by
Susan Marthens

Contributors
Gail Mann and Teresa Kirsch

February 2004 Newsletter

In This Issue

1. Portland Home Market - December 2003 Residential Highlights

2. Cost of Residential Homes in the Portland Metro Area - December 2003

3. Long-Term Mortgage Rates

4. Portland Weather

5. Oregonians Vote on Taxes

6. Saturday Academy

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Portland Home Market

December 2003 Residential Highlights

As the last month of 2003, December didn't have much left to do.  In fact, most of the month's momentum was spent by a 4.2% increase in the number of closed sales over the number reported in December 2002.  What remained were a 0.1% rise in pending sales and a 0.9% drop in new listings.

Fourth Quarter Report

Every month in the last quarter of 2003 showed the same trends: more closed and pending sales, but fewer new listings.  Combined, October through December 2003 brought an 11.3% rise in closed sales compared to the fourth quarter of 2002 (7,335 v. 6,589).  At the same time, pending sales rose by 3.8% (6,411 v. 6,178) and new listings fell by 4.1% (8,538 v. 8,903).

A Summary of 2003 - Home Average Price Increases 5.8%

At year's end, the Portland metro area had generated 2.2% more new listings than it had in 2002.  The only year to have generated more new listings was 1998. No earlier record matched the area's 2003 performance for generating pending sales (up 10.2% from 2002) and closed sales (up 12.0% from 2002).

Sales that closed in 2003 generated a dollar volume of $6.9 billion.  Contrast that with the $5.8 generated last year and you'll witness the increase of 19.0%. The jump in closed sales can account for part of that increase, but so can the 5.8% rise in average sale price ($222,500 v. $210,300) and the 5.1% appreciation of median sale price ($185,000 v. $176,500).

2003 Home Appreciation in Portland

In West Portland (southwest and northwest), the average price was $328,400 and the average price increase was 4.6 percent. North Portland and Southeast Portland were the leaders in average price increases for the metro area. North Portland prices increased 8.3% ($158,500 average price) and Southeast prices jumped 8.1% ($184,100 average price). Northeast Portland's appreciation in 2003 was 7.3 percent and the average price for 2003 was $208,300.

The lowest average price in the metro area suburban communities was in Gresham and Troutdale with an average price of $187,000. Next lowest was Hillsboro and Forest Grove at $197,100. 

Clark County (Vancouver, Washington) For 2003, the average sales price was $196,700 and the median sale prices was $170,000. The average sale price rose 7.8% over 2002 and the median sale price increased 6.3%.
 

Cost of Residential Homes in the Portland Metro Area

For Period December 2003

Mortgage Rates Steady

January 29, 2004

In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 5.68%, with an average 0.7 point, for the week ending January 29, 2004, up slightly from 5.64 percent last week. Last year at this time, the 30-year FRM averaged 5.90 percent.

The average for the 15-year FRM this week is 4.97 percent, with an average 0.7 point, up very slightly from last week's average of 4.95 percent. A year ago, the 15-year FRM averaged 5.28 percent.

One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 3.59 percent this week, with an average 0.6 point, up also very slightly from 3.56 percent last week. At this time last year, the one-year ARM averaged 3.89 percent.

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

Fed Keeps Rates Unchanged

"Mortgage rates were basically unchanged leading up to the FOMC's announcement that opened the door to the possibility the Fed would raise rates sooner than expected," said Frank Nothaft, Freddie Mac's Chief Economist. "Following the policy statement, bond yields shot up, taking mortgage rates with them, raising the prospect that mortgage rates will be even higher next week.

"However, even at higher levels next week, mortgage rates remain incredibly low and affordable and shouldn't starve off the demand for housing in 2004. The real estate market, although slowing from last year's blockbuster pace, will continue to be robust this year."

Portland Area Mortgage Rates

In late January, Washington Mutual Bank was offering 5.75 percent for a 30-year FRM (APR of 5.78 percent) with zero points. Another lender, US Bank's rate was 5.63 for a 30-year FRM (APR OF 5.76 percent). Both of these rates are for a $150,000 loan with 20% down.

You can learn more about mortgages by visiting Professor Guttentag Web site. To check on local mortgage rates go to Bankrate.
 

Portland Weather

Tracking the Moisture and Sunshine

Portland's rainfall is measured according to the "water year" which is from October 1 through the end of September.  Since we receive only a few inches in the summer months, the rainy months are from October through May.  Over half of Portland's annual rainfall falls in the first four months of the water year (October, November, December, and January).  The average precipitation is about 37 inches in the metro area.

January Snow Storm

When we sent out the last newsletter in early January, we commented on the late December snowfall and the prediction for another storm in early January.  It came and it was a doozy!  Higher elevation areas (Portland West Hills) received over a foot of snow and downtown was almost impossible to navigate for days.  We hunkered down and managed well.  The essentials were heat and an internet connection - both worked during the storm. My husband put chains on his pickup and he made some "food" runs for ourselves and neighbors.

Snow Stays for Three Weeks

Usually after snow, we can expect warm rains to melt the snow so it only lasts for a couple of days.  This storm was different.  After the snow, the weather turned cold and a cold rain created a ice blanket on top of the snow.  It closed schools for 3-4 days. By the last week of January, the snow had finally disappeared and life got back to normal.

Oregon Snow Pack in Great Shape

Snowpack is like money in the bank. You spend it when you need it – during the dry summer. Agriculture (irrigation), recreation, and the fish all need a good snow pack to survive the summer. Thanks to heavy January snow, Oregon's snowpack is well above average. The Natural Resources Conservation Services tracks moisture in the U.S.A.  Their SNOTEL map of Snow Water Content for the Pacific Northwest shows Oregon areas with averages well over 100 percent.

Checking the snow charts in the Cascades each morning, just about every day they report a few inches and occasionally it hits double digits.  Timberline Lodge, located on Mt. Hood, has 175 inches of snow at the lodge (elevation 6,000 feet) at the end of January, 2004.  The last day of January brought another foot to the mountain.

Oregon Vote on Taxes: Will State Repeat 1930?

The Measure 30 ballot - the Legislature's $800 million tax increase - has been mailed to Oregon voters and ballots must be returned to county election officials' hands by 8 p.m. Tuesday.

The last time Oregonians approved a tax increase was in 1930 during the depths of the great depression. They have defeated numerous other tax increases since then.

What is Measure 30?

Measure 30 is a referendum. Voting 'yes' ratifies the 2003 Legislature's decision to increase a variety of taxes, contained in a house bill, to balance the budget. Opponents of the tax gathered signatures to put most of it on the ballot. That is why Oregonians must vote for the measure in February.

What is Measure 30 Fails?

Legislators specified $545 million in spending reductions that will be made if the measure fails, including $285 million in school funding.

What are the Chances for Passage?

Political analysts say they still consider Measure 30's passage to be a long shot. "I still think the odds are stacked pretty well in favor of the no side," said Tim Hibbitts, a Portland pollster. "I don't rule out that the yes side could squeeze through, but I think it's unlikely."

Opponents of the tax increase, are not running any  television ads. They say they don't need to because polling indicates Oregon voters will reject the measure. "We're not going to spend money we don't think we need to, especially when we're talking about efficiencies in government," said Russ Walker, director of Citizens for a Sound Economy, which has led the fight against the tax increase.

Tax Increases are Both Permanent or Temporary

Of the nine tax changes in Measure 30, three expire after three years: an income tax surcharge, a reduction in corporate tax credits, and a cut in the deduction for dividend income from corporate subsidiaries. The temporary cuts total $620 million in 2003-05. The permanent increases include a property tax increase, an income test for the senior medical deduction, and elimination of a business tax break for SUV owners. These total about $180 million.

The Tax Burden in Oregon

In 2001-02, Oregon ranked 44th in state taxes as a share of personal income according to The Federation of Tax Administrators.  The Federation states that an Oregonian's tax burden is 5.3% of their personal income. On a per capita basis, an average Oregon taxpayer paid $1,459. The Oregon Legislative Revenue Office estimates that if Measure 30 passes, the ranking would rise to 34th. The ranking is expected to rise to 39th even if it fails.

Oregon ranked 13th in per-capita state spending in 2001. The discrepancy arises because Oregon collects a relatively high share of its revenues from fees and federal grants. Oregon's reliance on taxes is one the lowest in the nation.

Multnomah County Surtax

In late May 2003, Multnomah County (i.e., City of Portland) voters passed a bill to increase their taxes by 1.25 percent in order to fund the eight different school districts in the county. About 75% of the revenues from the measure provided funds for schools and the other 25% provided funds for health care, mental health, senior services, and public safety. The measure was called 26-48 and passed by a margin of 58.48 percent.  Should Measure 30 pass, measure 26-48 would not go into effect according to county officials.
 

Saturday Academy: Enrichment Programs

Since 1983, Saturday Academy (SA) has provided instruction to more than 100,000 students and teachers in urban, suburban and rural communities. Saturday Academy’s innovative programs are open to all students in grades 4 through 12.

SA offers Portland metro area students opportunities for enriched learning by enlisting community professionals to share facilities, equipment and expertise through hands-on classes, workshops and internships. Classes are held on Saturdays, holiday breaks, and during the summers.

Emphasize Math, Science, Engineering, Technology, and Healthcare

Take a class at Saturday Academy (SA), and you may end up creating and showing off your own 3-D alien landscape, building and using your own ultrasound detector, or even processing and studying human chromosomes. They emphasize math, science, engineering, technology, and healthcare because these disciplines are integral to the future of where children will live and work.

Their vision is that all interested, pre-college students in the Portland metro region will have the opportunity to interact with community experts and experience professional environments in ways that assist them in developing intellectually and preparing for rewarding careers. SA has received seven National Science Foundation grants to develop and disseminate model projects in community-based science education.

Class Schedule - Winter 2004

Reading the class schedule, one wishes to be back in school again. Here are some of the offerings: Java Programming, Robo Physics with Lego, Math Help for the SAT, Comic Book Creation, and Build a CO2 Power Car.

Wouldn't you like your son or daughter to build and race a C02-powered race car? Students begin the undertaking by creating a plan using designer software. Next, they construct a vehicle out of balsa wood and finish it with a custom paint job. When complete, the car must meet weight and design specifications. Then, they clock speeds using a digital timer, analyze the data, and finally, fine tune the design to increase the car’s speed. According to the class descriptions, "the more aerodynamic the design, the faster the speed."