Prices are expected to keep climbing in 2006

The Portland area’s diverse work force and proximity to “world class” outdoor recreational opportunities influenced Jim Clark’s decision to move his company here from California. So did local home prices, which are 15 percent to 20 percent below those in the Eureka area, where the company was located. “That was an added benefit to our employees,” said Clark, chief executive officer of Yakima Products, which makes car racks and accessories. The company relocated to Beaverton earlier this year.
Although many longtime Portland-area residents are shocked by current home prices, they actually are among the lowest on the West Coast. In November, the median home price in the metropolitan area was $252,500, compared to $389,000 in the Seattle area and $656,000 in the San Francisco area. “Portland is the most affordable major city on the West Coast,” said Brian Allen, co-owner of Windermere Cronin & Caplan Realty Group and chairman of the Portland-area Regional Multiple Listing Service. According to Allen and other local real estate experts, this difference is one reason why Portland home prices will continue increasing next year. Many people in California and Washington are selling their homes, paying premium prices for new homes in the Portland area and still making a sizable profit. They are some of the 1 million more people expected to be living in the region by 2025. “People are able to buy a larger home in a better neighborhood and still put $200,000 to $300,000 in their pockets,” Allen said. Local Windermere broker Suzanne Goddyn saw this happen when she helped several of Clark’s employees buy homes in the Portland area earlier this year. “They bought in Hillsboro, the Pearl District, Northeast, every part of the city. Almost all of them commented about how much more home they were able to buy for their money,” Goddyn said.
Portland could be bucking national trends if its home prices keep increasing. Last week the U.S. Commerce Department reported that home sales across the nation fell 11 percent from October to November, and the median home price was little changed from a year ago at $225,200. Government analysts and economists said the figures show the hot housing market is cooling off. But according to the most recent figures released by the local RMLS, regional home sales fell only about 2 percent from October to November — far less than the traditional end-of-year slowdown, Allen said. “We’ve had years where there’s been very little action in the later months, but we’re still seeing a lot of sales right now,” he said. Perhaps more significantly, median home prices in the Portland area are 14 percent higher than last year — $252,500 in November compared to $212,000 in November 2004. “In my personal opinion, the Portland housing market is healthy and will remain robust for the reasonable future,” Allen said. Local real estate experts also point to the most recent unemployment figures, which suggest the Portland area finally is emerging from the recession that began in November 2000. One year ago, the metropolitan area unemployment rate was 6.5 percent, the highest of any major city in the nation. But, according to the Oregon Employment Department, the unemployment rate fell to a pre-recession 5.3 percent last month. “The economy is finally starting to pick up,” Allen said. Jerry Johnson, a principal at the local Johnson Gardner real estate consulting firm, agrees. Speaking at the annual housing forecast sponsored by the Home Builders Association of Metropolitan Portland in October, Johnson said 2006 could be the first full year since the recession began that regional wages increase, fueling more home sales and higher prices. According to Johnson, the only dark cloud on the horizon is interest rates, which are increasing slightly from their record lows. Johnson told the gathering that home sales could slow — but not decline — if rates continue increasing. Allen agrees, but compares the decline to a slight slowing in freeway speeds. “It would be like going from 75 to 65,” he said.
Article: Jim Redden, The Portland Tribune, 12/30/05