Case shiller Number 1 performing market Portland Oregon
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesCase shiller Number 1 performing market Portland Oregon
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Mike NussPro Member
Real Estate Entrepreneur · Portland, OR · Member since 2014 · 451 posts · 328 votesHey @Steve B. we agree on something!! You’re right, our legislation is showing no sign of changing directions anytime soon, and it seems Multnomah county gets more liberal by the year.
I’m sorry but you’re way off here…”the Max line is a minor player in housing outside of low-income rentals”. I'm too lazy to go dig up the multiple economic papers I’ve read on the topic (backed up with my own experiences, research and eyes in the marketplace), but there has been an economic boom along the MAX lines. I guarantee you there are thousands of property owners, including me, benefiting from the infrastructure that the city of Portland built. We will continue to benefit from the demand that’s been created, in large part because of the MAX.
I agree that the MAX is a tough pill to swallow for taxpayers that, A) don’t use it and B) don’t own a business or property around it, as these taxpayers are subsidizing every ride in a heavy manner. The bottom line is that it spurs private development, which drives the economy. Same thing with the Tram. There is no way OHSU invests in the south waterfront, the way they do, without the tram in place. It just isn’t feasible. That one huge piece of legislation completely changed the landscape of that area, in large part due to their pact with OHSU, whether we like it or not. Good luck telling anyone in the SWF that public infrastructure doesn’t help their property value. Even the tax payers that don’t benefit from, but subsidize the max, see a rising tide that they take part in. It’s very hard to argue, without simply whining, that the MAX and Streetcar haven’t benefited their market segments.
Also Steve, You obviously don’t know much about me. I’m on record in both January 2015 and January 2016 as stating Portland won’t continue to appreciate at the rates we’ve seen and I’ve also stated that I’m looking forward to another downturn. I believe the midterm is where Portland is the weakest. Portland looks great in the short term and great in the long term, but affordability is changing (still more affordable than 2006-2007 levels) and lending parameters are starting to loosen. We won’t have a crash like we did in previous years, there has been too much “skin in the game”over the past 4-5 year run up, but lenders are heading back to pre crash standards and something has to be done about the conglomerate GSEs known as Freddie and Fannie. There will be a changing tide in borrowing power, which will affect the market place. People won’t have to sell like they did during the crash. But eventually these prices will bring more significant amounts of sellers to the marketplace. Those sellers combined with the extensive amount of development in the pipeline, while force market conditions to change from a seller’s market to a buyer’s market. I think it will be smart to avoid selling and to be buying aggressively 2-5 years from now.
@Mushfiq S. , to answer your question. Gresham is an interesting market. It has a lot of potential as Gresham, Fairview, East County and Troutdale have a significant portion of Portland’s very minimal industrial land (this is where Seattle puts Portland to shame by the way, feasible industrial land). There are many main thoroughfares to get out there (Powell, Division, Stark, Burnside, Glisan, I-84 and Sandy) and there is a MAX station in downtown Gresham. I know new construction is doing well and they’re seeing escalation in the market place. Gresham recently was reported to have 1% vacancy rates, lowest in the State of Oregon at the time. The downside, or potential downside to Gresham, is that Portland’s gentrification is pushing low income earners toward Gresham. That’s part of the reason their vacancy rates are low. In a market like this that just increases demand so high at the lower price points that it trickles upward from there. When supply levels switch it can be bad, because lower earners, will have more pull in the market place. But there have been multiple institutional investments made in the Gresham area and it has strong demographics, in the long run, just like most of Portland at this time.
36 Replies
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Bryan R. other than 08 to 2010 ish buying has always been very competitive in our market. nothing new.. on that score.. or at least from the middle 90S when Oregon transformed officially from a Timber and AG based economy to one of high tech and diversification.
- Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes10y
Without the city/county/state substantively supporting affordable housing, Portland is going to become San Francisco. While I loved living in SF back in the late '90's, that would be unfortunate for so many reasons.
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Account Closed Oregon just adopted affordable housing legislation.
any new build apartments over 100 units has to have a certain % set aside for affordable housing.
you have a few reasons why SF did what it did in values.. some are obvious like major corps moving in. others are its a peninsula were there just is no land avalaible so it becomes free market
Oregons land use laws have created the same thing.. there is NO shortage of buildable land if you did not have an Urban growth boundry.. this boundry is an imaginary line that creates scarecity of developable lands.. and raise value of existing props that can be developed.
For all the reasons the keep Portland Weird crowd wants to stop urban sprawl they only have themselves to look at with regard to massive spikes in rental rates and property values.
Can't have them both a viberant healthy economy then a shortage of land and homes.. something has to give
- Developer · Portland, OR · Member since 2014 · 732 posts · 490 votes10y
@Account Closed is spot on in with the issue with the Urban Growth Boundary. It's compounded by the fact that the strong demand that we are experiencing is primarily centralized to the core, which then reverberates out to the suburbs.
I'd really like to hear from someone that has great examples of where cities have been able to successfully roll out municipality-wide affordable housing programs in hot markets with pent up demand. Many of the plays out of the affordable housing playbook actually cause market rent to increase. In other cities like SF the affordable housing policies also had the effect of limiting supply even further when property owners and landlords decided to convert their residential units to either condos or converted the use to commercial in the allowable areas so they wouldn't be faced with affordable housing restrictions.
I definitely don't know the answer to the predicament that we are in. There's times when I want the market to stabilize or drop in value, mainly because the competition can be tiring. But then when you go to sell I completely understand the current market mentality and love to count the chickens before the eggs hatch.
- Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes10y
Yes, the UGB inflates land values within it. But it doesn't necessarily have to inflate the cost of living (which ≠ the cost of housing) with density and transit. It costs more to build up than it does to build out, which is why developers hate UGBs.
But broader more macro issues are more important than cheap houses and developer profits, like having enough farmland to feed people, clean air, not commuting 40 miles to work, and not needlessly wasting finite energy resources, among others. We can't simply build houses over every non-developed patch of land for so many reasons, not the least of which is, what would we eat??
Anyway, there's a reason why so many people are moving to Portland instead of, say, Houston or Atlanta. It's probably the same reason you and I live here--it's a beautiful place to live. Sprawl is kept to a minimum, and you can drive 20 minutes in just about any direction and be in nature.
Ironically, it's what makes Portland so attractive that is now making it incredibly expensive for people who've been living here for years (as opposed to recent bay area transplants who think Portland is relatively cheap). I don't have the solution, but it's the people who come up with ways for moderate income people to live here affordably who stand to profit long-term.
There was a timely interview with Gil Kelley on the topic just this past Saturday: http://www.opb.org/artsandlife/article/gil-kelley-portland-san-francisco/
- Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes10y
@Neal Collins I don't have all the answers; I only know what I know from having a master's degree in architecture and urban design, and from having lived in places like San Diego, Los Angeles, the Bay Area, NYC, and Paris. Jay's life and work experience is very different from mine.
I'm sure that increasing minimum wages would help, but it wouldn't solve the problem. As you know, everything affects everything, so things like paid paternity/maternity leave and affordable childcare and flex-time and educating people in the trades and tech etc. would all help. Ultimately, it's better to bring everyone up rather than race to die with the most toys.
I also think there are too many people on the planet, but this is a REI website, not a sociology class.
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Account Closed in other countries they are having terrible times with work force so you see them import the work force from other countries.. we don't have that issue with our Mexican border and that work force.. but other countries defiantly do....
- 10yMike NussPro MemberReal Estate Entrepreneur · Portland, OR · Member since 2014 · 451 posts · 328 votes
@Jay Hinrichs, @Neal Collins and @Account Closed
In my opinion, the UGB doesn't effect housing in Portland anymore. The urban core demand is so strong that activity around the UGB equates to less than a ripple, by the time it would effect inner Portland. The UGB moves so slowly and land development takes so long that Portland's urban core is not effected by a move in the UGB. Now, the suburban markets are different, because they can be directly affected and need the added supply that UGB can ultimately create (however long that may be). Portland will be getting it's new supply on land already inside the UGB and that won't change anytime soon.
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Mike Nuss Excellent point the new buyer the millennial. buys for a different reason.
they want Urban core.. they want walk score.. they want things the buyers did not want years ago. they don't want to live in a suburb... so the demand is created by those that want to live there. So they create their own competition as it were.
However if you released a lot more suburban acreage so there was no shortage dirt prices would be lower and housing would be lower in the burbs.. Like in many areas of the mid west for example building lots in nicer areas peak at 30 to 40k... so you can provide a nice 200k product.
when our cheapest burb lots are 80k if you can find one.. 300 plus becomes starter
- Real Estate Agent · Lowell, OR · Member since 2016 · 33 posts · 11 votes10y
@Jay Hinrichs what areas of portland are you investing in? I was just there yesterday staying with a friend and her and her husband just bought a house in beaverton for $317,000. Average sized single-family home. The husband is renovating it and its in a nice neighborhood so I am thinking they got a good deal. Since I still have family and friends in Oregon and go at least once if not twice a year, I was thinking I would invest there. I have more buying power there than I do here in Hawaii. What are your thoughts?
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Lilia Andrew I only buy and flip or buy and build.. so to answer your question where ever there is a deal.
- Portland, OR · Member since 2008 · 123 posts · 73 votes10y
This is good discussion, I'm learning a lot reading these replies. I do find the UGB interesting, and while I can see it does increase the suburban pricing a bit, I'm really, really glad it's here. I live right on the border of the UGB in an unincorporated area of Washington county (address is Portland, schools are Hillsboro). The highways in this area can barely handle the traffic as is, if there were more residential to the north of us highway 26 would become a parking lot 24/7. Highway 217 is already a giant fluster cluck most of the time, with no real way to improve it without the state spending $1b. Since Oregon road workers seem to only work on a project sporadically (a single lane addition can be 1/2 of a career here) there just isn't the time or money to fix the road problems before houses could be built, adding to those problems.
I grew up in the sprawl of Orange County, CA, trust me, we don't want that here. Eventually the land gets used up, traffic is terrible, and house prices still go up making it hard to afford. Building tons of cheap homes here will make (some) developers rich, but at a cost to the overall market and appeal that brings people to the area. If the Portland area becomes another urban sprawl why would people want to live here?
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Steve Moody your correct .. the freeways here are antiquated have been antiquated and are not going to get fixed anytime soon.. its inevitable that your hwy 26 commute will become one of the worse in the country.. if you have to go downtown for work..
They need to do like other cities do out east and start to have feeder routes for the Max line.. Having Max go to Hillsboro does not good if your N. of 26th at say 185th.
Oregon can't get out of their own way when it comes to highway improvements your not the only one who notices' it takes ODOT years to do something that in CA or WA would take 6 months or less.
Very POOR long term planning here.. they think they solve it with UGB and ultra high density.. unless you add East coast type of transportation to it.. IE a killer bus system and Rail system like say a Chicago.. your fubared this will not be a great place to live 10 years from now vis a vi traffic.
off traffic hours say 7pm and on and 9 am to 2pm you can get around on mid week days.. weekends are still OK.. I used to live at the sylvan exit.. that area is now bumper half of the day or more going into town regardless .
And there are no cheap homes anymore being built IE new construction under the median price range. unless you want to live in an attached unit but those are pushing high 200's now.
But for those that don't need to commute and live in a semi rural Washington county its pretty ideal and your open spaces are assured.. right up until the time I come in and clear cut that 20 acre forest next to you LOL.... no rules on cutting trees in the Rural areas those rights are god given and born into ORegonians lively hood.. not so in CA.. but in Oregon no fighting that fight.
- 10yMike NussPro MemberReal Estate Entrepreneur · Portland, OR · Member since 2014 · 451 posts · 328 votes
@Steve Moody and @Jay Hinrichs This is one of the reasons Portland is forecasted to take on most of the next 1million residents. Portland is the sole city that has the ability to provide the transportation amenities that high density requires. Our suburban cities can have the urban amenities that Portland does, but they will never have the infrastructure that Portland has, at-least not in our lifetime. They're too far behind and too less committed than Portland.
South Metro will eventually be the benefit of a rapid mass transit line, or Max, which benefits Tualatin and Wilsonville (speak of a highway clog, sheesh). SE Powell or Division should eventually get rapid transit service, which would benefit Gresham.
The loser in all of this, in my opinion, is Beaverton and Hillsboro. They have 2 of the largest employers in the state and only one measly little public transportation line feeding the entire west side. ODOT at it's finest. Ignore the higher demand less serviced areas. Makes sense to me.
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Mike Nuss also they bring in land on the wrong side of town into the UBG.. so all the new homes those that want to travel to work will have to take the woefully inadequate surface streets.
they should have brought in land between Evergreen and Hwy 26... but no they left that out in RR can't touch for 50 years and brought in lands south of TV highway that have no infrastruce and will take years to build out.. and traffic will be all over surface roads. and or up and over cooper mtn.
Just like bringing in 25k acres in Damascus and never serving any of it.. its just like the politico's they can hang there hat on " what you talking about Willis" we brought in 25k acres in the ugb...
Well looks good on paper but can't be developed and that was over a decade ago.. talk about as backwards land planning LOL
we better get going on Traffic circles and like fast.
- 10yMike NussPro MemberReal Estate Entrepreneur · Portland, OR · Member since 2014 · 451 posts · 328 votes
@Jay Hinrichs yep, the past 3 debacles of the UGB move have been a joke. Damascus, being the biggest. Even Cooper Mountain, where they have some infrastructure and major need for expansion, just lead to battles between Wash Co, Beaverton, Tigard and King City about who will do what and who will get what. That high school is going to be pretty darn sweet though.
South Hillsboro expansion was the dumbest move ever. Super dumb. You have Intel real close to Hwy 26 and some large industrial projects underway right next door, but you're bringing housing in all the way across town, further from the max and further from Hwy 26.
As dumb as Portland can be, at least we don't have to deal with this headache. We just market proximity to our highly subsidized max line and renters come flocking. I'll take that over the burbs anyday.
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Mike Nuss I used to live on Cooper Mtn.. and of course we got brought into the UBG.
so now my home was zoned 5 lots to the acre.. we are all Estate acre parcels with large million dollar plus homes on each lot.. so whats the likely hood of a developer buying my one acre with a 5k sq ft custom home and developing 5k lots next to it... But hey they brought in 300 acres into the UGB of which NON will be developed..
so anyway... got bless em...
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Mike Nuss well anyway the weather is getting better and I think I owe you a tour in the Cirrus.. !!!
- Seattle, WA · Member since 2016 · 249 posts · 54 votes10y
Just wondering what you guys think about East Portland-ish (i.e. Gresham). Their is a direct MAX line from their to anywhere in the main Portland downtown area and others. Any thoughts?
- Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes10y
While @Jay Hinrichs offers his usual great insights dont let @Mike Nuss fool you with his usual rah-rah Portland narrative. Despite what avuncular bespectacled and bow-tied Earl Blumenauer may say, and that which the city promotes; the Max line is a minor player in housing outside of low-income rentals. Buying into Mulltnomahs propaganda on the Max line is like believing the foxs cheerful report on the security of the hen-house. Just look at who is on the max line outside rush hour and you see its major function is low cost transportation for the homeless and unemployed – hardly a factor in promoting business. Clackamas county has been trying to fight even a subsidized Max rail incursion as they know what that ridership normally attracts outside of the 7-9am and 4-6pm rush hour crowd. The SJW's have some idealized image of making Portland resemble a quaint car free, bike friendly, hamlet in Europe but it isn't going to happen. Traffic and congestion is going to get worse and development is going to continue as the urban counties are addicted to increasing the property tax rolls despite their hand waving. The question is the proportion of urban density vs. sprawl. In the long run we are going to look no different congestion wise than any other west coast metropolis. The good news is I dont think this is going to have any adverse affects on appreciation in the medium term.
- Seattle, WA · Member since 2016 · 249 posts · 54 votes10y
I agree with you. The last sentence on appreciation is what I was trying to ask. The consensus of Portland seems to be that it is not done growing yet in terms of appreciation in the medium term.
- 10yMike NussPro MemberReal Estate Entrepreneur · Portland, OR · Member since 2014 · 451 posts · 328 votes
Hey @Steve B. we agree on something!! You’re right, our legislation is showing no sign of changing directions anytime soon, and it seems Multnomah county gets more liberal by the year.
I’m sorry but you’re way off here…”the Max line is a minor player in housing outside of low-income rentals”. I'm too lazy to go dig up the multiple economic papers I’ve read on the topic (backed up with my own experiences, research and eyes in the marketplace), but there has been an economic boom along the MAX lines. I guarantee you there are thousands of property owners, including me, benefiting from the infrastructure that the city of Portland built. We will continue to benefit from the demand that’s been created, in large part because of the MAX.
I agree that the MAX is a tough pill to swallow for taxpayers that, A) don’t use it and B) don’t own a business or property around it, as these taxpayers are subsidizing every ride in a heavy manner. The bottom line is that it spurs private development, which drives the economy. Same thing with the Tram. There is no way OHSU invests in the south waterfront, the way they do, without the tram in place. It just isn’t feasible. That one huge piece of legislation completely changed the landscape of that area, in large part due to their pact with OHSU, whether we like it or not. Good luck telling anyone in the SWF that public infrastructure doesn’t help their property value. Even the tax payers that don’t benefit from, but subsidize the max, see a rising tide that they take part in. It’s very hard to argue, without simply whining, that the MAX and Streetcar haven’t benefited their market segments.
Also Steve, You obviously don’t know much about me. I’m on record in both January 2015 and January 2016 as stating Portland won’t continue to appreciate at the rates we’ve seen and I’ve also stated that I’m looking forward to another downturn. I believe the midterm is where Portland is the weakest. Portland looks great in the short term and great in the long term, but affordability is changing (still more affordable than 2006-2007 levels) and lending parameters are starting to loosen. We won’t have a crash like we did in previous years, there has been too much “skin in the game”over the past 4-5 year run up, but lenders are heading back to pre crash standards and something has to be done about the conglomerate GSEs known as Freddie and Fannie. There will be a changing tide in borrowing power, which will affect the market place. People won’t have to sell like they did during the crash. But eventually these prices will bring more significant amounts of sellers to the marketplace. Those sellers combined with the extensive amount of development in the pipeline, while force market conditions to change from a seller’s market to a buyer’s market. I think it will be smart to avoid selling and to be buying aggressively 2-5 years from now.
@Mushfiq S. , to answer your question. Gresham is an interesting market. It has a lot of potential as Gresham, Fairview, East County and Troutdale have a significant portion of Portland’s very minimal industrial land (this is where Seattle puts Portland to shame by the way, feasible industrial land). There are many main thoroughfares to get out there (Powell, Division, Stark, Burnside, Glisan, I-84 and Sandy) and there is a MAX station in downtown Gresham. I know new construction is doing well and they’re seeing escalation in the market place. Gresham recently was reported to have 1% vacancy rates, lowest in the State of Oregon at the time. The downside, or potential downside to Gresham, is that Portland’s gentrification is pushing low income earners toward Gresham. That’s part of the reason their vacancy rates are low. In a market like this that just increases demand so high at the lower price points that it trickles upward from there. When supply levels switch it can be bad, because lower earners, will have more pull in the market place. But there have been multiple institutional investments made in the Gresham area and it has strong demographics, in the long run, just like most of Portland at this time.
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes10y
@Mike Nuss I am following Mike Nuss forecast 2 years from now I will have built my last home in PDX and will have sold my last rental property in the US.. and will be simply loaning my cash for short term deals to all the young whipper snappers who want to do flips.. LOL...
I had a long conversation today with one of my partners.. and he was saying what are we going to do with our profits on the Gresham sub.. I said the problem is if we buy land today .. it won't be shovel ready for 24 months and I am not willing to pay today's prices for land to build on in 24 months... I would rather hold cash.. and if we need to build in 24 months just buy market lots as we need them. or just loan to others. If market corrects we have cash we swoop in.
that's kind of my mind set.. the same mind set had I had it in 2006.. I would never have met any of you folks on BP I would be long ago retired.. LOL..
- Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes10y
Originally posted by @Jay Hinrichs:
@Account Closed ...
Just some thoughts on the agriculture points. Although some of the crops being grown are not for food, those growers might have a need for diversity in what they plant / grow. Plus selling the products is a form of industry - in my area, it is not unusual to go to a nursery and look at the tag on a plant to see that the origin is from the Pacific northwest. Just a different way of making money from the land than buying and selling the real estate.
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