Sponsored by George Fox University
Home Archives August 2008 State economist thinks economy will sour less in Oregon

State economist thinks economy will sour less in Oregon

| Print |  Email
Friday, August 01, 2008


t_TomPotiowsky BY TOM POTIOWSKY

Let’s say you hit a stretch of bad luck a year ago. You lost your job. Your spouse took the kids and left. Your driver’s license was revoked for driving under the influence. Creditors were constantly calling and unpaid bills piled up on your desk. The grand jury was investigating you for identify theft. Your life was in shambles — but you could still get a mortgage.

The get-rich-fast days of the housing boom are over. The pain and adjustment going on in the housing market is occurring throughout the country. Oregon is feeling this pain but not as badly as other “hot housing markets.”

Of course, “hot housing markets” is a term no longer in use. But from 2002 to 2006, some geographic areas of our country were building and selling homes at amazing rates. California, Florida, Nevada and Arizona partied hard. Oregon also joined this party but in a more subdued manner. Oh, we definitely partied, but were a bit more reserved.

A common impression in Oregon is that our housing market has not suffered as badly as other former “hot housing markets.” Some prophets are waiting for the other shoe to fall. Is it just a matter of time before we crash as badly as the rest? I don’t think so.

By just about every price-appreciation measure out there, Oregon’s run-up in housing prices was late and not as dramatic. The S&P’s Case/Shiller Home Price Index shows Portland tied with Denver for third-best performing home price appreciation out of the 20 metro areas covered by this index. “Best” is a relative term; Portland home prices are down 4.7% for April 2008 compared to a year ago. But this is a far cry from the 25% and greater price declines in Phoenix, Miami, and Las Vegas.

Another sign of distress from the housing market is the degree of delinquent loans. The Mortgage Bankers Association places the state of Oregon at 46th out of 51 for seriously delinquent subprime ARMs (90 days past due or foreclosure) for the first quarter of 2008.

Other indicators point to a slowed Oregon housing market, with closed and pending sales both down, and months of inventory on the market up. Building permits for single-family homes for the year through May are down close to 50% compared to the same period a year ago. Any building overhang we had is being adjusted at a rapid rate. So the party ended for us at the same time as for the nation. Oregon will not overshoot the end of the housing downturn; our adjustment is well under way.  

The 2001 recession was more punishing to us than to the rest of the country. Oregon had the highest unemployment rate in the nation. By the time we were climbing out of the abyss, other parts of the country were already seeing the first signs of the explosive housing market.  

Urban growth boundaries have a way of slowing the growth of home building in the places where demand tends to be strongest, in metro areas. Our housing oversupply would be much worse today without these restrictions. This helps maintain the price of homes, which in turn relates to lower loan delinquencies. If you have a mortgage that is worth more than the market value of your home, the chances are greater that you will default rather than keep paying on an asset that is greatly declining in value. The higher the default rate, the more homes are thrown back on the market, and the more pressure on home prices to fall. This pressure is more subdued for the Oregon housing market.

The housing downturn is not over in Oregon. Prices will continue to drop and sales will be subdued. But we should not see the type of bloodletting occurring in Nevada and Florida. This time around, Oregon will not be the last one to turn out the lights.


Tom Potiowsky is Oregon’s state economist.

 

More Articles

Who said we should sell in May?

Contributed Blogs
Friday, July 18, 2014
BullMarketBY JASON NORRIS | OB GUEST CONTRIBUTOR

Back in May, we shared a common Wall Street quote about investing, “Sell in May and go away.” Fast forward to July and the most common question we have been getting from clients is, “When is the market pullback going to occur?”


Read more...

Q&A: David Lively of Organically Grown Co.

News
Tuesday, July 01, 2014
OGCLogoBY HANNAH WALLACE | OB BLOGGER

Demand for organic food continues to soar: Last year, sales of organic food rose to $32.3 billion — up 10% from 2012. In Oregon, organic produce wholesaler Organically Grown Co. has been championing organic growing methods for four decades.


Read more...

Portland: Where young people go to work?

News
Friday, June 06, 2014
UntitledBY KATIE AUSBURGER | OB GUEST CONTRIBUTOR

How to build a hipster-friendly work environment.


Read more...

Interview: Dr. Mark Goulston

Contributed Blogs
Thursday, July 10, 2014
JustListenBY TOM COX | OB BLOGGER

Tom Cox interviews Dr. Mark Goulston, author of Just Listen, Discover the Secret to Getting Through to Absolutely Anyone.


Read more...

Attack of the Robin Sages

Contributed Blogs
Monday, July 07, 2014
070714 thumb linkedinfakesBY TOM COX | OB BLOGGER

Named after the 2010 experiment by Thomas Ryan, "Robin Sages" are fake social media profiles designed to encourage linking and divulging valuable information.


Read more...

Updated: Disrupting innovation

News
Tuesday, July 08, 2014
070814 thumb disputive-innovationBY LINDA BAKER  | OB EDITOR

The New Yorker recently published a sharply worded critique of “disruptive innovation,” one of the most widely cited theories in the business world today. The article raises questions about the descriptive value of disruption and innovation  — whether the terms are mere buzzwords or actually explain today's extraordinarily complex and fast changing business environment. 

Update: We caught up with Portland's Thomas Thurston, who shared his data driven take on the disruption controversy.


Read more...

13 West Coast seafood species now 'sustainable'

News
Tuesday, June 03, 2014

Fishing OrBiz Fishing 0357 ADOBErgbCiting the transition to catch shares management as a key to rebuilding stocks and reducing bycatch, 13 species caught by the West Coast trawl fishery today earned designation from the Marine Stewardship Council (MSC) as sustainable.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS