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|Thursday, June 26, 2014|
BY ERIC FRUITS | OB BLOGGER
Is it a blip, or a trend?
That is the toughest question that economists have to answer when trying to forecast where the economy is going.
Last year, the housing market in Oregon—and the U.S. as a whole—was blasting off. The Case-Shiller index of home prices ended the year 13 percent higher than at the beginning of the year. A homebuyer who paid $250,000, would have added almost $33,000 in equity over the course of the year. According to past observation, that additional wealth (on paper, at least) would ultimately translate into increased consumer spending which would, in turn, boost the economy.
More detail on the Portland market shows that last year saw a number of home sales that had not been seen the days of the housing boom of the mid 2000s. Last year, 23,500 home sales were recorded, which is about the same value as the last half of 2006 and the first half of 2007.
Even more striking, 2013 saw the average house selling in less than 30 days after it hit the market. It seems that sellers could plant a “For Sale” in the morning and get a phone call with an offer before they went to bed that night.
But, was last year a blip or a trend?
This year, housing has seems to have slowed. The number of transactions seems to have flattened out and the number of days on the market about doubled since last year. Prices do no seem to have the double-digit growth seen a year ago.
Is the current slow down a blip or a trend? Is the market tapping the brakes, or slamming them?
The tough winter elsewhere stalled out housing starts in the first part of the year. That’s a blip. But other things point to potentially troubling trends.
In the second half of last year, mortgage interest rates began to rise, largely because of expectations that the Fed’s bond-buying program, known as quantitative easing, or QE, was coming to an end. And, it does have to end. But, we don’t know when and we don’t know how. Nevertheless, mortgage interest rate are a little less than one percentage point higher this year than they were the same time last year. For a $200,000 mortgage loan, the payment this year is about $100 more per month than for a loan obtained last year.
In addition to rising interest rates, mortgage lending remains somewhat tight. Last year lenders reported loosening lending standards for much of the year. This year has seen a slight tightening of lending. (Or, more precisely, lending is not getting looser.) The combination of higher interest and tighter credit has tapped the brakes on the housing market.
We know that mortgage interest rates will rise, but we don’t know when or by how much. Credit standards will likely remain tight so long has employment and income opportunities remain stagnant or sluggish. Without a boost to employment opportunities and a renewed interest in returning to work, housing and much of the rest of the economy will remain blipping along a series of small ups and downs.
Tuesday, July 08, 2014
BY 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.
Thursday, July 24, 2014
BY LINDA BAKER | OB EDITOR
Remember the naysayers? Those who called the South Waterfront aerial tram a boondoggle? Those who rejoiced at the massive sell off of luxury condos at the John Ross and Atwater Place?
Friday, June 06, 2014
BY KATIE AUSBURGER | OB GUEST CONTRIBUTOR
How to build a hipster-friendly work environment.
Tuesday, June 03, 2014
Citing 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.
Monday, June 16, 2014
The Oregon economy could get a boost from a new trade agreement being negotiated between the U.S. and the European Union.
Thursday, June 12, 2014
BY ANDREA DURBIN | OB GUEST BLOGGER
Last week, the Obama administration took an important and welcomed step in the effort to protect the health and well-being of all Oregonians by limiting carbon pollution from existing power plants.
Monday, July 14, 2014
BY VIVIAN MCINERNY | OB BLOGGER
Some people think Amazon’s winking eye logo is starting to look like a hoodwink.
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Vigilant enters a New Year with a new president.
How George Fox has become one of Oregon's largest private universities.
Forest Grove sees growth in the burgeoning food and beverage scene.
Lane Powell Shareholder Susan K. Eggum has been elected as vice chair of programs and projects for the International Association of Defense Counsel’s (IADC’s) Employment Law Committee.
Geffen Mesher is saddened to announce the passing of long-time shareholder, Tom “Mike” Anderson, who died on July 10, 2014, from liver disease diagnosed after recent heart surgery. He was 55 years old.
Fifteen Lane Powell attorneys have been named 2014 “Oregon Super Lawyers,” and another five attorneys have been named as “Oregon Rising Stars” by Super Lawyers magazine.