Portland Foreclosures - Good and Bad

As I was catching up on the news and enjoying my coffee this morning, I ran across an article I wasn't overly excited about. (Side note: I found this Pumpkin Spice Coffemate at Safeway and it's fantastic!)  Anyway, CNNMoney.com ran a spot on the cities that were being hit by foreclosures.  Unfortunately Portland, OR made the list.  At first I was thinking, 'Oh great, another article with bad press for Portland.'  Then I started to think of the opportunity it presented for people looking to buy right now.

Being that my generation seems to be somewhat economically cursed, this could be great for us.  I remember when I was in college, the world was rosy and we were plugging along with the tech boom.  You couldn't possibly lose money and everyone had a job.  Then as I was getting out of college, the bubble burst.  Jobs were no where to be found, and the thought of buying a house was the furthest thing from my mind.  As I started to work and make money, oddly enough in buying foreclosures, the prices of homes started to shoot up.  Most of the people I knew were not quite financially ready, and by the time they were, houses were too expensive.

Then came the current bubble burst.  Now all of the people who were just getting financially stable were worried about their jobs.  Once again, buying a house was the furthest thing from their minds.  Well, low and behold I think we've made it past the worst of that too!  So now, if you've got a job, a little money in the bank, and haven't ruined your credit along the way, this is YOUR time!  With bank owned (REO) properties and short sales out there, prices have been driven down.  Foreclosures have forced everyone to lower their prices across the board.  So while it is hard on existing homeowners, this is the first opportunity for all of those people that have just been waiting for it to be 'their time'.

On the other side, I can say that in my years of experience dealing with foreclosures and short sales in and around Portland, foreclosure not always a bad thing for the homeowner either.  In most cases, it's been a relief for them once the house is actually sold.  Now did that person want to be in the position where they were upside down in their house or unable to afford it?  Absolutely not!  However, once they were thrust into that position, it was an 800 pound gorilla hanging on to their back.  Once they were able to offload it, suddenly they had a clean slate and were able to rebuild.

Regardless of how you look at it, foreclosures are going to remain in Portland and Oregon in general for the near future.  You can either look at it as an opportunity, or as another black cloud on our beautiful state.  However as Baron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, is credited with saying, "The time to buy is when there's blood in the streets."


Here is what the article in CNN Money said:


Foreclosure rate: One in 44 homes
Percent increase: 87%
National rank: 61st
Unemployment rate: 10.8%

For a long time, the housing bust failed to reach the far Northwest. But it was just a delay: In the past year there has been a big run up in foreclosures, particularly in Portland.

One big reason is that the state and metro area are more dependent than most on the housing industry. Much of Oregon's economy is manufacturing based -- including lumber and other construction products -- so when homebuilding started falling nationwide, many Oregon workers lost their jobs.

In addition, Portland had its own mini-boom in home prices during 2004 through 2006, according to Don Gladson, a broker with Coldwell Banker Seal in Portland. "Prices went way above where they should have been," he said.

When home prices dropped in the bust, many borrowers were left owing more on their mortgages than their homes were worth. Gladson estimated that half the borrowers in Portland are now underwater.

"It was a double whammy," said Tom Potiowsky, Oregon's state economist. "But the sluggish economy is the bigger whammy."