Buyers are betting on the 'burbs
As home sales have begun to recover with the improving economy, a familiar pattern is emerging the highest prices are still being paid for homes in the suburbs, including portions of unincorporated Washington County, Lake Oswego and West Linn.
That helps explain why the Washington County Commission put so much effort into preparing the North Bethany area for development, and why it was willing to take the tract known as Area 93 away from Multnomah County and prepare it for future home building. Both are in unincorporated areas where people want to live.
The fact that people are paying a premium to live outside of Portland is contrary to claims repeatedly made by urban planners since the Great Recession started to wane. They argue that people no longer want to live in the suburbs but are moving to cities, where transportation costs are less.
The goal, they say, is to live in so-called 20-minute neighborhoods where jobs, shopping and recreational opportunities are just a short walk away.
What were finding is, people still want to be able to choose where they live, including in the suburbs, said Dave Nielsen, CEO of the Home Builders Association of Metro Portland.
Monthly reports issued by the Regional Multiple Listing Service (RMLS) back him up. They show that home sale prices in some suburban areas of metropolitan Portland are significantly higher than in the urban core.
Median price $397K
In July, this included the RMLS tract known as north Washington County, which stretches from west of Banks to Sauvie Island. The median sales price there was $397,000, compared to $281,000 in north Portland.
It also included west Portland, which covers the Raleigh Hills area. The median sales price there was $384,000, compared to $237,300 in southeast Portland.
The prices are also higher than in Hillsboro and Forest Grove, which are lumped together in the RMLS reports. The median sales price there was $245,000 in July.
Significantly, sales prices in those suburban areas have historically been higher than in urban Portland, according to the RMLS reports. That means they did not lose their appeal when the real estate market crashed in 2007 and 2008.
The RMLS first began compiling sales data and issuing monthly reports in the 1990s. The organization divides the metro Portland area into 15 districts based on the distribution zones of The Oregonian newspaper back then. They have never been changed, and might not make sense now. For example, Beaverton and Aloha are included in a single district, even though their residential development patterns are different.
And there are significant price differences between portions of inner and outer northeast and southeast Portland.
Nevertheless, the RMLS reports are perhaps the most reliable and accessible way to track metro Portland home sales over the past three decades. And they have consistently shown the appeal of certain suburban areas.
There are many factors to explain the price differences. Homes tend to be bigger and sit on larger lots in the suburbs. And many are newer because urban Portland began running out of suitable lots a long time ago. For many years, the vast majority of new single-family homes have been built in the suburbs.
Many expensive condominiums were built or being built in urban Portland when the recession started. Some units were priced higher than most suburban homes. There were apparently not enough of them to match the sales figures generated in the suburbs, however.
School district matters
And then there are factors not related to the housing stock, such as schools. A recent audit by Portland Public Schools revealed that its students do not do as well as those in other large school districts. That confirms the feelings of many parents who believe suburban school districts are better. From 2006 to 2011, the number of children younger than 19 fell in Multnomah County but rose in Washington County, according to a recent analysis of economic trends in the Portland area conducted by Christian Kaylor, a work force analyst with the Oregon Employment Department.
Kaylor said that reflects the perceived superiority of the school districts there.
There are some suggestions in the most recent RMLS report that home prices in Portland could close the gap on their suburban counterparts. In July, their year-to-date average price increases were higher than in the most expensive suburban areas. Average home prices increased 9.2 percent in north Portland, 13.5 percent in northeast Portland and 14.7 percent in southeast Portland.
In comparison, they increased 5.6 percent in northwest Washington County, 8.5 percent in west Portland and 13.3 percent in Lake Oswego and West Linn.
It remains to be seen whether those differences can be sustained as the economy recovers, however. Even if they are, the differences in sales prices is still substantial, and will be further influenced by new homes that come on the market. At least for now, most of them are still being built in the suburbs.Add a comment