Every day that goes by we continue to see signs of a “normal” Portland area real estate market. In talking with a client of mine who lives in San Jose California, the perception is that just about every home on the market there is in foreclosure. Prices have dropped dramatically in that region and once again homes are nearing a range of affordability. Another client who has recently moved to the Portland area and had planned to buy a home, will now have to wait a few years to realize that dream. He just lost his home to foreclosure, in the southern California market. Similar homes to his, in his neighborhood, were selling for up to $300,000 less than what he paid for his in 2005.
The bright spot for Portland Oregon is that we are enjoying the 3rd lowest level of foreclosures in the nation as reported in last Sunday’s Oregonian newspaper. Probably lots of things have contributed to that which I won’t go into here, but suffice it to say, we are very fortunate! Many of us who have lived in our homes for a long time however may not fully realize that a “foreclosure” problem in our area will greatly hurt more than simply those who are losing their homes. Even though we, without the problem will not be losing our homes, when a home forecloses in our neighborhood, that now becomes a “comparable” which can have the affect of lowering the value of our home. Is a Government bailout necessary? Again, that’s another topic that may create a heated debate so we won’t go there now. I will toss out a question however, and this should not be interpreted as my recommendation to the solution, but what if: homeowners contributed a fixed amount toward a remedy which stopped in some fashion 90% of “sub-prime” related foreclosures. Lets say that number was $2,000 (which I have no basis for and is completely pulled out of the air). Might that be better than seeing the value of our home dropping $80,000 because 3 homes in our neighborhood have foreclosed, setting a new standard for pricing? Again, that is just a “what if” and not a solution.
At the end of the day, in Portland Oregon, Beaverton Oregon, and other suburbs in the area, the market is stable, healthy and it’s a good time to buy if that is your dream.
What a great idea! I think they did not put much time into the George Bush think tank as they usually do because it’s an election year and they want to appear to be helping. As we know with all the Bush plans we will pay dearly later.
Where are these people gonna go. I don’t like giving a bail out option but why not reacess a different type of fixed loan being given to them and the ability not to sell for a specific period of time as a penalty. They could adjust the time for penalty by the value of the house so that we don’t have this all happen again in 10 years with all of the properties being up for sale at the sale time.
While I think paying into a fund is a noble idea, it is money that would ultimately be abused. Look at Social Security. Congress dips into this money whenever the need arises and promises to pay it back in the form of IOUs. Those IOUs have the program essentially bankrupt.
No, I think that these real estate cycles are quite natural and happen every 15-20 years. If your intent in buying a home is to live there for some time, you’ll be able ride out these cycles. As we’ll see in the years to come, this crises will be water under the bridge… just enough time for people to forget and fuel the next “boom” and “bust” cycle!
Oh and one more thing. You mentioned that Portland has been relatively immune from the foreclosure plague that has affected other regions of the country. While the bell weather locations of FL, Las Vegas, San Diego, etc, are shaping the news, I think that Portland will have its share of foreclosures, albeit in 2009 and perhaps later. Specifically in places where the appreciation was out of step with the “value” of the location. The best neighborhoods will retain their value, while the “up and coming” neighborhoods will get hit with their share of folks that simply should not have been given mortgages. This will make the road for them to establish themselves a longer one.