Happy families are all alike; every unhappy family is unhappy in its own way, at least according to Leo Tolstoy, who probably knew a few things about unhappy marriages.
I hate to crib from the great writer, but all unhappy cities are unhappy in their own way, too. And living in Mesa, Ariz., I know a few things about unhappy cities where housing prices drove off a cliff.
This brings me to Portland, Ore., an unhappy city that is unhappy in its own way.
In my state of Arizona, for example, builders severely overbuilt, so when the housing bubble burst we were stuck with a lot of empty residences.
Portland didn’t have that problem, thanks to urban-growth boundaries that strictly limit unmitigated housing expansion as seen in places like Miami, and, yes, Phoenix and its surrounding cities such as Mesa.
Portland’s problems were almost purely economic — industry reduction and lost jobs, which caused the city’s unemployment rate to top 11 percent at peak.
"We got hit harder by the recession," said Tom Potiowsky, professor and economics chair at Portland State University. "Rather than looking like Phoenix or Las Vegas, Portland started to look like Detroit in that the economy really impacted the housing market."
Whoa, hold it right there! Detroit and Portland in the same sentence? Can’t be! People haven’t wanted to move to Detroit in 40 years, but Portland — at least until the Great Recession — was one of the "hot" cities in the country. So many people wanted to move to Portland it became the new Seattle.
Desirability and moderate residential expansion kept Portland in the game longer than most cities, some of which started to see the "homequake" as early as 2005 and 2006. In Portland, home prices were still climbing, not hitting that glorious apex until 2007.
Of course, it was all downhill after that — and very steeply downhill. Home prices have retracted to 2004 levels, while home sales volume has declined by 40 percent.
Then there’s the question of REOs ("real estate owned" properties, chiefly owned by lenders). In the rest of the country, REO saturation rates started to peak around 2009.
But because Portland’s descent into the economic maelstrom lagged the rest of the country, the REO saturation rate didn’t peak until mid-2011, when it hit 27 percent, reported Alex Villacorta, director of research and analytics at Clear Capital, a Truckee, Calif., firm that tracks housing prices.
Portland may have been late to the recession game, but because of the resilient desirability factor (Californians in particular are still moving there) is it one of the lucky cities that has turned the corner and exiting the downturn early?
The answer to that depends on who you talk to.
"I don’t see it," said Villacorta. "Portland still has a long way to go."
According to Clear Capital’s numbers, Portland-area home prices dropped 6.1 percent between September 2010 and October 2011, at a time when national home prices fell an average of 3.8 percent.
The average Portland home cost $271,800 in August 2011, which was down 9.2 percent from a year earlier.
Between July 2010 and July 2011, the Standard & Poor’s /Case-Shiller Home Price Indices showed home prices in the Portland-Beaverton-Vancouver region dropped 8.4 percent.
Here’s where things get tricky: If one looks at the city on a month-to-month basis instead of a year-to-year basis, the whole picture changes.
"Our market peaked in August 2007 and there has been a slow, steady decline over the last four years," said Bob Ulery, president of the Portland Metropolitan Association of Realtors and a broker with Hasson Company Realtors in Portland. However, he added, one could say the bottom had been reached in January 2011 and the city has since been climbing back.
"Looking at the median price for the tricounty area, in January prices were at $217,000," said Ulery. "In October, the median price had climbed back to $230,000 — that’s on a month-over-month basis."
Ulery attributes the growth to the current, very attractive interest rates and an improving economy. "We have seen a modest growth in new jobs and modest improvement in employment numbers," he said.
I asked Potiowsky if that was true. "At peak, we got up to 11.2 percent unemployment, but now we are about 9.6 percent as compared the U.S. average of 9.1 percent," he said.
In the last real estate recession at the end of the 1980s and early 1990s, Portland actually lost population. That didn’t happen this time around.
"There was still positive net inmigration, although a lot less percentagewise than we had seen before due to the recession," Potiowsky said. "Population growth does bring with it a labor force and that creates its own economic engine. More people demand more services and that lifts the economy.
"We always had a large number of Californians move into Oregon, but if your house is underwater back in Fresno it’s tough to sell and move here," he said.
"When we look at the demographics and net-migration patterns, we are still seeing people coming from California. The flow is not as strong as before, but that flow is still there. The affordability index is still looking better in Oregon."
That’s all about California. What about the rest of the nation that at one time wanted to move to Portland? Take my son and his family: They at one time flirted with the idea of moving to Portland, but chose Charlotte, N.C., instead.
The affordability index looked better in North Carolina.
