Thursday, June 24, 2010

Oregon Catching Up With The Rest of The Nation

The May 2010 "Trends in Delinquencies and Foreclosures in Oregon" report from the Federal Reserve Bank of San Francisco was recently released to the public. Of particular interest, is a graph depicting four of Oregon's major housing markets price indexed for the last decade. As you can see below, after 10 years of varying growth rates, Oregon's home prices are once again converging back toward a common historical point of reference -regardless of where you live in the state. Bend and Salem are leading the way in price declines as we race toward the new lows.

As the graph below demonstrates, Oregon's housing prices lagged much of the country after the dot com bubble burst. However beginning in 2005 the late to the party housing bubble in Oregon heated up and the rest of the country saw prices begin to level out. Oregon prices charged upward through the summer of 2007. Oregon prices are now following the same wage/reality bound journey downward, and swiftly catching up with the rest of the country.

Speaking of wages and reality, the Oregon unemployment rate still remains stubbornly higher than the rest of the nation, as most every employer with a viable balance sheet and an income statement that still turns positive cash flow is avoiding the hiring of new employees like the plague.

When it comes to YOY four quarter price change, Oregon finds itself in dangerous company. Foreclosures during Q1 2010 in Oregon increased roughly 20% compared to the prior two quarters, while the rest of the country saw foreclosures decline in Q1 2010. Are you starting to notice a "late bloomer" theme at work here Oregon? If not convinced, ask someone you know in Bend what to expect for Portland real estate prices circa 2012.


Caveat Emptor!!!

Source: The Federal Reserve Bank of San Francisco. The full report can be found here in .pdf format. The first half of the report is national in scope, while the second half (starting on page 13) focuses exclusively on Oregon, complete with foreclosure trends and foreclosure heat maps for the entire state. Bend is clearly ground zero, but there are plenty of new darker orange colors starting to pop up in the Portland area (VC and Clackamas) as recently as this quarter. The commentary is exactly what you'd expect from a Federal Reserve Bank, however the data and the graphs alone are well worth the 30 page read.