Profile picture for kamikami

Is it a good time to buy a condo in Portland, Oregon?

Because of overdevelopment, the condo market has really tanked in the past year. Last summer, we were going to buy a small, 1 bedroom condo in a location that wasn't our favorite for $230k (listing price a bit higher). Having remained renters, I'm really glad we didn't buy that place; right now it's listing for $170k. We've watched the condo buildings in our neighborhood turn into rentals.

We've thought several times, over a year of searching, that the close-in Eastside condo market was really ripe and that we should pounce on it before values go back up. We thought that about the $230k place, in fact. At the time, it really was the best deal.

I don't want to be kicking myself a few years down the road if condo prices in the neighborhoods we like climb back up and rents do too. Tax credit is awesome. I also don't want to buy if prices still may drop or if there are arguments against condo ownership in times like these. Neither my husband nor I are thrilled about looking for condos again. We've had so much fall through that we hate, hate, hate the whole process (we've taken a 5 month break so far). If you do think there's a good deal to be had (preferably 2 bedrooms), on either the Belmont/Hawthorne/Clinton corridor or the Mississippi area, let me know that, too!
  • March 26 2009 - Portland
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Answers (17)

Profile picture for Mr Caveat


here is my answer:

10% unemployment means lots of forclosures(high volumes of distressed sales negatively impact prices)

the average home in the portland market is 290k if people are going to be required to document their income properly, the average income per houshold ought to approach 100k(mort should be less than 3x income)... the median is actually 50,344 suggesting almost another 50% minimum(but that is just ONE indicatior

buy = rent says that if your average rental in portland is 750/mo then the average mortgage should be roughly 150k(thus a 50% fall still to come)

huge jump in new construction( new construction permits for single family homes grew by 20% in 2005 and held steady for 2 years)

no corresponding huge growth in population (population of multnomah county grew by 2.4% from 2000 to 2007)

my answer is: give it 2 more years

  • March 26 2009
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Profile picture for Mr Caveat
5 years from now condo prices will be nowhere near 230k... under normal market conditions they appreciate about 3% a year, but most economists agree that this housing correction will be "L" or "U" shaped for lack of a better letter... essentially prices will bottom and hold for 3 to 10 years before any real appreciation occurs...

and of course there will be exceptions to every rule, some markets may experience fundamental growth... nothing in the double digits, but say 5% a year? possibly. will you be able to make it through the door before it closes though?(will you spot that consistent year over year growth before houses have "shot up" 15-25% yes, if you are paying attention.

also i think that you need a little bit of a paradigm shift. would you be "kicking yourself" if prices jumped say 20,000 and you missed it? consider that while obviously there was a huge cost to you, it would have been no different than taking a huge gamble at the casinos and winning. just as easily as appreciation could bump sale prices 5%, and in fact more easilly, depreciation of another 15% is also very very likely.

now that we have your priorities aligned and have alliviated that ungency that you feel to "time the market" which is essentially what you asked here, "i don't want to miss any upside." sometimes clarifying one's position clarifies their motives too...
  • March 26 2009
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Profile picture for klarek the realist
"we should pounce on it before values go back up"

values will not go back up any time soon

"I don't want to be kicking myself a few years down the road if condo prices in the neighborhoods we like climb back up and rents do too."

you will only be kicking yourself if you see prices continue to plunge

Florida
  • March 26 2009
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Profile picture for sunnyview
I think you have time in Portland to be picky and do a little market research. I ran across this article this morning about rents falling here. You are totally right when you say that condos were overbuilt in Portland. They will drop some more based on their monthly costs. The market chart for Portland is here. You may have seen it before. Also, be sure to check out the market report on Zillow for Portland here. I guess my feeling is that condos will keep softening a bit longer there mainly based on soft employment here and oversupply of condos in particular. I would keep looking at property though. You may see something that is a good deal even if the market is not done dropping. I would ask you to consider one more thing. I think in Portland that if you are looking at that 200K range that looking at a house might pencil out better since there are no condo fees. Condo fees tend to go up disproportionate to other things like rent. They add monthly cost that must be covered if you rent out the condo or even if the condo is empty for some reason. Condo also tend to appreciate slower than a single family house. You have to make the best choice for you, but you have time to choose, Study your market and buy when you see that you can own (mortgage, taxes, insurance, condo fees) for about the same as rent. I sincerely believe that you will have the chance to do that in the Portland market.
  • March 26 2009
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Profile picture for jonestim
The Portland condo market has almost no chance of appreciating in the next couple years.  The Pacific NW was late to the game in price run ups, late to the bursting of the bubble, and will be late to the recovery.  Portland will have at least a year after a turnaround in California before it turns around giving you plenty of forewarning.   As noted, the recover won't be V shaped, but a long L shape.   I'm in Bend and I expect prices to drop another 35% in the next 12 months.   From what I have been reading it looks like the Portland condo market (not necessarily the residential) is as shaky as Bend - which is saying a lot.

There is good discussion at http://portlandhousing.blogspot.com/ .  It's going to be a lot better for local information than this board.
  • March 26 2009
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Profile picture for sunnyview
I totally agree with the recommendation of that blogspot. I have it on my bookmark list. It has lots of good info for Portland housing and is very informative. 
  • March 26 2009
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For a straight-to-the-point, readable article on the Portland housing market, pick up the current issue of Portland Monthly.  It tells you what's happening, by neighborhood.

What really struck me about your note was you and your husband having had deals fall through and you hate the process. I don't blame you.  The fun wore off a long time ago.  To get past that, it will help if you analyze your reasons for owning a home. You have to get past the investment part to some degree.  That's not to say you shouldn't avoid overpaying. Far from it. But if your reason for owning is having a place that's really in truly yours, don't hold out for the last dollar.  On the other hand, if you're buying an investment, it's a different story.

I don't know if you listened to NPR this morning (3/26), but there was a great story on people getting into the market and being frustrated.  The market they were in, Boston, is so much like Portland's, where good listings are hard to find even as foreclosures and short sales rise, that I wrote about it on my blog today.

As for buy-don't-buy a condo--too much to go into here.  I advised my son against buying one in Boulder, CO. I would have different advice if he had been in San Francisco.  Portland falls somewhere between, and it's really neighborhood specific.  Then, there are issues of FHA approved condo projects and condo building defects.

I would have no problem writing 500 or 1,000 words on this but certainly won't do it here. If you want to e-mail me with questions at bmetzker@equitygroup.com, I'll give it all to you.  You do not have to provide contact information or any of that if you don't want to. You need information at this point, and I'd be happy to offer it.

  • March 26 2009
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Profile picture for sunnyview
You sound very nice Mr. Metzker, but I sincerely disagree with you on one important point "To get past that, it will help if you analyze your reasons for owning a home. You have to get past the investment part to some degree.  That's not to say you shouldn't avoid overpaying. Far from it. But if your reason for owning is having a place that's really in truly yours, don't hold out for the last dollar.  On the other hand, if you're buying an investment, it's a different story." I see a home as an investment to a large degree. I do not suggest that you squeeze every dollar out or buy a complete cash flow driven rental to live in, but people need to evaluate their 30 year mortgage like an investment before they decide how much money they want to give up every month for the warm fuzzy feeling of ownership. That goal of primary home investment is attainable in the Portland market and I don't understand why giving that up would be a benefit to anyone.
  • March 26 2009
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You have a very valid concern. I understand many buyers are on the fence on whether now is the time to buy.  Our estimates on a study showed that prices are to increase in the next 3-5 years by 47% . Keep in mind that we have lost about 17%+ percent in depreciation. Then consider low prices,low interest rates which we are anticipating will be going up in June considering the Fed will discontinue
purchasing bonds which has helped keep rates low. Then add in your  8k tax credit. 8K which if you haven't already filed your taxes now you can file an extension and get your money in 2009, if you buy a home now.  You don't have to wait until 2010 to get you purchase credit if you haven't filed your taxes. In my opinion I really feel this is the best time to buy.  You can't ask for more.  I have a great article called "Where is the bottom?"  I could email it to you if you would like.  It answers most of your concerns to purchase or not...
  • March 30 2009
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Profile picture for chuckdog24
"Our estimates on a study showed that prices are to increase in the next 3-5 years by 47%"

Kimberly, that's a bold prediction from Coldwell Banker.
Is there any data or methodology that you can share regarding that estimate?

I agree with you that the Fed can't keep rates artificially low for much longer, but what will the effect on home pricing be if rates go up?
  • March 30 2009
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Profile picture for sunnyview
I can't agree with this statement either "Our estimates on a study showed that prices are to increase in the next 3-5 years by 47%" I will admit that it make me feel disagreeable to keep disagreeing, but 47% comes from where. Portland is not undervalued like it once was, employment looks soft moving forward for the next 1-2 years even 1 year of soft employment puts your 3-5 year appreciation timetable in the middle. So you expect almost 12% a year appreciation coming off the biggest drop in the recent real estate market EVER. How can this be? It is certainly not rent driven as rents are dropping there, not employment driven as employment is soft, not supply driven with inventories rising. Tell me where you are getting your numbers? I love Portland. I have family there. I visit there at least 2x a month. I hate to talk bad about Oregon's best big city, but please tell what you mean to do by suggesting 10-12% appreciation moving forward.
  • March 30 2009
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Profile picture for jonestim
Our estimates on a study showed that prices are to increase in the next 3-5 years by 47%

I am very interested to see this study.  It must have some mind-blowing new piece of information in it that nobody is aware of yet.  Please share it.

Until shown otherwise, I believe this to be the most laughable thing I have read on here in a while.

  • March 30 2009
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Profile picture for owner of this house
She is an agent, all too optimistic to get a sale.  What do you expect agents to say, prices will drop in portland another 10% or more, like the experts are saying. If they were doom and gloom with their buyers, they would probably convince them to hold off another year or two before buying, but then how will they make their overinflated commissions.  47% appreciations, wow that is funny!!!!!
  • April 06 2009
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Profile picture for sunnyview
Optimism is a fine trait, but being deceitful is not. I think you can be honest and still be an agent. That may mean that sometimes you do advise your clients not to buy or advise them of the risks if they do buy. I know that it may cost a sale in some cases, but there are some agents that will do that. Not many, but a few. Honestly though, 47% appreciation in Portland in 3-5 years. Can I get a money back guarantee from her agency on that based her own study? If so, sign me up for minimum of 9% a year appreciation in Portland and we have a deal to do today!
  • April 06 2009
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No.
  • May 01 2009
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While the previous poster shows doom and gloom in our market the truth from RMLS which is the tracking source for home sales shows that home prices are begining to be less volatile and shows signs of arrestsing the fall. That said I would love the opportunity to take a look for you as I'm sure you are all to aware that you as a buyer don't have to give a dime to a realtor to help you accomplish your dream. Please feel free to call or email.

  • November 30 2009
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I'm not sure about Oregon...but it's a great time to pick up a "bank owned" condo here.
  • December 08 2009
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