Oregon Real Estate: Long-Term Trend Outweighs Short-Term Mortgage Woes

By Richard Barrington
Local Lender Columnist
Nov 21, 2007
Often times, a long-term trend will get lost in the commotion over a short-term development. While the mortgage crisis has created the impression of a weak real estate market, recently-released Census Bureau data revealed that Oregon's home prices grew at a faster rate than those of any other state in the nation.

This argues for the staying power of Oregon's real estate market, despite short-term set-backs. However, it also demonstrates the importance of taking a long-term view of real estate.

Oregon Growth Rate Leads Nation

Between 1990 and 2006, Oregon's average home price grew by 254%. This far exceeded the 136% rate of growth nationally over the same period. In fact Oregon's growth rate was greater than that of any other state.

This left Oregon with an average home price of $236,600 as of the end of the period.

Long Term Investment vs. Speculation

There is good news and bad news in the data. First the good news. This type of long-term value creation demonstrates growth that short-term disruptions such as the mortgage crisis cannot negate.

The bad news, though, is two-fold. Even though the mortgage crisis is not as significant as long-term growth trends, it will reduce demand in the near-term. This could cause some price declines, with those who bought in at the top of the market most susceptible to these mortgage-induced difficulties.

The second piece of bad news is that the rate of home price growth greatly exceeded the rate of income growth over the same period.

What all this adds up to is reinforcement of the fact that real estate should be considered a long-term investment. As such, it has the potential to create tremendous value. As a short-term buy, however, it is as risky as any other form of speculation.

Source
The Oregonian

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.