HOUSING MARKET ANALYSIS

HOUSING 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 prices. Even so, prices are still lower than a year ago for all housing types. Nationally prices are down 3.9 percent from September 21 to September 211. Median prices in the western United States have followed a similar trend and decreased by 4.5 percent to $27,4. Over the past year, the Portland metropolitan area experienced a decrease in median sales prices, but double-digit increase in sales volume. The median sales price of $222,5 has decreased 6.1 percent since September 21 and the number of transactions in the metropolitan area increased by 14.8 percent. The National Association of Realtors reports the number of existing home sales decreased in September 211 to a seasonally adjusted rate of 4.91 million homes sold nationally. This was a 3. percent decrease from August. However, the number of home sales is currently 11.3 percent above the 4.41 million unit pace as of September 21. Evan Abramowitz is multifamily broker with Joseph Bernard Investment Real Estate. He is also the Oregon Association of Realtors student fellow at Portland State University where he is a graduate student studying for a master s in real estate development. Any errors or omissions are the author s responsibility. Any opinions expressed are those of the author solely and do not represent the opinions of any other person or entity. Center for Real Estate Quarterly Report, vol. 5, no. 4. Fall 211 23

HOUSING MARKET ANALYSIS ABRAMOWITZ 24 The HousingPulse Distressed Property Index (DPI) is one indicator of the health of the housing market and decreased to 45.9% in August from 46.2% percent in June. The index suggests that nearly half of all housing sales are distressed properties. This trend is expected to continue as the backlog of foreclosures and mortgage defaults make their way through the housing pipeline. According to Campbell Surveys, first-time homebuyers made up a smaller proportion of short sales this August at 39.7%, compared to a peak of 54.1% in November 29. In August 211, short sales accounted for 17.1% of the home purchase market, with damaged REO and move-in ready REO accounting for 13.2% and 15.6% respectively. 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 Mar- 11 Jun- 11 Sep- 11 Dec- 11 Mar- 12 Jun- 12 Sep- 12 Dec- 12 Mar- 13 Jun- 13 Sep- 13 Dec- 13 Mar- 14 Jun- 14 Sep- 14 Dec- 14 Mar- 15 Jun- 15 Sep- 15 Source: Freddie Mac Mortgage interest rates had been steadily decreasing since the first quarter of 211 and are now at nearly 6-year lows. The national average commitment rate for a 3-year conventional, fixed-rate mortgage was 4.11 in September, down from 4.27 percent in August; the rate was 4.35 percent in September 21. First time home buyers made up 32 percent of home sales in September, unchanged from August. They were also 32 percent in September 21. Investors purchased 19 percent of homes in September, down from 22 percent in August.

HOUSING MARKET ANALYSIS ABRAMOWITZ 25 Table 1: Median Home Values of Existing Detached Homes U.S. West Portland Metro Area September 21 Median Sales Price $172,4 $217,1 $237, September 211 Median Sales Price $165,6 $27,4 $222,5 % Change in Median Sales Price - 3.9% - 4.5% - 6.1% % Change in Number of Sales Sept 21- Sept 211 15.2% 1.7% 14.8% Source: National Association of Realtors Standard & Poor s Case-Shiller Index for Portland was 135.8 through July 211. The represents an increase of 1. percent from June 211, and a year-overyear decrease of 8.4 percent. Case-Shiller s 2 city composite index is down 4.1 percent compared to the same time last year. 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. The Case-Shiller Home Price Indices are a leading measures for the US residential housing market, tracking changes in the value of residential real estate both nationally as well as in 2 metropolitan regions. The indices show prices for the 1- and 2-city composites are lower than a year ago, both the composites fell, 3.7 percent for the 1-city composite and 4.1 percent for the 2-city composite as compared to July 21. Of the 2 cities tracked, Washington D.C. and Detroit were the only markets to post a year over year gain at growth rate of.3 percent and 1.2 percent respectively. Portland, Ore. was one of seventeen markets that saw improvements in their annual rates of return in July versus June. Data published by RealtyTrac, show 61,337 foreclosure filings for the third quarter 211, an increase of less than one percent from the previous quarter and a 34 percent decrease from the third quarter of 21. The filing figures include default notices, schedule auctions and bank repossessions. Foreclosure filings were reported on 214,855 U.S. properties in September, a 6 percent decrease from August and a 38 percent decrease from September 21. September marked the 12th straight month where foreclosure activity decreased on a year-over-year basis. U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork, said James Saccacio, chief executive officer of RealtyTrac. While foreclosure activity in September and the third quarter

HOUSING MARKET ANALYSIS ABRAMOWITZ 26 continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up. Third quarter foreclosure activity increased marginally from the previous quarter, breaking a trend of three consecutive quarterly decreases that started in the fourth quarter of 21, Saccacio continued. This marginal increase in overall foreclosure activity was fueled by a 14 percent jump in new default notices, indicating that lenders are cautiously throwing more wood into the foreclosure fireplace after spending months trying to clear the chimney of sloppily filed foreclosures. During September 211 Oregon reported 2,934 foreclosure fillings, which is a 13 percent increase from August and a 36.6 percent decrease from the previous year. Oregon registered a 47 percent increase in REO activity from the previous quarter, which was second in the nation to Massachusetts. In the U.S., one in every 213 homes received a foreclosure filling while one in every 559 homes in Oregon received a foreclosure filling during September 211. Figure 2: Foreclosure Rate Heat Map, September 211 Source: RealtyTrac

HOUSING MARKET ANALYSIS ABRAMOWITZ 27 Figure 3: Foreclosure Rate Heat Map-Oregon, September 211 Source: RealtyTrac According to RealtyTrac, the ten states that ranked the highest in foreclosure rates in the third 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 44 housing units receiving a foreclosure filing. In Arizona one in every 93 housing units and in California one in every 88 housing units filed for foreclosure during the third quarter. Table 2: Building Permits Issued, Year to Date, in thousands Single Family Multi Family Aug- 11 Aug- 1 % Change Aug- 11 Aug- 1 % Change United States 284.6 319.9-11% 123. 98.3 25% Oregon 3.58 4.1-13% 1.41.99 43% Portland- Vancouver- Beaverton OR- WA 2.15 2.46-12% 1.4.62 68% Salem OR.16.27-42%.7.22-68% Eugene- Springfield OR.28.35-21%.12.8 53% Bend OR.34.25 33%.1.1-3% Corvallis OR.2.2 11%.17.2 828% Medford OR.18.19-9%.7.9-15% Source: National Association of Home Builders

HOUSING MARKET ANALYSIS ABRAMOWITZ 28 PORTLAND The number of Portland metropolitan area home sales increased by 15.31 percent during the third quarter compared to the second quarter of 211, and buyers closed on purchases of 5,235 existing homes. This is a 55.76 percent increase from the third quarter of 21 when there were 3,361 transactions in the metropolitan area. Median prices for the third quarter were at $246,45, which represents a 1.42 percent decrease over the previous quarter and a 2.97 percent reduction annually. Sales price to original list price are coming closer together, with average sales taking place at 96.78 percent of the original list price. This is a.43 percent point increase from the previous quarter which was 96.36 percent, and a.48 percent increase annually from 96.31 percent. Sellers in the Portland area have had their homes on the market for an average of 89 days before closing, reflecting a 14 day increase from 21 and an 8 day increase from the previous quarter. Figure 5: Single Family Price per Square Foot, New and Existing Detached Homes, Portland Sub Markets NW Washington County Lake Oswego/West Linn West Portland Mt. Hood Govt. Camp Tigard Wilsonville Beaverton/Aloha Northeast Portland Oregon City/Canby Southeast Portland Hillsboro/Forest Grove North Portland Yamhill County Milwaukie/Clackamas Gresham/Troutdale Columbia County 93 126 121 126 119 126 119 117 113 132 134 139 158 163 175 $9 $1 $11 $12 $13 $14 $15 $16 $17 $18 Median Price/Median SqFt Source: RMLS

HOUSING MARKET ANALYSIS ABRAMOWITZ 29 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, 6 5 4 3 2 1 Number of Transactions/Quarter 3rd Quarter Median Price: $236,675 Quarterly % Change: -5.33% Annual % Change: -6.82% Number of Transactions : 5,235 Quarterly % Change: 15.31% Annual % Change: 55.76% Median Price Number of Transactions

HOUSING MARKET ANALYSIS ABRAMOWITZ 3 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 88 86 84 9 8 7 6 5 4 3 2 1 Days on Market 3rd Quarter Sale/Original ratio: 96.78 Quarterly % Change:.43% Annual % Change:.48% Days on Market: 89 Quarterly % Change: 9.87% Annual % Change: 18.66% Sales Price/ Original List Price Days On Market

HOUSING MARKET ANALYSIS ABRAMOWITZ 31 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 3rd Quarter Median Price: $285, Quarterly % Change: -7.5% Annual % Change: - 8.6% Number of Transactions: 568 Quarterly % Change: 82.68% Annual % Change: 111.94% Median Sale Price Number of Transactions

HOUSING MARKET ANALYSIS ABRAMOWITZ 32 Figure 9: Appreciation Rates of Existing New Detached Homes from Q3 21 to Q3 211, Portland Sub-Markets Overall Yamhill County West Portland Tigard Wilsonville Southeast Portland Oregon City/Canby NW Washington County Northeast Portland North Portland Mt. Hood Govt. Camp/Wemme Milwaukie/Clackamas Lake Oswego/West Linn Hillsboro/Forest Grove Gresham/Troutdale Columbia County Beaverton/Aloha -13.43% -3.12% -7.32% -3.49% -6.79% -7.11% -.1% -.95% -3.85% -3.99% -8.97%.15% 1.43%.9% 2.45% 4.16% -3% -25% -2% -15% -1% -5% % 5% 1% 15% 2% 25% 3% 35% 4% 45% 5% % Appreciation The largest annual depreciation was experienced in Milwaukie / Clackamas with a 13.43 percent, while Beaverton / Aloha increased by 4.16% and Hillsboro / Forest Grove increased by 2.45%. VANCOUVER Vancouver s median home price was $19,95 resulting in a quarterly increase of 3.6 percent and an annual increase of.6 percent in home values. The number of homes sold throughout the third quarter increased by over 15.5 percent to 879 from the second quarter of 211, and a large increase of 82.7 percent since third quarter 21. Six of the 16 submarkets decreased in median sold price. The largest decrease was in SW Heights at 29.8% and the largest increase was Five Corners by 28.53%. The average number of days on the market decreased to 86 days. Second quarter 211 average number of days on the market was 88, while it was 84 during the third quarter of 21.

HOUSING MARKET ANALYSIS ABRAMOWITZ 33 Figure 1: Median Price and Annual Appreciation Existing Detached Homes, Vancouver Median Price and Annual Appreciation Existing Detached Homes Vancouver $3, 5% Median Price $25, $2, $15, % -5% -1% Annual Appreciation $1, -15% $5, -2% Median Sale Price Annual Appreciation

HOUSING MARKET ANALYSIS ABRAMOWITZ 34 Figure 1: Average Days on Market and Number of Transactions Existing Detached Homes, Vancouver Average Days on Market and Number of Tranactions 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

HOUSING MARKET ANALYSIS ABRAMOWITZ 35 Figure 12: Median Price and Annual Appreciation Existing Detached Homes, Clark County (excluding Vancouver) Median Price and Annual Appreciation Existing Detached Homes Clark County (excluding Vancouver) $3, 4% 2% Median Price $25, $2, $15, % -2% -4% -6% -8% Annual Appreciation $1, -1% -12% $5, -14% Median Sale Price Annual Appreciation In the suburban areas of Clark County there were 699 transactions during the third quarter of 211, compared with 586 transactions during the second quarter, a 19.2% increase. The average days on the market was 97, compared to 11 in third quarter of 21. The median sold price was $238,613, a 1.24% increase from the previous quarter. The median price decreased by 3.2% over the year from $246,5. The submarkets that increased the most since the second quarter were NW E of I-5 County at 27.1% and Woodland Area at 11.2%. The number of transactions increased in 13 of the 18 submarkets with the largest numerical increases occurring in Woodland Area, Yacolt, and west of I-5. The average number of day on the market decreased from 1 in the second quarter to 97, demonstrating the growing strength of this market.

HOUSING MARKET ANALYSIS ABRAMOWITZ 36 Figure 23: Average Days on Market and Number of Transactions Existing Detached Homes Clark County (excluding Vancouver) Number f Tranactions 8 7 6 5 4 3 2 1 Average Days on Market and Number of Tranactions Existing Detached Homes Clark County (excluding Vancouver) 13 12 11 1 9 8 7 6 5 4 3 2 1 Average Days on Market Number of Transactions Average DOM

HOUSING MARKET ANALYSIS ABRAMOWITZ 37 Figure 14: Appreciation Rates of Existing Detached Homes, Vancouver and Clark County Sub Market from Q3 21 to Q3 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 -11.47% -2.83% -2.31% -.72% -11.36% -1.5% -7.24% -6.77% -7.67% -8.68% -6.54% -12.73% -9.3% -9.98% -18.75% -7.6% -7.55% -21.92% -11.68% -11.6% 19.46% 18.52% -32% -22% -12% -2% 8% 18% 28% Two submarkets increased over the past year, Ridgefield and N Salmon Creek. The Ridgefield submarket posted the highest gains with an appreciation rate of 19.46 percent and 18.52 percent from N Salmon Creek. Conversely twenty submarkets had price depreciation. The Fisher s Landing submarket had the highest quarterly depreciation rate at 18.75 percent (195 transactions) followed by NW Heights submarket at 21.92 percent (129 transactions) and Washougal at 2.83 percent (248 transactions).

HOUSING MARKET ANALYSIS ABRAMOWITZ 38 CENTRAL OREGON Both Bend and Redmond increased in median price, but Redmond had 19.2% fewer transactions and 15.6% longer days on the market. The Redmond market continues to be particularly soft in the 1-5 acre market. The two markets decreased from the previous quarter with respect to the number of homes sold less than one acres. Bend home sales less than one acre decreased 4.7 percent to 423 and Redmond s decreased 19.2 percent to 147 in the third quarter. Sales volume for homes on 1-5 acres also decreased 31.8 percent from 22 to 15 in Redmond and decreased 13.6 percent to 51 transactions in Bend. For homes on less than one acre, the average number of days on market decreased from 144 (in the second quarter 211) to 124 (in the third quarter 211) in Bend and increased 15.6% from 147 to 17 in Redmond. In reports from Central Oregon, 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 differences in lot size between each category. Figure15: Number of Transactions and Days on the Market, Single Family Under 1 Acre, Bend and Redmond Number of Transactions and Days on the Market Single Family Under 1 Acre - Bend and Redmond 6 25 Number of Transactions 5 4 3 2 2 15 1 Days on Market 1 5 Trans(Bend) DOM(Bend) Trans(Rdmnd) DOM(Rdmnd) Source: Central Oregon Association of Realtors

HOUSING MARKET ANALYSIS ABRAMOWITZ 39 Figure 16: Number of Transactions and Days on the Market, Single Family 1-5 Acres, Bend and Redmond Number of Transactions and Days on the Market Single Family 1-5 Acres -Bend and Redmond 7 4 6 35 Number of Transactions 5 4 3 3 25 2 15 Days on Market 2 1 1 5 Trans(Bend) Trans(Rdmnd) DOM(Bend) DOM(Rdmnd) The median home prices for the Bend market increased during the third quarter of 211 for the second straight quarter, while the Redmond market increased slightly. The Bend market increased 3.4% to $25,, and Redmond increased 11.9% to $12, from the previous quarter for homes less than one acre. Sales on homes 1-5 acres produced the opposite trends in the market. Bend decreased 1.4% to $268,, while the Redmond market decreased 4.3% to $199,9. Over the past year the Bend market has increased 4.% while the Redmond market decreased 3.1% for home sales under an acre. For sales 1-5 acres, Bend increased 15.1% while Redmond has decreased 26.6% since third quarter of 21. Price-per-square-foot numbers in Bend increased from the second quarter to the third quarter from $18/sq.ft to $113/sq.ft for homes under one acre and from $149/sq.ft to $123/sq.ft for homes with 1-5 acres. In Redmond, homes under one acre was decreased from $68/sq. ft to $74/sq.ft, while the price per square foot of 1-5 acre homes decreased slightly from $123/sq.ft to $19/sq.ft.

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

HOUSING MARKET ANALYSIS ABRAMOWITZ 41 Figure 18: Median Single Family Price and $/SqFt, 1-5 Acres, Bend and Redmond Median Single Family Price and $/SqFt 1-5 Acres - Bend and Redmond $6, 3 $5, 25 $4, 2 $3, 15 $2, 1 $1, 5 $ MED(Bend) MED(Rdmnd) $/SQFT(Bend) $/SQFT(Rdmnd) WILLAMETTE VALLEY Prices in Marion County increased 14.5% since the third quarter of 21 to a median sold price of $163,1. Benton County and Eugene / Springfield also saw year over year increases. Lane County decreased 14.9% over the past year to a median price of $171,.

HOUSING MARKET ANALYSIS ABRAMOWITZ 42 Figure 19: Annual Appreciation Rates of Existing Detached Homes, Willamette Valley from Q3 21 to Q3 211 Benton County Keizer Linn County Polk County Salem Eugene/Springfield Lane County Marion County -2.% -15.% -1.% -5.%.% 5.% 1.% 15.% 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%. The number of transactions in Marion County increased from 134 to 141. The number of days on the market decreased annually for all submarkets, except for Lane County which increased by 13.9% to 115 days. The largest change in number of days on the market on a percentage basis was the Benton County submarket which decreased 27.6% from 119 in third quarter 21 to 86 in third quarter 211.

HOUSING MARKET ANALYSIS ABRAMOWITZ 43 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 Q1 211 Q2 211 Q3 211 Benton County Linn Marion Polk Lane SALEM Salem s housing market experienced annual depreciation of 11.7% year over year in the third quarter while the number of days on the market decreased. The median sale price increased slightly while the number of transactions increased from the second quarter of 211. The number of transactions increased from the previous year from 339 to 415, and increased from the second quarter of 211 from 394. The average number of days on market decreased from 119 in the second quarter to 15 in the third quarter of 211.

HOUSING MARKET ANALYSIS ABRAMOWITZ 44 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

HOUSING MARKET ANALYSIS ABRAMOWITZ 45 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 EUGENE/SPRINGFIELD Home prices in the Eugene/Springfield area increased 5.% from the second quarter of 211 to $212,111. Annual appreciation increased 1% since the third quarter of 21.

HOUSING MARKET ANALYSIS ABRAMOWITZ 46 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 Apprec. Source: Willamette Valley RMLS