RESIDENTIAL MARKET ANALYSIS

RESIDENTIAL MARKET ANALYSIS EVAN ABRAMOWITZ Joseph Bernard Investment Real Estate Oregon Association of Realtors Student Fellow Masters of Real Estate Development Graduate Student National housing market statistics reflect slightly increasing median-existing home price for all housing types over the past year was $184,6 in June, up.6 percent annually from June 21. However, median prices in the western United States have decreased by 6.7 percent from $269, to $25,9. Over the same period, the Portland metropolitan area experienced a decrease in median sales prices and sales volume. The median sales price of $23,7 has decreased 5 percent since June 21 and the number of transactions in the metropolitan area decreased by 4.7 percent. The National Association of Realtors reports the number of existing home sales decreased for the third straight month in June 211 to a seasonally adjusted rate of 4.77 million homes sold nationally. This is the lowest number of sales since 1997. Last year 4.91 million homes were sold. In contrast, a healthy economy generates approximately 6 million homes per year. The HousingPulse Distressed Property Index is one indicator of the health of the housing market. The index rose to 47.7 percent in April, meaning that nearly half of all housing sales are of distressed properties. HousingPulse projects that this trend will likely continue as the backlog of foreclosures and mortgage defaults make their way through the housing pipeline. Campbell Surveys reports that first-time homebuyers made up a smaller proportion of the market this April at 35.7 percent compared with 44.4 percent in April 21. On a positive note, investor activity increased from 18 percent in April Center for Real Estate Quarterly Journal, vol. 5, no. 3. Summer 211 9

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 1 21 to 23 percent in April 211. When the supply of distressed properties exceeds the amount demanded by first-time buyers, there is an opportunity for investors to enter the market and buy damaged properties, renovate, and then try to sell the properties. Many owners are being forced to rent properties, as the supply exceeds demand for buyers wanting to enter housing market. Figure 1: Single Family Mortgage Interest Rate 7.1% 6.6% 6.1% 5.6% 5.1% 4.6% 4.1% 3.6% 3- Year FRM 15- Year FRM Source: Freddie Mac Mortgage interest rates had been steadily decreasing since the first quarter of 211. The national average commitment rate for a 3-year conventional, fixedrate mortgage was 4.51 in June, down from 4.64 percent in May; the rate was 4.74 percent in July 21 and has dropped to 4.39 percent in the first week in August. First time home buyers constituted 31 percent of home purchases in June, down from 36 percent in May. Table 1: Median Home Values of Existing Detached Homes U.S. West Portland Metro Area June 21 Median Sales Price $183,5 $24,4 $242,8 March 211 Median Sales Price $184,6 $195,2 $23,7 % Change in Median Sales Price -.6% 9.5% -5.% % Change in Number of Sales June 21-June 211-7.4% -2.6% -4.7% Source: National Association of Realtors

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 11 Standard & Poor s Case-Shiller Index for Portland was 134.5 in May 211, an increase of 1.2 percent from the month before, and a year-over-year decrease of 9.1 percent. Case-Shiller s 2 city composite index is down 4.5 percent since last year at this time. The index data shows that in the major U.S. metropolitan cities, home prices increased slightly from the previous month but are still down over the past year. Figure 2: Standard & Poor s Case-Shiller Index for Portland and Composite-2 16. 155. 15. 145. 14. 135. 13. 125. Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Composite-2 OR-Portland Of the 2 cities tracked by Case-Shiller, Washington D.C. was the only market to post a year over year gain at growth rate of 1.3 percent. Overall the two indices are back at summer 23 levels. The 2-composite index was 139.87 in May 211, and Portland was 134.5. Data published by RealtyTrac, show 68,235 foreclosure filings for the second quarter 211, down 11 percent from the previous quarter and a 32 percent decrease from the second quarter of 21. The filing figures include default notices, schedule auctions and bank repossessions. Foreclosure filings were reported on 222,75 U.S. properties in the month of June 211, an increase of 3.64 percent from the previous month but still down 29 percent from June 21. It would be nice to report that foreclosure activity is dropping as a result of improvements in the economy or the housing market, said James J. Saccacio, chief executive officer of RealtyTrac. Unfortunately, with unemployment rates inching back up, consumer confidence weak and home sales and prices continuing to languish, this doesn t appear to be the case. Saccacio also points out that processing and procedural delays are pushing foreclosures further and further out. He

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 12 estimates that as many as one million foreclosure actions that should have taken place in 211 will now happen in 212 or later. For the second quarter of 211, Oregon reported 7,58 foreclosure fillings, a 2.75 percent decrease from the previous quarter and a 41.55 percent decrease from the previous year. In the U.S., one in every 583 homes received a foreclosure filling while one in every 612 homes in Oregon received a foreclosure filling during June 211. Figure 3: Foreclosure Rate Heat Map, June 211 Source: RealtyTrac

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 13 Figure 4: Foreclosure Rate Heat Map-Oregon, June 211 Source: RealtyTrac According to RealtyTrac, the ten states that ranked the highest in foreclosure rates in the first quarter were Nevada, Arizona, California, Utah, Idaho, Georgia, Michigan, Florida, Colorado and Illinois. Of these states, Nevada posted the nation s highest state foreclosure rate, with one in every 114 housing units receiving a foreclosure filing. In Arizona one in every 25 housing units and in California one in every 248 housing units filed for foreclosure during June 211.

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 14 Table 2: Building Permits Issued, Year to Date, in thousands Single Family Multi Family May-11 May-1 % Change May-11 May-1 % Change United States 167.2 22.2-17% 65. 53.4 22% Oregon 2.4 2.69-24%.84.37 125% Portland-Vancouver- Beaverton OR-WA 1.27 1.65-23%.61.25 147% Salem OR.11.19-43%.7.2 171% Eugene-Springfield OR.16.23-3%.3.1 125% Bend OR.19.16 17%..1-75% Corvallis OR.1.2-2%.13.2 639% Medford OR.1.12-17%.7.2 324% Source: National Association of Home Builders PORTLAND The number of Portland metropolitan area home sales decreased by 7.23 percent during the first quarter compared to the fourth quarter of 21. This is a 3.85 percent increase from the first quarter of 21 when there were 285 transactions in the metropolitan area. Median home prices for the first quarter were at $223,, which represents a 5.91 percent decrease over the previous quarter and an 8.89 percent reduction annually. Sales price to original list price are coming closer together, with average sales taking place at 96.8 percent of the original list price. This is a.15 percent point decrease from the previous quarter which was 96.22 percent, and a 5.71 percent increase annually from 9.89 percent. Sellers in the Portland area have had their homes on the market for an average of 93 days before closing, reflecting a 9 day increase from 29 and a 14 day increase from the previous quarter.

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 15 Figure 5: Single Family Price per Square Foot, New and Existing Detached Homes, Portland Sub Markets NW Washington County West Portland Tigard Wilsonville Northeast Portland Southeast Portland North Portland Milwaukie/Clackamas Columbia County 92 125 134 135 134 12 121 116 123 116 116 11 158 164 17 $9 $11 $13 $15 $17 $19 Median Price/Median SqFt Source: RMLS Figure 6: Median Sales Price & Number of Transactions, Existing Detached Homes, Portland Metro (excluding Clark County, WA) Median Price $35, $3, $25, $2, $15, $1, 5 45 4 35 3 25 2 15 1 5 Number of Transactions/Quarter 2nd Quarter Median Price: $25, Quarterly % 12.1% Annual %.% Number of Transactions : 4,54 Quarterly % 55.8% Annual % 3.5% Median Price Number of Transactions

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 16 Figure 7: Sale Price/Original List Price& Average Days on Market, Existing Detached Homes, Portland Metro (excluding Clark County, WA) 98 1 Sales Price as a % of List Price 96 94 92 9 9 8 7 6 5 4 Days on Market 2nd Quarter Sale/Original ratio: 96.76 Quarterly %.71% Annual % 4.89% 88 86 84 3 2 1 Days on Market: 81 Quarterly % - 12.62% Annual % 14.46% Sales Price/ Original List Price Days On Market

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 17 Figure 8: Median Sales Price & Number of Transactions, New Detached Homes, Portland Metro (excluding Clark County, WA) Median Sale Price $4, $35, $3, $25, $2, $15, $1, $5, $ 6 5 4 3 2 1 Number of Transactions 2nd Quarter Median Price: $38,241 Quarterly % 14.3% Annual % 8.4% Number of Transactions: 311 Quarterly % 29.58% Annual % -22.64% Median Sale Price Number of Transactions

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 18 Figure 9: Appreciation Rates of Existing New Detached Homes from Q2 21 to Q2 211, Portland Sub-Markets Overall Yamhill County West Portland Tigard Wilsonville Southeast Portland Oregon City/Canby NW Washington County Northeast Portland North Portland Milwaukie/Clackamas Lake Oswego/West Linn Hillsboro/Forest Grove Gresham/Troutdale Columbia County Beaverton/Aloha -25.22% -7.6% -5.44% -11.22% -5.66% -.45% -.53% -3.58%.81% 8.39% 12.17% 6.95% 27.% 38.82% 48.72% -3%-25%-2%-15%-1%-5% % 5% 1% 15% 2% 25% 3% 35% 4% 45% 5% % Appreciation No clear trends emerge from an analysis of submarket price performance. The wide variation in from submarket to submarket likely reflects the relatively small number of sales and the idiosyncratic factors associated with each sale. VANCOUVER Vancouver s median home price was $183,486 producing in a quarterly increase of 2.51 percent but an year-over-year decrease of 4.68 percent in home values. The number of homes sold throughout the first quarter increased by over 49 percent to 756 from the first quarter of 211, and a small decrease of 1.5 percent since second quarter 21. Fifteen of the 16 submarkets increased the number of transactions, with only Downtown decreasing slightly. The largest numerical increases were in Evergreen, Cascade Park, N Hazel Dell, and Five Corners. The average number of days on the market decreased to 88 days. First quarter 211 average number of days on the market was 12, while it was 81 during the second quarter of 21.

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 19 Figure 1: Median Price and Annual Appreciation Existing Detached Homes, Vancouver Median Price $3, $25, $2, $15, $1, $5, % -2% -4% -6% -8% -1% -12% -14% -16% -18% -2% Annual Appreciation Median Sale Price Annual Appreciation Figure 1: Average Days on Market and Number of Transactions Existing Detached Homes, Vancouver Number of Transactions 12 1 8 6 4 2 12 11 1 9 8 7 6 5 4 3 2 1 Average Days on Market Number of Transactions Average DOM

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 2 Figure 12: Median Price and Annual Appreciation Existing Detached Homes, Clark County (excluding Vancouver) Median Price $3, $25, $2, $15, $1, $5, 4% 2% % -2% -4% -6% -8% -1% -12% -14% Annual Appreciation Median Sale Price Annual Appreciation In the Clark County suburbs median home prices have increased to $235,72. This is a 4.2 percent increase from the previous quarter s median price, but a 1.79 percent decrease since last year. The number of home transactions in Clark County s suburbs is up over 6 percent from the first quarter and down 15.28 percent annually. There were 586 transactions during the second quarter, a massive increase of over 6 percent from first quarter. The number of transactions increased in 14 of the 18 submarkets with the largest numerical increases occurring in Camas, Brush Prairie, Washougal, and Cowlitz County. The average number of day on the market decreased from 12 in the first quarter to 1, demonstrating the growing strength of this market.

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 21 Figure 23: Average Days on Market and Number of Transactions Existing Detached Homes Clark County (excluding Vancouver) Number f Tranactions 7 6 5 4 3 2 1 13 12 11 1 9 8 7 6 5 4 3 2 1 Average Days on Market Number of Transactions Average DOM

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 22 Figure 14: Appreciation Rates of Existing Detached Homes, Vancouver and Clark County Sub Market from Q2 21 to Q2 211 Cowlitz County Washougal E Heights Cascade Park N Hazel Dell Five Corners Brush Prairie Evergreen Camas City Lincoln/Hazel Dell Ridgefield Battleground N Felida S Salmon Creek E Orchards Fisher's Landing Orchards Downtown Vancouver NW Heights E Hazel Dell NE Heights N Salmon Creek -1.67% -6.33% -16.67% -8.89% -12.41% -11.2% -14.29% -.85% -5.8% -5.57% -11.63% -8.57% -1.96% -7.29% -17.55% -14.21% -12.5% -16.21% -16.74%.%.91% 19.64% -32% -22% -12% -2% 8% 18% 28% Of the submarkets where there were more than 15 transactions to make appreciation numbers informative, two Vancouver/Clark County submarkets experienced price appreciation for the year. The downtown Vancouver submarket posted the highest gains with an appreciation rate of 19.64 percent (based on 122 transactions for the year). On the other hand, 2 submarkets saw a decline in prices. The Fishers Landing submarket had the highest quarterly depreciation rate at 17.55 percent (54 transactions) followed by NE Heights submarket at 16.74 percent (38 transactions) and E Heights at 16.67 percent (26 transactions).

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 23 CENTRAL OREGON Both Bend and Redmond are experiencing increases from the previous quarter with respect to the number of homes sold less than one acres. Bend home sales less than one acre increased 12.7 percent to 444 and Redmond s increased 13. percent to 182. Sales volume for homes on 1-5 acres also increased 15.8 percent from 19 to 22 in Redmond and decreased slightly from 61 transactions in the first quarter of 211 to 59 transactions during the second quarter of 211 in Bend. For homes on less than one acre, the average number of days on market decreased slightly from 145 (in the first quarter 211) to 144 (in the second quarter 211) in Bend and increased slightly from 143 to 147 in Redmond. In Central Oregon s reports, the housing stock is separated by lot size, properties under one acre and those between one and five acres. Price per square foot data is provided to control for lot size between both categories. Figure15: Number of Transactions and Days on the Market, Single Family Under 1 Acre, Bend and Redmond 6 25 5 2 Number of Transactions 4 3 2 1 15 1 5 Days on Market Trans(Bend) Trans(Rdmnd) DOM(Bend) DOM(Rdmnd) Source: Central Oregon Association of Realtors

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 24 Figure 16: Number of Transactions and Days on the Market, Single Family 1-5 Acres, Bend and Redmond 7 4 Number of Transactions 6 5 4 3 2 1 35 3 25 2 15 1 5 Days on Market Trans(Bend) Trans(Rdmnd) DOM(Bend) DOM(Rdmnd) The median home prices for the Bend market recovered strongly during the second quarter of 211 after three quarters of steady declines, while the Redmond market continued to decline. The Bend market increased 12.9 percent to $198,25, while the Redmond decreased 1.3 percent to $17,25 from the previous quarter for homes less than one acre. The same trends prevailed on homes 1-5 acres as the Bend market increased 24.7 percent to $299,9, while the Redmond market dropped 16.4 percent to $28,95. Over the past year the Bend market increased slightly by 1.1 percent while the Redmond market decreased 13.9 percent for home sales under an acre. For sales 1-5 acres, Bend decreased 4.8 percent and Redmond has increased 6.5 percent since second quarter of 21. Price-per-square-foot numbers in Bend increased from the first quarter to the second quarter from $97/sq.ft to $18/sq.ft for homes under one acre and from $113/sq.ft to $148/sq.ft for homes with 1-5 acres. In Redmond, homes under one acre was decreased from $75/sq. ft to $68/sq.ft, while the price per square foot of 1-5 acre homes decreased slightly from $125/sq.ft to $123/sq.ft.

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 25 Figure 17: Median Single Family Price and $/SqFt Under 1 Acre, Bend and Redmond 4 35 3 25 2 15 1 5 2 18 16 14 12 1 8 6 4 2 $/SF MED(Bend) MED(Rdmnd) $/SQFT(Bend) $/SQFT(Rdmnd) Figure 18: Median Single Family Price and $/SqFt, 1-5 Acres, Bend and Redmond $6, 3 $5, 25 Median Price $4, $3, 2 15 $/SF $2, 1 $1, 5 $ MED(Bend) MED(Rdmnd) $/SQFT(Bend) $/SQFT(Rdmnd)

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 26 WILLAMETTE VALLEY All Willamette Valley submarkets experienced annual depreciation on existing home prices. Marion County had the highest depreciation of 18.9 percent followed by Polk County with a 15.9 percent decrease. Figure 19: Annual Appreciation Rates of Existing Detached Homes, Willamette Valley from Q2 21 to Q2 211 Benton County Keizer Linn County Polk County Salem Eugene/Springfield Lane County Marion County -2.% -18.% -16.% -14.% -12.% -1.% -8.% -6.% -4.% -2.%.% Source: Willamette Valley RMLS The number of transactions over the past year decreased annually for all of these submarkets except Marion County where the number of transactions during the second quarter of 211 increased 5.2 percent. The number of transactions in Marion County increased from 134 to 141. The number of days on the market decreased annually for all submarkets. The largest change in number of days on the market on a percentage basis was the Benton Count submarket which decreased 33.1 percent from 127 in second quarter 21 to 85 in second quarter 211.

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 27 Figure 2: Median Sales Price Existing Detached Homes, Willamette Valley $28, $26, $24, $22, $2, $18, $16, $14, $12, $1, Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Q1 21 Q2 21 Q3 21 Q4 21 Benton County Linn Marion Polk Lane Q1 211 Q2 211 SALEM Salem s housing market again experienced annual depreciation while the number of days on the market increased. The median sale price increased slightly while the number of transactions increased from the first quarter of 211. Prices declined 1.73 percent from the previous year to $154,888. Meanwhile, the average number of days on market decreased to 119 from 17 in the first quarter of 21. The number of transactions decreased from the previous year from 55 to 394, but increased from the first quarter of 211 from 336.

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 28 Figure 21: Median Sales Price and Annual Appreciation, Existing Homes, Salem Median Price $225, $2, $175, $15, $125, $1, $75, $5, 4% 2% % -2% -4% -6% -8% -1% -12% -14% -16% Annual Appreciation Median Price Annual Appreciation Figure 22: Average Days on Market and Number of Transactions, Existing Homes, Salem Days on Market 18 16 14 12 1 8 6 4 2 6 5 4 3 2 1 Number of Transactions Average Days on Market Number of Transactions

RESIDENTIAL MARKET ANALYSIS ABRAMOWITZ 29 EUGENE/SPRINGFIELD Home prices in the Eugene/Springfield area increased 13.6 percent from the first quarter of 211 to $199,95, after three consecutive quarters of declines. Annual appreciation improved to a 6.96 percent decline since the second quarter of 21. Figure 23: Median Price and Annual Appreciation Existing Detached Homes, Eugene/Springfield Median Price $25, $225, $2, $175, $15, $125, $1, $75, $5, 2% % -2% -4% -6% -8% -1% -12% -14% -16% -18% Annual Appreciation Median Price Annual Appreciation Source: Willamette Valley RMLS