STATEWIDE It’s become even harder to make the case that Oregon is immune to the housing crisis, after three high-profile failures hit the news back-to-back-to-back in June.
The first story, from Portland blogger Jack Bogdanski, involved the streetcar extension to the towering South Waterfront project, which was financed on the assumption that $500-per-square-foot condos were the thing of the future in Portland. Whoops. Sales have been stagnant, and the Portland Development Commission was forced to ask for an extension on a $5.9 million loan to Bank of America to avoid defaulting.
On the following day came the announcement from Street of Dreams builders that the big show will return this summer — even though not one of the over-$1 million palaces from last year’s event has sold. The 2007 show featured the latest in luxurious design, but agents had difficulty moving the mansions because of their remote Clackamas County location. And that was before gas topped $4. Whoops.
The day after that, the Oregonian reported that Matrix Development dba Legend Homes, one of the state’s largest homebuilders, had filed for bankruptcy. Legend’s fall sounds familiar: builder buys too much dirt, notably in Bend, then can’t sell as the market crumbles. Bank clamps down. Subcontractors line up to collect. Whoops.
Unfortunately for Oregon’s economy, none of the downward trends that began accelerating this spring (see “The Party’s Over”, May issue) are showing any signs of reversing. Home values are falling, short sales and foreclosures are stacking up, banks and builders are scrambling, and the market is bloated with supply. It’ll take a significant surge in economic activity for things to change, but the University of Oregon’s Index of Economic Indicators warns of “persistent weakness… consistent with at least a mild recession.”