Deschutes, Yamhill, and Columbia counties are experiencing painful foreclosure rates well above most of Oregon and the nation. Note that most of Western Oregon falls under the "High foreclosure rate" category when compared with the rest of the country.

For those who've been paying attention, heat maps such as these did not look nearly this bleak for Oregon or the NW last year at this time. Many are aware that we were late to the housing bubble party (peak prices) by roughly two years (2005 vs 2007).

Soon many more will become painfully aware that we will not avoid the skull pounding, dehydrated, muscle cramped hangover that awaits the vast majority of Western Oregon's real estate market. It's becoming ever more apparent that it's not going to be "different here" regardless of taxpayer funded stimulus, media touted green shoots, or NAR cheer leading.

As a recent poster noted, Portland and Seattle are at the very top of MOM price declines in the recently published Case-Shiller Index. The Great Northwest is catching up to the rest of the country, even though we were in fact a late arrival to the high priced debt binging real estate party.

Welcome to the hangover Oregon. We are now awakening to the reality of real wages & cash flows vs. very real debts. It's not going to be a pretty picture. There are a massive amount of Alt-A and Option-ARM mortgages resetting/recasting in the NW now through late 2012. Leverage (debt) on real estate promises to be a recipe for financial disaster in Oregon at least through late 2012. The odds of finding a "greater fool" to buy under water real estate are slipping swiftly away. As a result, prices will inevitably fall from here until Oregon's employment situation recovers significantly.