Resiliency or declines looming on the horizon?

Asked by Larry David, Portland, OR Mon Feb 23, 2009

The NW 97229 area seems to be more resilient to market declines than other areas around Portland. This is my target purchasing area, and I've been watching it quite closely for the past 3 months. I don't really want to buy into a falling market unless a good deal is to be had that offsets the risk. So, what's going on in this area that keeps house prices inflated above where they seemingly should be based on macro-economic conditions? Is the area primed for a much larger fall? It seems like another 15% correction is not out of the question.

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Sarita Dua, Agent, Portland, OR
Wed Feb 25, 2009
Forbes.com just posted their best 10 (and worst 10) housing markets... Portland is in the US Best Top 10 and came in at #4...
Web Reference:  http://www.asksarita.com
0 votes
Sarita Dua, Agent, Portland, OR
Mon Feb 23, 2009
Hi there,

Great question... and while there are no sure things with regards to knowing which areas are stronger than others, it does make sense to step back and look at the contributing factors of any area. Schools, jobs, proximity to downtown, proximity to recreational areas, socioeconomic profile, etc. all are factors that affect value positively or negatively.

I do quite a bit of business in 97229 - this includes NW Portland, the Bethany area, portions of Bonny Slope and Cedar Mill, and Forest Heights. Having lived in Forest Heights for 5+ years as well, I know the location (close to Nike, Intel, and the tech corridor but also very close to downtown) attracts professionals that may work downtown, hih tech, and/or closeby at some of our areas hospitals. The schools in 97229 are some of the best in the state and no matter what happens I believe the location is one that allows this area to weather the current economic times well.

97229 is being affected though, there is no question. Homes over $600K are sitting, there re quite a few bank owned and short sale homes, and jumbo financing and stated income loans come at a price or are non-existent.

I apologize for the duplicate answer - my previous answer was truncated...

Hope this helps, you are getting a lot of great opinions and I commend you for asking the right questions. If it is too good to be true, you need to know why. And no matter what happens with the market, making an informed decision is key...

Sarita Dua
Broker
The Hasson Company
Web Reference:  http://www.asksarita.com
0 votes
June Lizotte,…, , Portland, OR
Mon Feb 23, 2009
Larry, you're getting some good answers (projections) here. This area is definitely showing a better stability than many others. There will undoubtedly be more homes coming available with the lay-offs and subsequent back lash on home owners. Pending sales year over year for the Hillsboro area were just found to be up 3% and every other market shows double digits in the red. I sell over there and have found that good deals don't hang around long. With short sales and REOs affecting the comps for homes there are more deals to be had over there ten ever before but there are still many opportunities for strong and solid investments.

Risk -"exposure to the chance of injury or loss" Everyone, whether purchasing, holding, investing, venturing, lending, borrowing.....etc experiences risk. The question is: can you limit your EXPOSURE TO losses? That can only be determined - and at best, only partly reliable- by historical calculations, One historical calculation that will serve you in making a determiniation is to invest in homes that have been owned for quite some time (not been bought and sold in the past several years). If the homeowner has owned for quite some time he will absorb some of your risk by incurring some of the loss so you don't have to; in other words, seller will not get as much for the home as they would have a few years ago, but because they have owned for so long they will still have good equity and will make a good profit . It will then be less risk for you.

I have a system for find sellers that will likely be selling. If you are interested please contact me through my email directly through my web site. If you would also like to receive Market Tracker (exclusive trademarked program with my company) to track only activity in a certain zip code and receive emailed reports with stats, charts and data to track your target zipcode please contact me and let me know you want the Market Tracker. This is one of 3 exclusive programs I can offer you as you search for a investment property or family home. You can log in to my site and set up your own secure login, save your favorites, save your search criteria etc. This may be a very helpful resource for you.

Sincerely,
June Lizotte, Real Estate Broker
Providing REAL Service
Prudential NW Properties
6400 SE Lake Rd., Suite 200
Portland, OR 97222
503-310-8032 mobile
503-212-2727 office
jlizotte@prunw.com
http://www.junelizotte.com
Web Reference:  http://www.junelizotte.com
0 votes
Janeese Jack…, Agent, Portland, OR
Mon Feb 23, 2009
Larry,
you are correct that 97229 has "weathered the storm" better than some areas of Portland (and, there are many other areas that are resilient as well). I also work frequently in the 97229 zip and understand why it is your target purchasing area. I don't pretend to have a crystal ball but it is location and price that are driving the market. Location has always been paramount but now pricing rules the market. You must be priced to appear to be a "steal" or a "deal"! I do believe that the low interest rates "trump" even price. Let's make an assumption that the prices may still decline 5% or more before they start appreciating again. If while a buyer was waiting for the price on a $250,000 to go down 5% to $237,500, and the interest rate goes up one percent from 5.25% to 6.25%, which is entirely possible, the buyer's monthly payments will increase almost $79 per month. Of course, adjust the math according (a $250k home in 97229 might not meet your needs). Just another way to think about the your real estate investment. And, remember you won't know it's the bottom of the market until we're on our way back up. Just one Realtor's opinion.....if you'd like to have access to a great property search site, please try http://www.fabulousportland.com
Janeese Jackson, Principal Broker
Real Estate Resource
503-709-0802
jj@janeesejackson.com
0 votes
William Metz…, , Portland, OR
Mon Feb 23, 2009
Two factors stabilized zip code 97229 --it's proximity to downtown and to employment centers. As long as Intel, Nike and other companies maintain employment, this area should remain relatively stable. Intel recently announced layoffs, as have other companies. It remains to be seen what the effect will be.

But that's only part of the discussion. Oregon just moved to fifth in the nation for foreclosure notices, so the wave washing over the country hasn't fully hit here, yet. Moreover, Oregon is part of the national and international economy in ways few of us understand so far. These factors apply downward price pressure.

No one can time a market, whether that's real estate or pork bellies. The question you need to really consider is what your motivation is. If it's home ownership and you plan on staying in the house at least five years, it's a good time to buy because prices are down, mortgage rates are low and Uncle Sam is offering an $8k tax credit to first-time buyers (meaning someone who hasn't owned in three years).

But if you're an investor, you need to stay with the basics and be concerned with whether or not net income will pay interest, what kind of occupancy you can expect, etc. All that matters for investors is return on the investment, and market timing becomes secondary. This area should remain strong for rentals.

If you're looking to buy and flip, then you do indeed need to keep an eye open for screaming good deals. They're out there. I know because I just came in second on two of them.

For rent estimates, check out http://www.zilpy.com. Also, the current Atlantic has an intriguing article on real estate trends, and it's one I tend to agree with (finding myself at odds with most other agents).
0 votes
Dirk Knudsen, Agent, Hillsboro, OR
Mon Feb 23, 2009
OK I can handle this one. I am one the top agents in 97229. My office in in Bethany Village. I live in 97229 and have for many years. I was selling here before there was anything here and I participated in the original Bethany Community plan.

Your assumptions while understandable are not really going to play out. The area is very limited in size. It enjoys the top rated schools in many cases available in all of the West Side. From a proximity standpoint you can reach more major employment sectors here in less time than anywhere else in the Portland area. We enjoy the lowest taxes in the Portland area and are not part of any City. There is an enhanced Sheriffs Patrol here so crime is low. I am less than 7 miles through a back roads drive into downtown PDX and at rush hour I can still make it there in 15 minutes.

The 97229 area has more parks, bike paths, and shopping amenities than almost anywhere else you can live. This is clearly a choice for many families and retired folks a like. As a Master planned area it is perhaps the single best example of what it right about Oregon Land Use planning.

Having said all of that the area has dropped as much as most areas. It was and still is the second most expensive areas in the Region but not by a wide margin and not when buyers factor in all the positives. People are willing to pay another $200 a month to be here. It is a great area. There is also not much new construction here at all and therefore as a result re-sale is holding up nicely. It is slow now and I think we will see another 5% reduction...maybe 10% but that is all relative as there are some awesome values now.

The rates will not be low forever and that is the true opportunity and play a bigger factor in all of this than the prices. I am selling homes every day up here at steep discounts. Look for this area to bottom sooner and rebound faster. Facts are that is a proven thing up here.

Larry your obviously retired form making Seinfeld and so you are a smart guy! There are reasons you want to be here so how about calling me and joining us?? Heck I will even buy you lunch at a great local haunt for taking the time to get to know me and my team and seeing what I can do for you!

See this tool right here:

http://www.theknudsens.com/about/bethany_homes_and_real_estate/

Hope we can help you out!

Regards;

Dirk Knudsen
Re/Max Metro Gold
Re/Max Hall of Fame
Web Reference:  http://www.theknudsens.com
0 votes
Kimberly Shu…, Agent, Portland, OR
Mon Feb 23, 2009
Hi Larry,

The economy does not affect neighborhoods in all the same way. The 97229 area is a strong stable area and has weathered the decline better than most. Although it may continue to fall a bit more, we are starting to see stablization to begin.

They have a stronger set of schools, higher value homes on the average, parks and shopping plazas so as a whole, there is a lot to offer that keeps the vaue in place.

If the risks you refer to are that you purchase and your home falls in value, it will not be for long if this occurs as the market is proposed to being turning around the latter half of 09 and we are beginning to see some evidence that this is true.

If I can help you in any further way, please let me know.

Thank you,
Kimberly Shute
Oregon First
Licensed in Oregon
971-227-1302
0 votes
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