March 2003 Newsletter
by Susan Marthens

In This Issue

1. Portland Home Market - January 2003 Residential Highlights

2. Cost of Residential Homes in the Portland Metro Area for January 2003

3. Long-Term Mortgage Rates

4. Portland Winter Weather

5. New Seasons to Open Store in SE Portland

6. Update on Schools and State Budget

7. Portland Public Schools - High Quality Vital

8. Oregon and Wolves

Portland Home Market

January 2003 Residential Highlights

The new year brought new listings. As a matter of fact, it brought 6.4% more new listings than January 2002. For that matter, it also brought pending salesup by 11.9%. Closed sales tagged along too, rising 3.3% from the total reported for January 2002. The inventory of active residential listings at the end of January (9,510) would last 6.1 months at Januarys rate of sales.

2002 New Construction

Listings sold as new construction, proposed, or under construction totaled 4,042down 4.9% from 2001 (with 4,251). However, average sales price for those homes rose by 5.0% ($236,500 vs. $225,300) and median sales price rose by 2.7% ($188,900 vs. $183,900).

2002 Average Price by County

Affordability

Per an National Association of Realtors (NAR) formula, the areas affordability index reached 139 in December 2002. The result takes account of median household income ($57,200, per HUD), and the interest for a 30-year fixed mortgage, (6.05%, per Freddie Mac). With 20% down, the income provides 39% more than minimally necessary to afford a median-priced ($178,000 in December).

Cost of Residential Homes in the Portland Metro Area

Area

Average
Sales
Price

Percent
Appreciated
 **See note

North

7.6%

Northeast

6.8%

Long-Term Mortgage Rates Keep Falling

February 28, 2003 

In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 5.79 percent, with an average 0.6 point, for the week ending February 28, 2003, down slightly from 5.84 percent last week, and setting still another record low. Last year at this time, the 30-year FRM averaged 6.80 percent.

The average for the 15-year FRM this week is 5.14 percent, with an average 0.6 point, down from last week's average of 5.21 percent, also the lowest ever recorded since Freddie Mac started tracking it in 1991. A year ago, the 15-year FRM averaged 6.28 percent.

One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 3.83 percent this week, with an average 0.6 point, up slightly from 3.81 percent last week. At the same time last year, the one-year ARM averaged 4.94 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Debilitating forces, such as looming war clouds in the Mideast, declining consumer confidence and other issues, are making an economic rebound difficult," said Frank Nothaft, Freddie Mac chief economist. "And when the economy is weak, interest rates tend to follow suit.

"Low rates will continue to keep the housing industry busy this year, and indications are that there is a good chance home sales may set yet another record in 2003."
 

Portland Area Mortgage Rates

To check on local mortgage rates go to Bankrate.

Portland's Winter Weather
Tracking the Moisture

Water Year:  October 1 - September 30

Portland's rainfall is measured according to the "water year" which is from October 1 through the end of September.  Since we only receive a few inches in the summer months, the rain months are from October through May.  Almost half of Portland's annual rainfall falls in November, December, and January.  Our average water year precipitation is about 40 inches.

Water Year:  Measurements From Portland Airport Weather Station

Report on Rainfall for February 2003

February ended with just over two inches of rain so Portland is about three inches below the average for this time of the year.  The good news is that cooler weather created numerous snow storms so the snowpack increased considerably (see below).

Two Weeks of Bright Clear Days Followed by Rain

Our intent was to cover the winter of 2002-2003 "drop-by-drop" so you could get a feeling of what a normal Portland winter was like.  But this is not a normal winter as evidenced by January being the second warmest January on record.  February started off bright and clear and then it starting raining on Valentine's Day.  Cooler weather brought snow in the mountains.  The  February 22-23 weekend brought cool and windy weather but no rain until the last day of February and we had light rain. 

The cherry trees are blooming and many of the daffodils are blooming along with other early spring bulbs.

It's Snowing in The Mountains

Moist skies and lower temperature that started in mid February also brought snow to the mountains.  At Timberline Lodge (elevation 6,000 feet) on Mt. Hood, the snow level went from 50 inches to 107 inches in about ten days.  We still need more and if the temperatures stay cool, the next series of storms brewing in the Pacific will reward us with some more white stuff.

For detailed information on water resources and snowpack visit the National Water and Climate Center.

New Seasons Market Opening Fifth Store in SE Portland

New Seasons Market, a locally owned and operated food market has the motto: "The Friendliest Store in Town".  It's one that employees at all their stores adhere to without exception.  It's not only fun shopping but the quality of food is exceptional.

The markets carry the essential groceries for everyday living and feature organic produce, natural meats and chicken, fresh seafood, imported olives and cheeses, and an extensive wine and beer selection. All New Seasons Market stores have a full-service deli complete with a seating area in which to enjoy a freshly made lunch or dinner. Each location offers a certified organic bakery featuring artisan breads.

Ask any one living around NE 33rd and Killingworth (Concordia neighborhood) what effect the New Seasons store had on the neighborhood and you will hear praises.

In early February, New Seasons Market announced that it will open its fifth store later this year in the shopping center at Southeast 20th and Division in Portland.  This is in the Clinton neighborhood and close to the Hawthorne area and only minutes from downtown.  Their press releases states that:

The opening of the new store will create approximately 120 new jobs and will support local vendors from the county and the region. Both tenants currently operating at the site have informed the landlord of their intention to close or relocate their businesses.

The neighborhood has numerous older homes and many need work. So if you're looking for a "fixer upper", add this neighborhood to your list.  We promise you'll eat well after a day's remodeling work if you shop New Seasons.

Update on School and Oregon Budgets

Portland Schools Still Have Issues to Resolve

Portland families can count on a full 171-day school year this year but this does not solve the problem for the next school year. Portland forced the issue in late February when the city negotiated a deal with the school district to prevent shortening the school year by offering $15 million from a proposed increase in business license fees. Voters will need to approve the local income and business taxes needed to keep school days and class sizes intact for the next school year.

The deal hinges on city and county governments coming up with an increase in local taxes to patch gaping holes in the school district budget. It keeps teachers' health benefits intact but requires them to accept a 5 percent pay cut this year and a raise of less than 1 percent next year.

At least three votes are needed to make it happen:

• Approval by a majority of teachers on Monday, March 3.
• Approval by the school board.
• A mid-March vote by Portland City Council to enact a 34 percent increase in city business license fees.

It may take some work to get the Portland business community to endorse these taxes. It also left four other school districts (David Douglas, Parkrose, Centennial, and Reynolds) that are located within the city of Portland without a share of the $15 million.  These school districts are a holdover from when they were outside the city limits but after annexation, they remained separate entities but within the city of Portland.  Needless to say, these four school districts are objecting to being left out.  The potential bailout of the Portland School District also left some rural legislators fuming that smaller districts have no such safety net, and vowing to force Portland to share the money through the state's equalization formula. 

More Bad News About State Budget

Word that revenue for the current state budget will drop about another $245 million came at the end of February.  With $890 million left in the remaining four months of the budget, lawmakers said they doubted the shortfall could be made up with spending cuts. Fears that the shortfall will grow even larger led to talk of digging into reserves and borrowing to find at least $400 million to close the books on 2001-03.

Indians, Casino, Baseball, and Schools

The Confederated Tribes of Grand Ronde is dangling a quiver full of money at Portland city leaders.  In exchange for the rights to built a casino in the city, they are offering to help finance a new baseball stadium in order to attract the Montreal Expos to move to Portland.  To sweeten the deal, they have also offered to help with school financing.  Vera Katz, the mayor, is pushing hard to get the city council and civic leaders accept the tribe's offers.
 

Portland Public Schools
High Quality is Vital

Long-Term Solution Needed

A projected $50 million budget deficit has led the district to slash its calendar from 172 to 157 days; the national standard is 180. After Measure 28, the proposed income-tax hike, failed in January, the city had to step up and fund the schools with a business tax increase.  This may solve the problem for the 2002-2003 school year, but the future of the Portland Schools are shaky unless some radical steps are taken.

Middle-Class Flight to The Suburbs

Poorly funded school could accelerate middle-class flight from urban public schools, a curse that has plagued nearly every other major American city. 

You might ask, "Who cares if the middle class leaves?" But we all know that it is middle-class parents who have the time and flexibility to volunteer and, more importantly, who wield the district's political and financial clout. Lose them, many people say, and you imperil not only the city's most fundamentally democratic institution, but far more.

Advocates for low-income students have hammered district leadership in the past few years, their passion fueled, in part, by the knowledge that poor kids have no alternative. But middle-class parents can vote with their feet.

When such parents choose private schools or move to the suburbs, the history of cities from Boston to San Francisco shows that urban centers become polarized between rich and poor--and their public schools are nearly always full of the latter. (See chart below)
 

Attracting Newcomers

SAT Scores Among Top in Nation

Portland continues to rank near the top of the class nationally on SAT scores they usually rank among the top three states.  For example, 2002 graduates of Lincoln High School scored an average of 593 point on the verbal part of the exam and 585 points on the math section.  Impressive numbers and when you add the fact that 86.8 percent of the students took the exam, it's even more impressive.

Programs Disappearing

Music and art in particular have disappeared from Portland schools. A decade ago, every school had a music program; this year, 28 of the district's 61 elementary schools have no music teacher.

Public School Attendance

Historically, Portland school-district boosters have bragged about the city's rate of public-school attendance.

District wide, according to a study released earlier this year by Portland State University demographers, that rate dipped only a couple of percentage points in the past decade, from 86 to 84 percent. In the enrollment areas of the city's two most affluent high schools, Lincoln and Wilson, the percentage of students attending public school dipped by about nine points in the past decade, to 73 percent. Public-school attendance also decreased about 6 percentage points in the Grant High neighborhood, which includes some of the east side's most expensive homes.

Overall, despite a population increase of 26,000 during the '90s in the district's enrollment boundaries, school enrollment grew by only about 251. That measly rise was primarily due to an increase in empty-nesters and a decline in birth rates, but the trend overall is clearly downward. Enrollment reached a recent peak of 58,000 in 1996 and has decreased ever since.

Former Secretary of State Phil Keisling, now a board member of Portland Schools Foundation, a nonprofit established to provide support for Portland public schools, says, "There's absolutely nothing to suggest that this current deficit is a one-year problem. It'll be even bigger next year, and if the solution is cutting days." Keisling, now a vice-president for business development for another consulting firm, ProDX, believes that Portland's truncated calendar will be used against the city.

Good Schools Key to Knowledge Workers

Portland City Commissioner James Francesconi is the "education" voice for the city.  Jim said recently that "No CEO is going to want to have his family anywhere near a city with the shortest school year in the country."  Not only is education the key to a productive home-grown work force, but in a knowledge-based economy, schools are of paramount interest to anybody considering moving to Oregon. "The first thing that knowledge workers are concerned about is school quality," he says.

Equalization Reduced Funding of Portland Schools

There are at least a couple of reasons for the district's predicament. The first is money. There's no consensus on how much is enough. A state audit released in February 2003 shows that per-pupil spending here $7,149 is near the national average.

After Measure 28 failed, the district's general fund will be $342 million, an increase of less than 4 percent over the past 10 years. Over the same time, the state's general-fund budget, even after $1.7 billion in recent cuts, has increased by about 80 percent.

Part of the problem is that Portland has suffered under the transition from local to state funding. In 1990, when Measure 5 passed (limits the amount of property taxes that can be collected from each property tax account) 70 percent of funding came from local property taxes; today, 70 percent comes from state income taxes.

How School Funding Works in Oregon

Previously, Portland could spend whatever local voters approved, which was far more per student than in many Oregon districts. Today, Portland gets the same per-capita funding as every district in the state. Although equalization devalued the quality of Portland schools, most education insiders say that it improved the lot of more than half of Oregon's 198 districts, particularly those in rural areas.

Out of every dollar that a Portland resident pays in taxes to support Oregon schools, they receive about eighty-five cents back to support their schools.  Portlanders subsidize every hamlet in the state.

Portland officials complain that the district gets shorted under equalization because it spends $13 million more annually on special-needs students than it gets in reimbursement.

Shrinking enrollment has also battered Portland's finances. Here's why: Portland gets about $5,000 in state funding for each student. If enrollment drops by 1,000, as it has for each of the past five years, that costs the district $5 million. Eliminating the 40 teaching positions that covered those kids, however, only saves about half that much because other costs, such as utilities, maintenance and administration, remain.

Management of Schools in Question

Portland schools have changed superintendents frequently the last few years.  Former Cheif Financial Officer of the Portland Schools, Jim Scherzinger is now in his second year as an interim superintendent after a national search failed to attract a permanent superintendent.  Three criticisms have been leveled at the board of education.

• Portland teachers have the most generous medical benefits in the state and the board has never put a cap on these benefits.
• It has been slow to close schools as enrollment declined.
• It has clung to underutilized facilities such as the district headquarters on North Dixon Street. The 10-acre Rose Quarter site includes a 347,000-square-foot building, only 15 percent of which is office space.

In early March 2003, the board announced that they will close three of the five schools that have been on the chopping block: Rice, Brooklyn, and Meek.  But the agreement with the teacher's union (hammered out with Mayor Vera Katz's, Commissioner Randy Leonard, and Multnomah County Chairwoman Diane Linn assistance) in late March left the spiraling health costs continue.  They didn't cap them. 

Portland came into this school year having overspent last year's budget by $2.8 million, while other local districts sat on fat wallets.  Lake Oswego, for instance, began the year with a $6.7 million reserve, more than 10 percent of its budget; David Douglas, a less affluent district in East Multnomah County, carried a reserve of $8 million, about 13 percent of its budget.

Pro Education or Anti Education?

Governor-elect Ted Kulongoski's has said repeatedly that schools need to demonstrate accountability before he'll fight for big changes.

The Portland Business Alliance, the city's most powerful lobby, has ignored education until very recently. Instead, the Alliance spent its energy fighting for parking on the bus mall and a ban on panhandlers. Only in the past month did Alliance boss Kim Kimbrough form an education committee.

Francesconi, who has tried to play matchmaker between the district and downtown, applauds that move. "Without the business community, we're not going to save our schools," he says. In the same breath, Francesconi concedes that City Hall hasn't done much to find a solution for schools either. "We've had too many priorities as a city," he says.

In Portland, by contrast, the city and the county put forth three tax measures that will raise $46 million annually for parks, libraries and kids' programs, causes arguably less pressing than school-district needs.

Wolves in Oregon

Beginning in the 1980s, the U.S. Fish & Wildlife Service (USFWS) began a program of wolf reintroduction in the western United States. To achieve that goal, experimental wolf populations were established in central Idaho, Yellowstone National Park, and northwest Montana.

In 1995 and 1996, 35 wolves were reintroduced into central Idaho. Since then, the population has grown to an estimated 250 plus wolves.  Biologists expect these animals to seek new territory in eastern Oregon

Wolves Cannot Read Maps

When the first wolf crossed from the experimental reintroduction area in Idaho into Oregon in 1999, she could not have known the political storm that would follow.  Absent from the state since the 1930s, wolves were suddenly back. Jerry Cordova, gray wolf coordinator for the U.S. Fish and Wildlife Service feels that Oregon will have wolves. He said, "We suspect that even now we have wild wolves in Oregon."

The problem is that Oregon was never chosen for part in the gray wolf reintroduction project. According to the Oregon Department of Fish and Wildlife (ODFW) official policy, "Oregon does not have sufficient contiguous wolf habitat of adequate size to support wolves on a year-round basis without livestock damage problems." 

Cattlemen versus Conservationists

Oregon is potentially new territory for the Idaho wolves.  Sharon Beck, former president of the Oregon Cattlemen's Association, and conservationist Dr. Reed Noss represent two opposing camps concerning wolf recovery.

Noss believes that the potential for wolf recovery is excellent if Oregon closes non-essential roads, compensates livestock owners for animals killed by wolves and bases its recovery plan on the state Endangered Species Act (ESA).

"Wolves and humans can coexist, and in fact they have for many thousands of years," Noss said. "People simply have to learn to respect these animals and to cultivate the generosity of spirit that allows them to survive and prosper."

Beck's point of view is that wolves, which eat about nine pounds of meat a day, are a detriment to their cattle. Conflicts, she believes, will not arise if the ODFW simply eliminates the gray wolf from the endangered species list and follows their policy of removing any wolves coming into the state.

"Programs that compensate livestock owners for animals lost to wolves are quite affordable and have been applied to other regions," Noss said. "The chief ingredient that is lacking for wolf recovery in Oregon is political will, largely because of pressure from a small minority of special interests, such as the livestock industry."

Oregon Wolves are Fully Endangered

Wolves in Oregon are classified as fully endangered under both the Federal and State ESA. This means that killing one is a federal crime carrying a maximum penalty of $100,000 and one year in jail. In Idaho, wolf populations are classified as 'experimental non-essential,' which means that they are treated as threatened.

Since wolves in Oregon are listed as fully endangered, government agencies have less ability to control those animals that kill livestock. Ben Miller, a junior in fisheries and wildlife management at Oregon State University has testified twice before the ODFW commission about gray wolf law and policy. He is also one of the principle authors of a law and policy review concerning the gray wolf in Oregon.  Ben thinks the the goal of any plan that Oregon creates should be to manage with wolves since they are in Oregon now.

Oregon State University Studies

Oregon State University has a number of professors and students who are studying wolf-related issues. Dr. Robert Beschta, emeritus professor in the Department of Forestry Engineering, is researching riparian succession patterns with results that may have implications with regard to wolves. Dr. Bill Ripple, a senior researcher in the Department of Forest Resources, has published two papers dealing with the connection between aspen trees, elk, and wolves in Yellowstone National Park.

Voice Your Opinion

The ODFW is putting on town-hall meetings across the state. The public is encouraged to voice their opinions on wolves and wolf management in the state.

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