February 2003 Newsletter
by Susan Marthens

In This Issue

1. Summary of 2002 Portland Metro Area Residential Activity

2. Portland Home Market - December 2002 Residential Highlights

3. Cost of Residential Homes in the Portland Metro Area for December 2002

4. Long-Term Mortgage Rates

5. Portland Winter Weather

6. Oregon Budget Crunch

7. Oregon Health Care

8. Polo Ponies Run on Western Range

Summary of 2002 Portland Metro Area Residential Activity
Modest Gain of 4.8 Percent in Average Home Price

Assuming you purchased an average price home early in 1998 for $181,000 (average for 1998), five years later the home would be worth $213,900.  This is an 18.2 percent increase in value over five years.  .

Appreciation by Area

If you had a Southwest or Northwest address and lived within the city limits of Portland, your home appreciation was 10.5%.  The is the first time in years that west side homes appreciated at a greater percentage than North Portland homes.  Just 1.4% point away, North Portland's appreciation was 9.1%.  Northeast Portland saw a 6.9% increased followed by Southeast Portland with 4.7%.  Suburban areas ranged from 1.7% to 6.9%. 

Living in the city of Portland continues to be something that many people desire.  Easy access to downtown, historic homes, interesting neighborhoods, and public transportation are some of the factors making Portland a livable city.

Portland Home Market

December 2002 Residential Highlights

It would be hard to tell there was a holiday season by comparing December 2002 with December 2001.  Rather than holding steady, all measures of market action grew.  Chief among them, the number of closed sales was up 21.2%.  Accepted offers were up 11.0%.  New listings also climbed, by 6.2%.

Fourth Quarter Report

December wrapped up the fourth quarter of 2002 with a nice ribbon of activity that was significantly higher than the fourth quarter of 2001.  Closed sales rose to 6,589 from 6,044, an increase of 9.0%.  Pending sales scaled slightly higher, outpacing quarter four of 2001 by 9.9%.  New listings grew, by a small amount of 1.1%.

Cost of Residential Homes in the Portland Metro Area

Area

Average
Sales
Price

Percent
Appreciated
 **See note

North

9.1%

Northeast

6.9%

Long-Term Mortgage Rates

January 30, 2003 

In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 5.90 percent, with an average 0.6 point, for the week ending January 31, 2003, almost unchanged from 5.91 percent last week. Last year at this time, the 30-year FRM averaged 7.02 percent.

The average for the 15-year FRM this week is 5.28 percent, with an average 0.6 point, down from last week's average of 5.31 percent. A year ago, the 15-year FRM averaged 6.51 percent.

One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 3.89 percent this week,, with an average 0.7 point, down from last week's average of 3.93 percent. At the same time last year, the one-year ARM averaged 5.12 percent. This is, once again, the lowest the 1-year ARM has been since Freddie Mac began tracking it in 1984.

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

"Mortgage rates are currently in a kind of limbo with no impetus to drive the figures either up or down," said Frank Nothaft, Freddie Mac chief economist. "Risks seem to be pretty evenly balanced at this juncture in time. The upside risk would be rapid economic growth and inflation while the downside might be extended hostilities in the Mideast, or a wider scope of weakness in the economy.

"Meanwhile, both new and existing home sales for 2002 totaled a record 6.5 million, due in large part to the lowest mortgage rates in more than a generation. And all indications are that mortgage rates will continue to be very affordable in the coming year."

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 January 2003

January ended with just under three inches of rain on the last two days of the month in Portland.  This is indeed rare to have even an inch in a 24-hour period.  This downpour (it was rain, not mist) brought flooding to some areas of the metro area and a few homeowners were sandbagging. We just finished the three rainiest months and the "water year" actual is about even with the "water year" average.

Two Periods of Bright Clear Days in January

During the month we had two periods of 5-6 days each of bright clear days without a drop of rain.  Again, rare for January.  We have had unseasonably warm weather.  For example, on the last day of January, the temperature was 55 degrees at five o'clock in the morning. 

The daffodils are beginning to come up and other spring flowering plants have already began to appear weeks ahead of schedule.

The photo above is the Winter Garden at the Hoyt Arboretum taken in late January.  The plants begin blooming in December and will last well into the spring.

Snowpack is Lowest in 30 Years

Warm weather, combined with weak storms, have left the Cascades with a low snowpack. We have sufficient moisture but not enough cold weather to make it stick in the mountains. Timberline Lodge at Mt. Hood, as you can see from the chart below, should have a snowpack at this time of year of well over 100 inches.  Look at the "Temp Min" column too warm for snow so any moisture they receive is in the form of rain.

Most of the precipitation falls at high elevations, and most of the demand is at low elevations.  Most of the precipitation falls in winter, and most of the demand is in summer.  There are two ways that water becomes available at low elevations in the summer: Number one is snow, and number two is reservoirs.

Snowpack is like money in the bank. You spend it when you need it during the dry summer.  Oregon's snowpack is 49 percent of average, the lowest in nearly three decades. Other western states are also experiencing problems.  Arizona is at 39 percent, Washington is at 61 percent, Montana at 69 percent of average.

Without a good snowpack in the mountains and with only three months of possible snow ahead, Oregon and the Pacific Northwest will likely experience a difficult summer.  Agriculture and power generation interests will collide with fisheries over who gets the sparse supply of water.  I don't envy the Secretary of the Interior as that person will have to resolve many disputes.  In the last drought, agriculture won and thousands of salmon died on the Klamath River.  The picture of dead salmon lying on the banks of the Klamath still lingers in the memory of many.

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

Mt. Hood Timberline Lodge Charts for January 22 - January 31
(Elevation 6,000 feet)

Oregon Budget Crunch

In a vote that has major implications for lawmakers in the state's capitol, Oregon voters in late January rejected a tax hike measure that would have averted $313 million in state budget cuts.

The campaign in favor of it was largely funded by labor groups, whose public sector workers will likely face layoffs as the state cuts $313 million from its budget in the next five months. But most here put a positive spin on the defeat by pointing out that the yes-vote was far higher than most political analysts predicted.

The measure failed by 55-45, which is a record considering that everyone predicted its defeat from day one.  In the metro area, only Multnomah County (i.e., City of Portland) voted overwhelmingly for the measure.  Clackamas and Washington counties, home to the suburban communities, voted against the measure by a substantial margin.  

Budget measures began immediately.  Oregon State Police cut 129 trooper positions and schools are developing plans to shorten their school year. Agencies that help the poor and elderly will cut services. Many counties started releasing prisoners early in order to save on their funds.

For those interested in learning more about Oregon taxes, the Oregon Legislative Revenue Office report was released last week.  It is entitled, "2003 Oregon Public Finance: Basic Facts."  You can download it at the Oregon State Legislature website.  We will cover the report in the March issue of this newsletter.
 

Oregon Health Care
How good is it?

In a state-by-state look at the quality of medical care, Oregon scored the largest gain in ranking, jumping from 20th to 11th highest in the nation according to a America Medical Association study.  But it included only records from Medicare, the federal program for people 65 and older or disabled. So the findings offer an indirect view of privately funded health care.

Researchers tracked how often caregivers met basic standards of care when facing important treatment decisions, such as prescribing aspirin quickly after a heart attack or making sure diabetics receive appropriate eye exams and blood tests. Nationwide, the study found that practitioners performed better on 20 of 22 measures of quality in 2000-01 than they did in a similar survey two years earlier.

The findings are a sign of progress in a growing movement to fix problems and systematically improve the delivery of health care. They also indicate that government agencies, employers, unions and medical groups in Oregon have been more successful in this quest than their counterparts in many other states.

"People who are working tremendously hard to give good quality health care need to be credited for bringing about measurable improvements," said Dr. David Shute, medical director of OMPRO, a Portland-based nonprofit with federal contracts to support evidence-based health care for Medicare patients in Oregon.

The authors of the study said it also underscores how many problems remain to be fixed even in states such as Oregon that scored well.

In Oregon and nationwide, for instance, the study found that:

• Nearly half of patients with an irregular heart rhythm, called atrial fibrillation, went without blood-thinning drugs proven to prevent stroke.
• One in five heart attack patients left the hospital without the recommended treatment using beta blocker drugs.
• About 13 percent of pneumonia patients nationwide and 8 percent in Oregon waited more than 8 hours for antibiotics.
• Businesses facing rapidly rising health care costs have a strong interest in seeing that the money is well spent.

The study, published in mid January in the Journal of the American Medical Association, is one of the largest attempts to track changes in health care quality. Researchers took random samples of medical charts and billing records from thousands of episodes of care in each of the 50 states, the District of Columbia, and Puerto Rico.

Like earlier surveys, the new study revealed big geographic variations in quality. The top one-fourth of performers clustered in New England, the upper Midwest and Rocky Mountains. Washington ranked 19th. The worst performers were in the Deep South.

Polo Ponies Run on Western Range

Malia Boles competes in polo tournaments around the world and, in a sport once known as the "game of kings" where ponies can cost $80,000 each, she owns 11 horses. Yet almost half of them were saved by Boles from starvation or a slaughterhouse at the hands of previous owners.

In nine years of competition, she has never bought a "made" horse -- parlance for a specially bred and trained polo pony.  She loves to rescue horses and retrain them for polo. "I break them and train them all myself," said Boles, owner of a La Grande, Oregon insurance agency.

Boles acquired one of her best polo ponies for $800 as it was being trucked to Canada to be slaughtered for dog food. The horse was culled from a California racetrack. Another she found starving on an Eastern Oregon ranch and bought it for $700. The horse's owner was strapped for cash and couldn't afford winter hay.

Boles was part of a four-member U.S. women's team that defeated British, French and Australian teams at an Australian tournament in December. The tournament was held at a sheep "station" or ranch in the Outback, and she was the sole Oregon competitor.

Polo is played by two four-person teams on grassy, 300-yard fields. The game probably first appeared in ancient Persia and has been played longer than any other sport, said historian Glenn R. Vernam in his book "Man on Horseback." Venetian explorer Marco Polo, who had no direct connection to the horseback game that bears his name, wrote of seeing polo played in 13th-century China, wrote Vernam.

In summer, Boles plays tournament polo two or three times a month with various teams on a Northwest circuit that includes Spokane, Yakima and the Tri-Cities. Over the past year, she has played in Florida and California. She trains her horses four hours a day, either before or after full workdays at her insurance agency. 

During the polo season, Boles' horses require vitamins and electrolytes and must be shod with special steel shoes that cost more than the shoes she wears, said Boles. She takes them to the mountains every other day and gallops them on trails, riding one and leading five others at a time. She grazes them on 15 acres of flood-irrigated pasture, supplementing the meadow grass with 35 tons of hay.

Boles fell in love with horses at age 12, and after her high school graduation decided against attending college because she wanted to earn enough money to buy and support a bunch of horses. She began selling insurance. She was introduced to polo nine years ago and was hooked the instant she smacked a ball with a mallet at a full gallop.
 

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Susan Marthens
Real Estate Broker, GRI
(503) 497-2984
Fax (503) 220-1131

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