So I am planning to move to the West Coast and Portland, OR is one area I have shortlisted. I also intend to buy a house in 3 - 4 months. I have heard that real estate in Portland is priced high for no good reason. Is this true? Is it another bubble?
The real estate market in Portland is showing signs of life.
Closed sales in Feb. 2010 were up 18.4% compared to Feb. 2009; however this increase in sales came at a high price for sellers and property owners: a 9.3% decrease in the median price of a home over the past 12 months ($235,000 from $259,000).
Many people as starting to say that we have reached the bottom, and even the conservative economists like Karl Case, the co-creator of the S&P Case Shiller Home Price Index recently said, â€œI would bet even odds that weâ€™re at a bottom and that we are going to see improvement in the coming monthsâ€�. (Bloomberg).
Just to put a perspective on the market swings of the past few years, consider the following facts: The market in Portland peaked in about July of 2007 when the median price of a home reached $302,000. In other words, the market has pulled back about 22% from the peak, and we have not seen the median price of a home at this level since May of 2005 ($230,000).
So we are back to 2005 prices. The bubble has burst. The market has reacted.
Looking forward is always more challenging than looking back. However, one interesting statistic is that homebuilders are on a tear. The S&P Supercomposite Homebuilding Index is up about 14% this year, and the economy is projected to grow 3 percent this year (Bloomberg). These are positive signs for the real estate market; however, if interest rates spike, the apparent improvement in the real estate market could be short lived.
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