Oregon’s Grim Real Estate “Rock and Hard Place”: Getting the picture yet, Molalla?

Percentage change in the average value of an American home since 2006: -25

Change between 1929 and 1933: -25.9 (Harper’s Index, Jan. 2011)

The devastation in some regions will never be repaired. Parts of Oregon, Georgia, and Arizona have become progressively more deserted. Since jobless rates may never recover, there is little reason to hope that the populations in these areas will ever rebound.  Some homes will be torn down in these pockets of high foreclosures in the hopes that reducing  supplies will boost prices.  Whether that idea will work in hard-hit areas such as Flint, Mich. and Yuma, Ariz. remains to be seen.” The Eight States Running Out of Homebuyers (complete post below)

Look out Molalla! Today’s bad real estate news lists Oregon as unlucky #7 on the list of “Eight States Running Out of Homebuyers“. If Portland is sinking, what does that mean for isolated cities – especially ones like Molalla – that have next to nothing to offer but a false economy built on houses? That’s easy – the foreclosure maps have zip code 97038 in the darkest of red, highest foreclosure zone! It doesn’t get any worse than that. And this year the banks expect a whopping 20% INCREASE IN FORECLOSURES.

The above quote is quite correct in the assessment that: “…there is little reason to hope that the populations in these areas will ever rebound.  Some homes will be torn down in these pockets of high foreclosures …”

Here is the spin on Oregon’s real estate crisis:

“7. Oregon
> Unemployment: 10.6% (Tied for 5th Worst)
> Decrease in Building Permits 2006 to 2010: -74.08% (7th Worst)
> # of Listings With Price Reductions (Portland): 35% (Tied for 8th Worst Among 50 Largest US Cities)

“Oregon’s real estate market has suffered the double blow of a sharp drop in both building permits and price reductions on existing homes. Unemployment is 10.6%, the fifth worst rate in the country.  The number of new building permits decreased by 74% from 2006 to 2010.  In December 2010, 35% of listings in Portland, the state’s largest city, had price reductions.”

What is Molalla going to do in the face of the obvious fact that Oregon – and most especially tiny, ill planned, going broke FAST cities like Molalla – cities that went for “stuff ’em in” at the expense of quality – aren’t GROWING?

Molalla must immediately face the grim future and stop projecting ridiculous population projections it can’t defend. Transportation planning – and especially transportation LIMITATIONS – are the driving forces in future growth. If “plans” can’t conform to ODOT’s needs and if transportation links aren’t readily available to foster economic development then cities will fail.

Molalla has been told repeatedly to forget about its bogus 50 year plan. That indefensible plan is bankrupting the city – plannin’ Potter has racked up close to $400,000 in DEFICIT SPENDING!  That  ridiculous “plan”  tries to compare Molalla’s potential growth to Woodburn’s growth – except the Molalla plannin’ fools kinda forgot that Woodburn is smack dab on a MAJOR FREEWAY EXIT!

It is all about transportation, folks. If you have to drive in and out long distances on 2 lane suicide run roads – like 213 and 211 – then business will go elsewhere. And since local residents are faced with growing gas prices and huge commutes to try to find family wage jobs, that puts the fork in Molalla’s home sales and home values as well – and obviously closes the door on growth!

Molalla has been urged to try for a legally defensible 20 year urban growth boundary (UGB) proposal. What’s stopping Molalla plannin’ for taking that suggested path?

It’s easy to answer that question: to do a 20 year UGB plan, Molalla would have to accept the tiny – but honest and legally defensible – safe harbor population projection and then Molalla could only try to annex the current exception lands (the exception lands are hundreds of acres mapped in the 80’s – Molalla plannin’ has already admitted in writing that it KNOWS it has plenty of exception lands to satisfy any growth for the next 20 years!!).

Aside from the fact that Potter’s land speculator buddies outside the exception lands would be hoppin mad if the urban reserve with its ridiculous towering population projection was dropped, Molalla would have to produce a lot of VERY EXPENSIVE, VERY FACTUAL new reports about CURRENT housing needs, CURRENT transportation needs and CURRENT realistic facility needs. Most of all, Molalla would have to account for all the woefully underdeveloped sites within the current borders to justify a UGB expansion (like all the tiny houses on big lots, all the  brownfields, all the “islands” of County land within the city limits, all the empty and ramshackle storefronts, etc).

At a recent Clackamas County meeting, it was noted that there will be “No more Happy Valleys”. That means there will be no more idiotic suburban sprawl “big lot” developments, no matter what the local “aspirational” plannin’ wishes for, so Molalla will be held to smart, compact growth. “Manager” Atkins himself threw fully 1/4 of the entire city into an urban renewal zone – so constriction of land availability will force needed re-development of  those designated “blighted” areas!

“Manager” Atkins defined 1/4 of the city as ‘BLIGHTED‘: now the City will have to justify its own re-development BEFORE it can impact new land. That “urban renewal” blight is like saying that 1/4 of the city is ready for the bulldozer. That alone could keep plannin’ Potter busy for 20 years (just joking, folks: if Potter is allowed to be a plannin’ for another 20 years, I’d suggest you take your city real estate marbles and run fast anywhere else while the running is even vaguely good – because another 20 years of Potter’s fake and incompetent plannin’ would be horrific!).

Don’t forget the big buzz word at County and State these days: SUSTAINABILITY! Molalla plannin’ couldn’t define that word it it tried (or maybe it could hire the LAWYER to try to teach the meaning to the (choke) “staff”!).

Is Molalla prepared to open the can of worms that would surely come to light if growth is projected and infrastructure costs are honestly outlined? Molalla can’t afford to fix much these days – how could it possibly expand infrastructure? I expect that transportation issues – like the state of the roads and lack of stop lights – are currently big factors in the stalled apt/commercial proposal on Hart Street. Molalla can’t afford to fix the streets in the Sunrise Acres neighborhood: how could it possibly afford to do the expensive traffic engineering and upgrades to downtown intersections that would have to come BEFORE major developments like new apts or commercial business at 4-corners could be approved by ODOT?

Remember – ODOT isn’t a haphazard agency like Molalla plannin’. ODOT has the capacity to stop bogus development WITHIN the current city if any plans overburden existing state roads or don’t provide proper traffic controls.

Let’s not even go to the possible state of the water and sewer lines under the city – or to the issues coming soon regarding much tougher waste water standards. And the future local water wars won’t be pretty – even now, County meetings feature grim reports about water shortages on the horizon.

It is a shame that plannin’ Potter and his protector, “manager” Atkins, blew all the public’s money on legally indefensible 50 year urban reserve plannin’. Now, even if the city wished to try to regroup and do a defensible UGB 20 year plan, Molalla doesn’t have the money or the skill to mount all the necessary reports. That’s called “between a rock and hard place” and there is nobody to blame except the big three fake leaders – Potter/Atkins/Clarke – for dumping Molalla into this sad impasse.

Just think what those HUNDREDS OF THOUSAND OF WASTED PUBLIC MONIES could have provided if they had been used wisely by a certified professional planner working to enhance the EXISTING COMMUNITY!

We’d better not go there because it is now far too late to regroup – plannin’ Potter has saddled Molalla with the ugliest planning messes known to man and now investors are left holding the bag. The current legal bills the city is facing are daunting enough.

Why can’t Molalla do anything without incurring ongoing nasty legal bills way out of proportion to the size of the City? Could it be that employees are incompetent?

Read on for the facts about the “Worse Year Since 97” and the article about the 8 states (including Oregon) with the far too many houses and little chance to recover:

THE EIGHT STATES RUNNING OUT OF HOMEBUYERS

Posted: January 17, 2011 at 8:37 pm

The single biggest problem in the U.S. real estate market is simple: There are very few homebuyers.

That seems obvious, but the “buyers’ strike” has caused house prices to drop, along with an epidemic of foreclosures. What’s worse, the long depression in real estate is probably not over. S&P has forecast that home prices will drop by 7% to 10% this year. The S&P Case-Shiller Index has dropped for most of the 20 largest real estate markets over the last several months. RealtyTrac recently reported that more than one million homes were foreclosed upon in 2010.

Many economists argue that the housing market may take four or five years to recover. Even if that’s proven to be true, the all-time highs of 2006 may never be reached again.

The devastation in some regions will never be repaired. Parts of Oregon, Georgia, and Arizona have become progressively more deserted.  Since jobless rates may never recover, there is little reason to hope that the populations in these areas will ever rebound.  Some homes will be torn down in these pockets of high foreclosures in the hopes that reducing  supplies will boost prices.  Whether that idea will work in hard-hit areas such as Flint, Mich. and Yuma, Ariz. remains to be seen.

24/7 Wall St. looked at a number of the standard measures to find the housing markets facing the biggest problems attracting buyers. After a detailed examination, six metrics were chosen: (1) vacancy rates for 2010; (2) foreclosure rates for 2010; (3) November 2010 unemployment rates; (4) change in building permits from 2006 to 2010;  (5) change in population from 2005 to 2010; and (6) price reduction by major cities for 2010. Taken together they create a strong statistical base to describe markets which buyers have largely abandoned.

Several states nearly made it onto the list such as Colorado and South Carolina, but did not get poor enough marks across all of our measurements.  Each was among the ten worst for declines in building permits. Colorado had one of the worst foreclosure rates, and South Carolina one of the worst vacancy rates. However, the populations in both states have rebounded enough to make a strong case that their housing markets may recover moderately over time.

The review of the data raises several public policy issues. The most important of these is whether the federal focus on reviving the housing market should be concentrated in the hardest hit regions. The counter to that point of view is that some cities such as Flint or states like Nevada are in such bad shape that they are beyond assistance. Unemployment rates are too high in these areas and perhaps the number of homes on the market is too large.

One thing is certain. The housing recovery will be wildly uneven. A city like New York which has a dense population and large numbers of middle class and upper class buyers who will wait until they believe prices hit bottom will have a rapid recovery soon. Building permits granted in New York City over the last four years have been very low. The supply of apartments is also low. Those forces taken together with an even modest economic recovery will help push real estate prices higher in New York and regions with similar characteristics.

The real estate crisis has gone on for four years. In the states 24/7 Wall St. has chosen here, the crisis will go on much longer.

1. Michigan
>Vacancy Rate: 15.98% (9th Worst)
>Unemployment: 12.4% (Tied for 2nd Worst)
>Population Change (2005-2010): -2.05% (Worst)

Michigan is one of only two states whose population has decreased in the last five years. The state has lost more than 12,000 people, or 2% of its population, since 2005. Most of this population loss was undoubtedly due to the depression in the car industry that lead to the bankruptcies of GM and Chrysler. Flint, once one of the largest car manufacturing cities in America, has lost more than 10% of its population in the past 10 years. The state has the second worst unemployment rate in the country at 12.4%. Michigan has a home vacancy rate of 15.98%, the ninth-worst in the the US. There are large neighborhoods in Detroit which are vacant.


2. Nevada
> 2010 Foreclosures: 9.42% (Worst)
> Unemployment: 14.3% (Worst)
> Decrease in Building Permits 2006 to 2010: -84.39 (Worst)

In 2010, an incredible 9.42% of all housing units in Nevada were foreclosed upon. This is by far the highest foreclosure rate in the U.S., and is nearly twice that of the next-worst state. Nevada also has the highest unemployment rate in the United States, at 14.3%.The recession undermined profits in the gaming industry. Between 2006 and 2010, the state had an 84.3% decrease in building permit requests, the largest drop in the country.  This has resulted in the loss of tens of thousands of construction jobs.



3. Arizona
> Vacancy Rate: 17.3% (5th Worst)
> 2010 Foreclosures: 5.73% (2nd Worst)
> Decrease in Building Permits 2006 to 2010: -81.36% (4th Worst)

Arizona is among a handful of states most deeply wounded by the real estate collapse.  Some 5.73% of properties in the state have been foreclosed upon, the second highest rate in the country, and 17.3% of homes are vacant, the fifth greatest rate in the country.  Also, Mesa, Phoenix, and Tucson, the state’s three largest cities, are all among the top five American cities with the greatest percentage of price reductions for homes in 2010, along with Minneapolis and Baltimore.  As of December 2010, these cities had 43%, 42%, and 38% of their listings with price reductions, respectively.


4. California
> 2010 Foreclosures: 4.08% (4th Worst)
> Unemployment: 12.4% (Tied for 2nd Worst)
> Decrease in Building Permits 2006 to 2010: -74.7% (6th Worst)

California’s impact on the housing market is huge. The state is the largest among the 50 in total GDP and housing units. California’s unemployment rate of 12.4% is now tied for second place with Michigan, once the jobless capital of the nation. In 2010, the state had one of the highest rate of foreclosure rates in the country, at just over 4%. New construction has dropped off dramatically as well, with a 74 % decrease in new building permits between 2006 and 2010.


5. Illinois
> 2010 Foreclosures: 2.87% (9th Worst)
> Decrease in Building Permits 2006 to 2010: -81.32% (5th Worst)
> Population Change: 1.23% (8th Worst)

Although Illinois has a relatively low residential vacancy rate,  finding people to buy homes can be difficult.  The state’s population only grew 1.23% between 2005 and 2010. This is the eighth worst growth rate in the country. Furthermore, the number of building permits issued since 2006 decreased 81.32%, the fifth greatest drop in the nation. The collapse of the state’s industrial base has been so great that its economy will not recover anytime soon.

6. Georgia
> 2010 Foreclosures: 3.25% (6th Worst)
> Unemployment: 10% (9th Worst)
> Decrease in Building Permits 2006 to 2010: -82.29% (2nd Worst) 

The number of building permits issued in 2006 in Georgia was 92,541.  In 2010 that number dropped to 16,391.  This is the second greatest decrease in the nation during that time. The state’s unemployment rate, at 10%, is above the national average of 9.4%.  Also, in 2010, there were 130,966 foreclosures in Georgia, 3.25% of the state’s properties.  This is an increase of 53.62% since 2008.


7. Oregon
> Unemployment: 10.6% (Tied for 5th Worst)
> Decrease in Building Permits 2006 to 2010: -74.08% (7th Worst)
> # of Listings With Price Reductions (Portland): 35% (Tied for 8th Worst Among 50 Largest US Cities)

Oregon’s real estate market has suffered the double blow of a sharp drop in both building permits and price reductions on existing homes. Unemployment is 10.6%, the fifth worst rate in the country.  The number of new building permits decreased by 74% from 2006 to 2010.  In December 2010, 35% of listings in Portland, the state’s largest city, had price reductions.



8. Florida
> Vacancy Rate: 21.03% (2nd Worst)
> 2010 Foreclosures: 5.51% (3rd Worst)
> Decrease in Building Permits 2006 to 2010: -81.37% (3rd Worst)

Unemployment in Florida is 12%, the fourth worst in the country.  Approximately 1.1 million residents are out of work.  Statistics show that 21.03% of the state’s housing units are vacant.  Furthermore, 5.51% of homes have been foreclosed upon.  Florida was among five states that had the largest real estate booms from 2000 to 2006. Residential prices in some waterfront areas like Miami and Palm Beach rose by much more than double during that period. New home and condominium construction soared. Many of those residences have never been occupied and are still part of the inventory of homes for sale.

Sources:
1) Vacancy rates for 2010 – American Community Survey (Census Bureau)
2) Foreclosure rates for 2010 – RealtyTrac
3) November 2010 unemployment rates – Bureau of Labor Statistics
4) Change in building permits from 2006 to 2010 – Census Bureau

WORST YEAR SINCE ’97

Home Sales

MARTIN CRUTSINGER 01/20/11 11:01 AM   AP

WASHINGTON — The number of people who bought previously owned homes last year fell to the lowest level in 13 years. But home sales in December jumped to fastest pace in seven months.

The National Association of Realtors says sales dropped 4.8 percent to 4.91 million units in 2010. That was slightly lower than 2008, which had been the weakest level since 1997.

Home prices have been depressed by a record number of foreclosures and high unemployment. Many potential buyers held off on purchases last year, fearful that prices hadn’t bottomed out yet.

The poor year for sales ended strong in December. Buyers snapped up homes at a seasonally adjusted annual rate of 5.28 million units, an increase of 12.8 percent from November and the strongest sales pace since last May.

Still, many economists believe it will take years for sales to rise to a normal level of around 6 million units a year. And some say 2011 will be even weaker than last year because more foreclosures are expected and home prices are likely to keep falling through the first six months of the year.

The foreclosure crisis has left a glut of unsold houses on the market. That has played a major role in lowering home prices.

For December, the inventory of unsold homes stood at an 8.1 months supply, down from 9.5 months supply in November. That represents the amount of time it would take to sell the remaining supply of homes on the market at the December sales pace. A normal inventory supply is six months.

Even historically low mortgage rates have done little to boost the sales.

The average rate on a 30-year fixed mortgage rose to 4.74 percent this week from 4.71 percent the previous week, Freddie Mac said Thursday. The average rate on the 15-year loan, a popular refinance option, slipped to 4.05 percent from 4.08 percent.

The 30-year loan rate reached a 40-year low of 4.17 percent in November, and the 15-year mortgage rate fell to 3.57 percent, the lowest level on records dating back to 1991.

For December, sales were up in all parts of the country with the strongest gain a 16.7 percent increase in the West. Sales rose 13 percent in the Northeast, 10.1 percent in the South and 11 percent in the Midwest.

The median price for a home sold in December was $168,800, down 1 percent from a year ago.

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