More Signs of Trouble For Oregon Housing Market

The Oregon housing market, particularly the Portland area, continued its slow drift downward in June, a new report shows.

Data shows Portland home prices dropped to a median of $295,000, from $297,000 in May, according to the Regional Multiple Listing Service.

That marked the first May-June decline since 2000, and indicated to economists who follow the local market that housing is weak and could become weaker through the end of the year.

“I think it’s going to be a long time before we fully adjust to the excess inventory,” said economist Bill Conerly of Lake Oswego. “It will be deep into 2008 before we hear any good news.”

The June data wasn’t entirely gloomy.

June’s median price was 5.4 percent higher than the $280,000 recorded in June 2006, so the region has held onto the record-breaking price gains of early last year. Many housing markets in California and Florida - and national indices - have had year-to-year price declines.

Still, after striding past the national housing slowdown for about a year, the Oregon housing market is showing signs of losing its stamina.

Rising inventories suggest sellers have lost leverage, and the widespread exit of first time buyers and investors have cut severely into demand.

“We’re in a buyer’s market,” said economist Jerry Johnson, of the Johnson Gardner firm in Portland.

Some buyers may not be able to afford homes because of tougher lending standards or modestly rising home loan rates, Conerly said.

But the Portland area had less of the risky home loan lender activity than most hot real estate markets, officials have long believed.

Recent price gains have simply out-paced incomes, he said, making homes less affordable. Rising Oregon mortgage costs haven’t helped, either.

“It’s the prices compared to three or four years ago - that’s what is keeping first time home buyers out of the market,” Conerly said.

The RMLS data cover sales of new and existing houses and some condominiums in Clackamas, Columbia, Multnomah, Washington and Yamhill counties. Many condo sales are handled in-house by agents who don’t list them with RMLS.

The local economists said they were most concerned by a rising inventory of unsold homes on the market in western Oregon.

The higher the inventory, the more competition home sellers face when trying to sell their homes, and, conversely, more choice mortgage applicants have.

In June, the Portland market reached 5 months inventory, higher than the 4.5 months in May and nearly double the 2.6 months inventory recorded in June 2006.

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