Local Market Trends

Real estate prices fell sharply in northwestern Oregon during the fourth quarter of 2008, closing out the year with sales and prices down in all communities tracked by The Foothills Report.

Data from the Regional Multiple Listing Service revealed the first such general decline in real estate sales and prices in the history of the organization, which began tracking real estate statistics around the Portland Metropolitan area in 1992.

The drop in fourth-quarter sales approached 30 percent in the 19 communities tracked by The Foothills Report compared to the same quarter in 2007. At the same time, the median home price fell nearly 15 percent. Prices fell for both new and re-sale homes.

The biggest reason for the drop was likely a glut of housing inventory, resulting from a negative consumer outlook that has been keeping homes on the market longer while new listings have continued to be added.

Regionwide, more than 50,000 new listings were added in all of 2008. While this represented a drop of nearly 9 percent from 2007, sales for the year fell by 32 percent.

Despite all the news of struggling home builders and corporate bankruptcies, enough local builders remained in business in 2008 to keep completing thousands of homes throughout the North Willamette Valley. From Aloha and Hillsboro to Oregon City and Salem, some developments slowed or stopped, but others kept going full throttle, especially in lower-end projects catering to buyers looking to down-size or to find their first homes.

Prices fell most in Mulino, in south Clackamas County, and in Aumsville, in central Marion County. Though the numbers of sales were so small in each community that it's hard to call their corresponding price drops definite indicators of the local markets, the drops were eye-popping.

Prices fell 41.2 percent in Mulino from the third to the fourth quarters of 2008, after adjusting for differences in home size. In Aumsville, the drop was 25.9 percent.

While it's not unusual for quarterly prices to fall in the last quarter of a year because of seasonal slumps in home sales in November and December, seasonally adjusted median prices were down across the board. In Mulino, the fourth quarter median plummeted 43.5 percent compared to the fourth quarter of 2007. In Aumsville, the drop was 38 percent.

The communities with the smallest quarterly declines were Molalla, where the size-adjusted price of a home was unchanged from the third quarter, and central Salem with a 3.8-percent quarterly slide. Still, seasonally adjusted median prices fell substantially in both areas. Molalla saw a 4.9-percent decline from the fourth quarter of 2007, while central Salem saw a 13.6-percent drop.

The median price falls exactly in the middle of prices for all homes sold in a given area, with half of the homes being priced lower, and half being priced higher.

Expect NW Oregon home prices to decline further in coming months, and likely through the end of 2009. Except as otherwise indicated, data in the table below are from 2008 fourth-quarter sales.

To get a better picture of the real estate market in your specific community or neighborhood, call Craig at 503-632-8258 or visit bybryson.com to contact Craig via e-mail.