The Burnside Blog

Posted By Mike Thelin on 02/15/2008

Libby Tucker reports today that local builders and bankers expect the slump in the local housing market to endure for another couple of years.

So that means it’s not time to buy, right?

For the first time in a few years, buyers are in the driver’s seat and any reasonable offer is fair game. The recent downturn in the housing market is also reminder that real estate is a long-term investment. The double-digit annual appreciation seen the residential market over the past few years is abnormal. That means the era of condo flipping and cocktail party bragging rights over gigantic gains in real property equity are (in this moment) a thing of the past.

Next Wednesday, Burnside Blog will explore Portland’s real estate climate in greater detail in an interview with Grant Norling, a chief commercial real estate appraiser with PGP Valuation, one of the largest appraisal firms in the western United States. For various reasons, which we’ll explore in greater detail, Portland is pretty good shape compared to other US cities. The urban growth boundary that places downward pressure on the overall housing supply, a steady increase in population, a shortage of rental housing, and a rise in office and retail rents in the foreseeable future and the abundance of recently acquired value-added properties should collectively provide a buffer that most other cities lack.

Tucker’s article also notes that Joe Weston won’t break ground on his 31-story Cosmopolitan Tower until the market hits the bottom. Weston is currently pushing the Lloyd District tower as well as another tall tower called The Manhattan in Goose Hollow through the design-review process with plans to build them as soon as the market improves.

In the meantime, Portland will see a glut of condominium units entering the market in 2008 and 2009, but this will happen concurrent with extremely low rental vacancy rates. In other words, don’t be surprised when more of these projects are converted to apartments in mid-stream. Two large condo projects, the 22-story Ladd Tower on the South Park Blocks and the 15-story Wyatt Condominiums in the North Pearl have already been changed to rental units.