Helping Families One Home at a Time

November 2002 Newsletter

by Susan Marthens

Portland Home Market

September 2002 Residential Highlights

Pending sales set the pace in September; closed sales and new listings followed. In fact, September 2002 was the best September on record for the number of pending sales. Compared to 2001, pending sales were up 26.8%, new listings increased 16.4%, and closed sales were up 5.7%.

With the new listings comes more inventory for the metro area. At Septembers rate of sales, the 10,755 active residential listings at the end of the month would last 5.4 months.

Year-to-Date Trends

There is not much for comparison between January-September 2002 and 2001. Pending sales are up 1.0%, closed sales are down 0.1%, and the difference in new listings doesnt even calculate to a significant statistic.

Third Quarter Report

The third quarter of 2002, compared to the third quarter of 2001, shows substantial growth in the number of pending sales. They are up 9.6% (7,842 v. 7,154). The number of new listings for the quarter was also up, 1.6% (12,448 v. 12,248).

The number of closed sales changed the least, and was the one category to show a decrease. The 7,047 reported for the quarter was 1.3% lower than the 7,137 reported in the third quarter of 2001.

Appreciation

Appreciation is over 3.0%. The areas average sales price over the last 12 months grew by 3.5% compared to the preceding 12 months ($207,900 v. $200,900). Median sales price rose from $169,500 to $175,000 (up 3.2%).

Cost of Residential Homes in the Portland Metro Area

Area

Average
Sales
Price

Percent
Appreciated
 **See note

North

9.0%

Northeast

6.0%

Long-Term Mortgage Rates Remain Low

November 1, 2002 

In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 6.13 percent, with an average 0.6 point, for the week ending November 1, 2002, falling from 6.31 percent last week. Last year at this time, the 30-year FRM averaged 6.56 percent.

The average for the 15-year FRM this week is 5.51 percent, with an average 0.6 point, down from last week's average of 5.70 percent. A year ago, the 15-year FRM averaged 6.04 percent.

One-year Treasury-indexed adjustable-rate mortgages (ARMs) averaged 4.25 percent this week, with an average 0.6 point, down from last week's average of 4.30 percent. This time last year, the one-year ARM averaged 5.26 percent.

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

"As a reflection primarily of low rates, new and existing home sales for September were stronger than had been expected," said Frank Nothaft, Freddie Mac chief economist. "With mortgage rates falling this week from already affordable levels, interest in home buying will remain strong coming into and through the holiday season. Although the economy is expected to get little help from the retail sector, current low mortgage rates should continue to fuel the housing market, providing strength to the economy.

"Presently, all eyes are focused on next week's FOMC meeting. What the Fed decides and what it says at that time will surely have an impact on the future direction of mortgage rates."

Portland Area Mortgage Rates

To check on local mortgage rates go to Bankrate.

Portland Area Mortgage Brokers

To talk with a mortgage broker, consider: 

• Associated Mortgage Group   They are licensed in both Oregon and Washington.    Telephone:  (503) 221-0064  Fax:  (503) 221-0396.  Mr. Dave Jolivette is the contact.
• Mortgage World  Telephone: (503) 292-4900.  Mr. Tim Bolen is the contact.
• Stevens Mortgage  Telephone: (503) 670-0535  Fax: (503) 670-0481.   Mr. David Dishman is the contact.
• Windermere Mortgage Services  Telephone: (503) 497-5060 or (800) 867-1337.  Ms. Cynthia Rockney-Wilson is the contact.  Also Bertha Ferran at (503) 464-9215.

You may want to read our Privacy Policy with regard to recommendations.

Portland's Winter Weather
Tracking the Moisture

Water Year:  October 1 - September 30

Our 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 important months are from October through May.  Almost half of Portland's annual rainfall (about 38 inches) falls in November, December, and January. 

By this time of the year if we haven't received a few good days of rain, we start to worry.  And we are beginning to worry.  We should have had about three inches of rain in Portland by now (end of October) and all we have had is a little over half an inch (.63) for the water year.  It's too early to panic, but the last few days have been strange indeed for this time of year; cool, clear, windy, and sunny.  The Cascade Mountain Range is highly visible and the mountain tops are too dark.  We should see some of the white stuff on their peaks by now. 

Too Dry or Too Wet - Both are Bad

Surprisingly, a dry winter is as bad (or worse) as an extremely wet year.  Oregon depends upon winter moisture for agriculture and recreation.  Snow in the mountains means good skiing and thriving fish.  Snow is valuable to the farmers and ranchers for summer irrigation. Wheat farmers in eastern Oregon need rain now to sprout their winter wheat.
 

Portland General Electric, Enron Subsidiary, Being Sold
City of Portland is One of Bidders

At stake is the fate of Portland General Electric (PGE), a privately held and publicly regulated company whose output electricity in many respects is the lifeblood of the regions economy.  It's the utility that supplies most of Portland and the Willamette Valley with power.  Whoever wins control of PGE, a subsidiary of the bankrupt Enron Corporation, gains powerful economic leverage.   The process to auction off the utility has begun and a groundswell has been building behind both public and private efforts for local control of PGE.

Bids for PGE Rolling In

The bidding war for Portland General Electric has begun. Thirty parties have expressed interest in purchasing PGE from its bankrupt parent, Enron Corp., and 25 of those have demonstrated enough interest to warrant a second round of bidding, company representatives told the Oregon Public Utility Commission in late October 2002.

We have received very significant interest in PGE, Enron spokesman Mark Palmer said after the commission briefing. We will proceed on to the second round of bidding on PGE and also on the other assets we have put into this process. During the second round of bidding, which is expected to end in November, Enron will work more closely with the existing bidders.

City of Portland Most Likely Will Offer a Bid

Palmer ruled out any further discussions with city officials, who have expressed an interest in buying PGE, unless they submit a formal bid. There shouldnt be a need to go around the process, he said.

We have designed the process to be a level playing field. Anybody who cares to make a bid can make a bid, Palmer said. Mary Volm, a spokeswoman for the city, said that Portland representatives who went to the meeting will review what was said there. The city is prohibited from saying more by a confidentiality agreement with Enron.

Offers Expected to Top $3 Billion

Palmer declined to reveal the price range or to provide any information about the bidders. Last May, Northwest Natural (the Portland metro natural gas utility company) offered $2.9 billion for PGE, but energy experts predict bids will top $3 billion this time.

We hope to have executed final purchase and sale agreements with as many bidders as possible so then we can determine what is the highest and best offer, Palmer said. If Enron determines none of the offers is sufficient, it will move forward with OpCo Energy, its proposed reorganization plan.

Portland Scores Well in Sprawl Study

Robust business and entertainment districts, good street connections, relatively high-density housing and mixed-use areas make the Portland region one of the least sprawling in the country, according to a report released in Mid-October by Smart Growth America.

Portland Eighth Least in Urban Sprawl

The study links sprawl to high rates of car ownership, driving, air pollution and traffic fatalities. Portland registered as having the eighth least urban sprawl of 83 metropolitan areas analyzed in the most nuanced study yet of what some groups consider wasteful development patterns.

Despite its reputation for discouraging sprawl, Portland has scored dismally in some previous rankings. This one sizes up the area more accurately because it didn't rely exclusively on how tightly houses are spaced, researchers said.

Portland sprawled more than older cities such as Boston and New York and places constrained by natural barriers, including San Francisco and Honolulu. Riverside and San Bernardino, Calif., ranked as the biggest sprawlers, followed by Southeastern cities including Atlanta and Knoxville, Tenn.

Chen spent three years working on the study with Reid Ewing of Rutgers University and Rolf Pendall of Cornell University. Their work comes as an important measuring stick for those encouraging bustling downtowns, smaller lot sizes and farmland preservation in the Portland area.

Some disagree with study But to many critics, it represents another means to justify government policies that not everybody likes. Oregon law pushes compact, bustling communities and sets a high bar for consuming farms or forests by restricting development with urban growth boundaries.

"The study unfairly assumes that driving, enjoying a back yard and living far from stores and restaurants are bad things," said John Charles, environmental policy director at the Cascade Policy Institute, a free-market think tank. "Lots of people have a wonderful sense of place and networks of friendships even though they live on dead-end roads and five-acre lots," Charles said. "There is a thriving activity center."

Researchers measured sprawl with 22 quantitative gauges in four categories: housing density; the mix of homes, jobs and services; the strength of downtowns and other focal points; and the accessibility of streets.

Portland's Thriving Downtown

The Portland area ranked especially high for its thriving downtowns and its street network, which likely got a boost from the city's grid system and short downtown blocks. The region barely made the top third for residential densities and fell in the middle of the pack for having jobs and services near housing.

It is hard to replicate the mix of businesses and homes that was common in older cities, said Bob Stacey, director of the environmental watchdog group 1000 Friends of Oregon. But he said local shopping and service areas such as Hillsdale in Southwest Portland could be replicated farther from the central city.

Car Ownership

The Smart Growth study found that residents own 180 cars for every 100 households in the 10 most sprawling areas, compared with 162 cars in the least sprawling areas. Public transit accounted for 2 percent of commute trips in the most sprawling regions, and 7 percent of trips in the least sprawling.

Researchers also found that, as sprawl increased, walking became less common, ozone reached dangerously high levels and traffic fatality rates increased. Traffic congestion -- which showed no connection to sprawl -- was measured by average commute time and time spent waiting in traffic.

Portland's New Pay Stations for Parking

The old fashioned meters, on a good day, would give you the gift of free parking time.  Maybe 10 still-warm minutes outside your favorite coffee spot, five minutes in front of the dry cleaners at 5 p.m., or a half-hour bonanza on a rainy day.

But the new SmartMeter pay stations being installed to replace Portlands traditional parking meters give patrons a choice of paying by coin or credit or debit card, meaning that the frenzied floorboard search for quarters could be over. And they make it possible to carry purchased time from parking spot to parking spot, just by keeping the proof-of-payment receipt affixed to the inside of the drivers window.

The traditional system was, of course, a use-it or lose-it proposition, making it likely that a patron would end up driving away from perfectly good, paid-for minutes.

Interpreting the pay station instructions for the first time can be a challenge. Actually, there isnt much writing in the directions. Most of the explanation about how to use the meters is given through small pictures: for example, a picture of a blue button and then the words Press to add time.

But they don't take paper money.  To ease parking for Portlanders, the city is developing a Smart Card that will allow patrons to pre-purchase blocks of parking time the way they would with a phone card.

Revenues Should Jump
   
The new stations also make more money for the city. If you leave your space before using the last 20 minutes on your receipt, a new motorist arrives, and rather than being able to use your leftover minutes, the newcomer must purchase his or her own time. Technically, the 20 minutes is paid for twice.  And because there are fewer stations one on each side of the block the sidewalks look less cluttered.
 
Within four years, the city plans to replace 6,100 traditional meters in the business districts east and west of the river with 900 SmartMeters. So far, 150 stations have been installed, all of them on the west side.
 

North Macadam Next Boom

Oregon Health & Science University

North Macadam, the one-time workhorse industrial district that slumbered through Portland's inner-city rebirth of the past quarter-century, is poised at last to become part of the city's new economy. This time around, the economic engine for the district is not the river that shaped its past, but Oregon Health & Science University (OHSU), squeezed into a hilltop residential neighborhood one mile to the west.

Developers are already pushing ahead to build an office building for OHSU, condominiums and two apartment buildings. One developer hopes to have construction started on all four buildings within 18 months. His development will be the start of a mixed business and residential area unlike any in the city -- a place of modern architectural design, with ties to nature along the river and a heavy transit dependence on the streetcar, bicycles and the much-discussed aerial tram.

Tram to Connect Upper Campus With North Macadam Will Cost $60-$70 Million

There is no overstating the area's significance to the city's future, in the eyes of top business leaders who pushed hard for an aerial tram to link North Macadam and OHSU. Portland Development Commission Chairman John Russell, also a commercial property owner and developer, said the Portland City Council's approval of the tram opening North Macadam for OHSU growth is "the most important action of the city in a generation."  "Any city," he said, "would kill to have an OHSU in its midst."

The city figures it will need to invest $60 to $70 million for construction of the tram, extension of the streetcar, road and sewer construction. That number doesn't include the costs, as yet unknown, of operating and maintaining the tram.

OHSU's tax-exempt status as a quasi-public institution means that its growth will not add to Portland's property tax base, although the city hopes that some OHSU operations will be located in tax-generating private buildings. The city doesn't yet have a plan to pay for costs that exceed the money available from urban renewal, but the Portland Development Commission promises a proposal soon so that it can strike a development agreement with developers.

Portland Hopes to Build a Biotech Industry

Some economic experts say the city's assumption that OHSU's biotechnology work will spark a private biotechnology industry is a dangerous leap of faith. Still, decades of waiting for development in North Macadam, and a recent barrage of business complaints that the city is anti-business, made city officials eager for action. "You sort of take those risks," said Mayor Vera Katz, who has long been involved in trying to stimulate North Macadam development. "If you delay any longer, it will never happen."