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Home sales cool but the value holds steady

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Saturday, September 01, 2007

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STATEWIDE Summer, thy name was volatile. The stock market, the subprime mortgage industry, the national housing market — the “v” word was the one-size-fits-all way to describe the downs and, well, downs that touched nearly every corner of the U.S. economy. But in Oregon’s real-estate market, that interaction comes in a surprising way.

It’s no secret home sales are shrinking. In the Willamette Valley, sales are down by 2.3% from last year; in Central Oregon, they’re down a fanny-spanking 40.2%. In mid-August, the National Association of Realtors hemmed and hawed and then lowered its projections for 2007 home sales for the eighth time this year — as of this last estimate it’s a 6.8% drop compared to last year.

But here’s the surprise: Oregon, and especially the Portland region, is one of the few places in the nation where homes are bucking the median-sale-price depreciation trend. By the beginning of summer, the national median price had fallen 1.8% compared to last year. Not the Portland region. There it was up 9.3%. Eugene, Roseburg and other cities had similar increases.

Why is this happening? The answers really aren’t that shocking. Gerard Mildner, director of Portland State University’s Center for Real Estate, points to several major contributors: an economy that’s driven by exports, whether ag or high tech; regional job growth that’s outstripped the national economy in each of the last three years; land-use laws that prevent over-building and thereby increase the price of developable land.

In other words, Oregon’s a desirable place. And in a national housing market that is — here’s that word again — volatile, steady appreciation makes the state very hot, says national real estate analyst Mike Colpitts.

Colpitts and a team of economists with the independent company Housingpredictor.com regularly crunch the numbers for 250 local markets around the nation. For all of 2007, Portland has made their top 10 buyers’ markets.

“[That appreciation] says a lot for your long-term growth. That’s why Oregon has so many Californians up there now,” he says, laughing.

This is not to say that the Oregon real estate world is a completely happy place these days. Mildner thinks that in Bend — where single-family home construction dropped by 45% — the real-estate boom is kaput. And how long will home sales in other places continue to drop? The only consensus is that it’ll last to the end of the year.

In the meantime, Natalie Middleton with the Regional Multiple Listing Service in Portland says she’s keeping her eye one thing: that appreciation rate.

“We’re holding our breath wondering if we’ll see that begin to change,” she says.                     

ABRAHAM HYATT


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