Writings and observations

Air extraction fron one small bubble

The national or even regional real estate market is so large you can’t easily get your figurative arms around it. You wind up with oddities like a pair of stories in today’s Oregonian, headlined “Portland real estate goes own way – up” (actually, the story doesn’t very well justify the head) and “home building goes downhill.”

Pearl District (from Wikipedia)Maybe a little easier to absorb is the smaller-scale experience of a specific place. An excellent post on Blue Oregon lays out the situation in the Pearl District in near-downtown Portland.

The Pearl is Portland’s largest artsy and high-end district, blocks of refurbished warehouses now turned into restaurants, galleries and such – and condos, lots of condos. (Stroll by for a First Thursday art night and you’ll see the condo-ites overhanging their windows and balconies.) Condo construction has been brisk in this area, and so has the increase in condo prices. But in recent months, according to the post by Jenson Hagen, the bubble is bursting.

“They are still building these things like mad,” Hagen writes. “The John Ross by the new tram. The Wyatt will add another 245 units to the Pearl. The Strand is going up where I-5 crosses the Willamette. Their website claims an additional 1,335 condos are going up along the Willamette.”

But alongisde that, some disquieting trends. Hagen said that in July he started noting how many Pearl condos were available for sale on the major web site for such sales, Buying Pearl Real Estate. Those numbers rose from 266 in July, to 322 in August, 379 in September, 422 in October and 480 in November. The average condo price is not cheap – most you’ve seen listed in the last year or two run upwards of a half-million. But the numbers of condos offered for under $200,000 (steadily up from 13 in July to 41 in November) has risen faster than the average – an indicator of dropping prices.

Is that the distant sound of a train wreck we’re hearing?

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One Comment

  1. I think you hit the nail on the head when you noted that housing markets are local, but there also are specialized areas. Second homes, vacation homes, investment homes are all specialized markets and in general they are beginning to take a real hit. There are localities that have over-built or over-priced themselves, these will take a hit. This is not so much a housing bubble burst as it is reality strikes. There certainly is going to be some pain for builders, a constriction with too many building too much means there isn’t enough left, but it also doesn’t mean disaster. I’ve been through a couple disasters, not good.

    November 18, 2006

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