Portland Real Estate Index Increases Again
Portland Real Estate had its largest month-over-month increase of 2017 in March. The Portland Case Shiller housing price index jumped 1.03% from February to March, beating the national average rate of increase. This new data from Standard & Poor's is interesting, given local media reports that apartment rental prices went down in April. 1
The Case Shiller housing price index reports on a two month lag every month. The data collated to create the Case Shiller index takes time to calculate properly, and analyzing repeating sales- as Case Shiller does- creates a lag by its nature. This creates a robust lagging indicator- an economic bellwether that gives us a better idea of how the economy has been doing.
What remains to be seen is whether recent reports of falling rental prices will be reflected in next month's Case Shiller. If not, the divergence of a rising housing price index and falling rental prices could possibly be explained by Real Estate investors creating high demand for properties at a steadily rising rate, but the shifting inventory of apartments versus the demand of renters changing separately. Anyone who's driven across Division street in Southeast Portland over the last two years will recognize that inventory- and who is creating demand for that inventory- is changing rapidly in recent years.
Case Shiller reports on a two month lagging schedule- March housing data comes out in May
Portland is 1 of 20 individual city Case Shiller Indexes
In recent years, Portland has often outpaced the national index, as it did in March
The Index (Case Shiller Housing)
The Case-Shiller Index is the product of researchers Karl Case and Robert Shiller. The data in the index is maintained by Standard and Poor's (aka "S&P"), calculated from are repeat-sales house prices across the United States. There are multiple Case-Shiller indices including composites of 10 and 20 cities and those individual cities (i.e. Portland Case Shiller). The National Case-Shiller index is the most commonly cited figure for Real Estate economic indicators.
Portland, Oregon happens to be one of those 20 cities that make up the composite index, and since we're based in Portland, we pay special attention to this figure. This figure can make a nice counter weight to all of the anecdotal observations about Portland's housing market you'd be likely to hear in any coffee shop here. As far as using it for a "timing tool," we simply can't speak to that- we don't invest in individual real estate properties, so that's not area of expertise of ours. What we do know about the Portland Case-Shiller index is that it speaks volumes to the health of the regional economy of the Pacific Northwest.
By the Numbers
While Portland's Case Shiller housing price index managed to outpace the national housing price index- Portland increased 1.02% while the national average was 0.81%- Part of this is due to negative performance of some of the cities in the national average. Tampa fell most of any city, losing 1.09% in March. Cleveland also declined by a modest 0.13%. New York, a very large sized market, also under performed the national average once again in March.
Notably, the Seattle Case Shiller index grew by more than twice that of Portland in March: 2.57%. The local indexes of Boston, Charlotte, Detroit, and Denver also grew faster than Portland in this period. This last fact is especially interesting in light of recent data that suggests the largest demographic shifts have been from the East to the West, as well as from the middle to both coasts. The continued growth in markets such as Charlotte and Atlanta suggest Southern markets are remaining strong despite being somewhat outside the largest demographic-based shifts in demand.
Portland Real Estate Index
- Portland Real Estate
As we've noted numerous times in the past year, Portland's Real Estate market has sustained a remarkable amount of growth since the financial crisis of 2008. In many periods, it has managed to grow faster than United states Real Estate market. For the first time in a long time, we're curious to see if this index of Portland's Real Estate market manages to increase again next month in light of new information. If it does, it may call in to question how substantive other reports of Portland's falling rental prices are in terms of pricing Portland's current housing market.
Meet the Author & Portfolio Manager
Victor Schramm is a Certified Fund Specialist (CFS®), with expertise in Mutual Funds & Variable Annuity Separate Accounts. He focuses on long term investing geared toward our annuity clients as a Fee Only Investment Advisor. He lives in Portland, OR.