By Jon Bell, The Portland Tribune
State economist Tom Potiowsky turned to lyrics from a classic song by The Doors to sum up his outlook Wednesday morning during the Home Builders Association of Metropolitan Portland’s annual housing forecast.
“I’ve been down so long that it looks like up to me,” he said. “It looks like things are getting better, but we’re still at the bottom of the pit.”
The economist’s take on the current state of the state worked equally well on every topic touched at the event, from the unemployment rate and housing starts to job growth and housing permits. Joining Potiowsky as presenters were Jerry Johnson, a local real estate consultant with Johnson Reid LLC and David Crowe, chief economist for the National Association of Homebuilders.
Both Reid and Crowe echoed Potiowsky’s views. The national recession is over, Crowe said, but because the housing market has dropped off so dramatically and because credit markets are still “healing,” the recovery will not be as strong as those seen after prior recessions.
“It will be a slow, tedious recovery,” Crowe said. “It will still be a recovery, but it will be nowhere near as fast or as comfortable as you’d like to have it.”
Here in Oregon, the recession is either over or just about to be, Potiowsky said. But don’t expect any huge changes in hiring until well into 2010. Employers first need to jettison the furlough days, shift cuts and other measures they’ve put in place to keep their heads above water. The state also has the fifth-highest unemployment rate in the nation – 11.3 percent – and the seventh-slowest rate of job growth.
With all this as backdrop, Potiowsky noted that the housing market in Oregon will continue to remain fragile. Housing starts improved in the second half of 2009 but are still 40 percent below historical averages and aren’t expected to return to those levels until 2015.
He also noted that permit levels, particularly for multifamily housing units, have been hammered as well. For example, the entire state saw only four permits for multifamily housing units in September – and all of those were for duplexes.
Although housing prices in the Portland region have fallen of late, Johnson said the area is still 5 percent above historical trend lines and it appears as if pricing adjustments will have been played out by early 2010. That said, he noted that 23 percent of mortgages in Oregon are now considered “negative equity mortgages,” which means people owe more on their houses than they’re worth.
Some of the more positive news to come out of the presentation included the fact that Portland’s housing inventory levels are down to between two and four months for new homes and between nine and 11 months for all homes. In addition, interest rates are expected to remain low, topping out at 6 percent by 2011.
“We should have a better forecast next year,” Johnson said at the end of the event, “because, again, there is nowhere to go but up.”
