Summary of Portland housing growth – in 6 charts

Last updated Aug 3, 2017.

See today’s Chart of the day here.

Figure 1. Lot of upswing.  US home price change (in percent) for top 20 cities for 2011-2017 (Click to enlarge). Key summary: (1) After the worst year of 2011-2012, a huge upswing in 2012-2013 across the country; (2) Best gains are in South-West SF-LA-Phoenix-Vegas corridor; (3) While US National growth has stabilized at about 5%, Pacific NW regions of Seattle-Portland and Denver-Dallas are still growing at almost 10%. This data is compared for month of May for each year (all other data below are for month of June). The data is available from several sources including S&P US IndicesZillow, & Federal Housing Finance Agency.

Figure 2. Still got momentum. Home price change (in percent) by zip-code in Multnomah county of Portland Metro, OR-USA (Click to enlarge).  Key summary: (1) Almost no price drop in 2011-2012, similar to other metros; (2) however, highest growth was in 2015-2016 instead of the nationwide peak growth in 2012-2013; (3) not a very strong correlation between price change to actual price (x-axis is plotted to show current house prices in ascending order, from left to right); (4) the most expensive neighborhoods (on the right side) had already started to appreciate in 2011-2012 & are still growing; (5) mid-price range neighborhoods have almost peaked & growth is <5%; (6) As prices increase, people are forced to buy in low-cost neighborhoods (left side on x-axis), and therefore those are growing at almost 10%.  Data from Zillow (which unfortunately does not include all zip-codes), raw data here. To see the actual home prices by neighborhood, see Chart of the day, Aug 1, 2017.

 

Figure 3. Growing growing growing. Home price change for Washington county, Portland Metro (this region includes the high-tech corridor of “Silicon Forest” with Intel, Nike, and coveted neighborhoods of Bethany & Skyline, Click to enlarge). Key summary: (1) Not as explosive growth as Multnomah county, but consistently growing at 10-15%; (2) as seen for Multnomah county, not a very strong correlation of growth to actual prices (house prices increase on this chart from low to high on x-axis as we go from left to right); (3) again, the most expensive neighborhoods (on the right side) had already started to appreciate in 2011-2012 but still growing; (4) lower priced neighborhoods (left side) are still growing more than the expensive ones (right side); (5) the Cedar Mill area (that includes Bethany & part of Skyline) is anomalous: it includes some of the best schools in Oregon & is preferred by the immigrant population working in the high-tech corridor; prices didn’t drop in 2011-2012 but growth is low due to extensive construction & already high prices; (6) strong growth in the outskirts & previously untapped neighborhoods of Aloha, Forest Grove, Banks, North Plains & Hillsboro; you can drive over and see once-in-a-lifetime generational change & inequality in action: low income families being pushed out by new construction boom and young, highly educated families moving to newly developed communities; the State of Oregon is working hard to bring more business & majority of it is moving to Washington county. Original data from Zillow, and raw data here. To see the actual home prices by neighborhood, see Chart of the day, July 31, 2017.

 

Figure 4. See you on the other side. Home price change (in percent) by zip-code in Clark county, Washington state (part of the Portland Metro, on the north side of Columbia river. Click to enlarge). Key summary: (1) Much more affordable due to lower cost to buy, lower property taxes, lower closing costs, no income tax in Washington state & better schools than Oregon; (2) across all neighborhoods, a consistent 10% growth except 2011-2012; (3) only reasons holding back are heavy rush-hour traffic to cross the Columbia river & Oregon state tax for people working in Oregon; however, lot of new businesses have moved here recently, especially financial firms including Fisher Investments that has helped raise the median household income. Data from Zillow and raw data here. To see the actual home prices by neighborhood, see Chart of the day, Aug 2, 2017.

Figure 5. A study in contrast. Home prices change (in percent) by zip-code in Clackamas county, OR. This county includes the affluent neighborhoods of Lake Oswego, the beautiful Columbia River Gorge, the high-tech area of Wilsonwille, and part of Willamette valley (Click to enlarge). Key Summary: (1) This is one of the most economically diverse regions and affordable neighborhoods are still growing over 10%; (2) the sought-after area of Lake Oswego is comparable to downtown Portland & therefore growth has been comparable to Multnomah county; (3) the high-tech area of Willsonville has not seen growth comparable to Washington county therefore growth has been sluggish. Data from Zillow and raw data here.

 

Figure 6. In the middle of action. Home price change (in percent) by zip-code in Marion & Polk counties, OR. These include the state capitol & the agricultural communities of the beautiful Willamette Valley. (Click to enlarge). Key summary: (1) Very different growth trajectory than the Portland Metro area; the area was hard hit during 2011-2012 but has slowly recovered and is seeing the best growth right now; as Portland Metro grows out of reach, more people are moving to these affordable neighborhoods; (2) most of the region is over an hour drive away from Portland Metro, making the high-tech growth inaccessible; (3) most likely jobs are related to agriculture, administration, health & medicine & tourism, thus the different growth trajectory. Data from Zillow and raw data here.

 

The bold new plan of building Amberglen neighborhood in Hillsboro

Last updated Aug 1, 2017.

Amberglen Community, Tanasbourne, Hillsboro, OR USA

If you were to believe the Hillsboro Planning Dept, the Amberglen Community in Tanasbourne will be Orenco Station 2.0 with big plans for development. Here is map of the area. A list of key projects below.

Key development items:

  • Amberglen Central Park, with nearly 15 acres of beautiful landscaping & water fountains, was recently purchased by Hillsboro Parks and Recreation
  • A new 5-story, 136 room world-class Aloft hotel is now open for service
  • 396 unit apartment complex, Amberglen West, recently completed & is now fully open
  • A retail plus residential property, Amberglen at the Park, with 277 apts, 338 car stalls & 252 bike spaces is slated to open by end of the year
  • A 203 unit Apt complex, 206 Apt, opened last year
  • A 237 room Oxford hotel is approved & will be coming up soon on Cornell & Aloclek
  • A new 140 room hotel by Kalyan Hospitality on Evergreen Pkwy, next to Kaiser Permanente is approved, which will be part of the 950 units increase to Hillsboro’s hotel inventory
  • The owners of Boom Fitness are building a new apartment complex next to the facility
  • If you read the full plans, there is even a Max rail planned for future
  • Want to know how it might look like, try these reports from University of Oregon & REIG

A bigger picture:

What Portland is driving? – Part II (long read)

Here is a long read for those more involved. This post discusses the detailed analysis of data collected from about 4000 vehicles in Washington County, Portland, OR in mid-July 2017.

 

Figure 1. Slice of the Pie. Market share of top 25 companies in the Washington County based on this study. GM and Ford may be leading the most recent sales numbers but they are far behind in numbers of cars on the road. Did Toyota & Honda sold more in the past or they just last longer?

About a year ago, I spent $15,000 to buy the stocks of GM and Ford. My rational was that US automakers had historically lowest Price-to-Earning ratios (with Ford at 6 and GM at 7), and they had nowhere to go but up. 12 months later, and with S&P at 20% high, that optimism is all faded away. To understand why things are so bad, I didn’t have to look farther but to go out & see how things really looked in Portland. The auto market is booming, no doubt. But things are gloomy for the US automakers.

Short summary:

  • The data from this study show that every other vehicle on the road is Japanese! Every time you hear the sound of a car or truck, more than half the time it will be one of the Japanese brands (Toyota, Honda, Subaru, Nissan or Mazda). And in most likelihood it will be a Toyota or Honda (every 3rd one).
  • If you hear a truck/SUV/Van, it can be anyone of these with almost same probability: Toyota, Ford, Chrysler or GMC; but chances of a Toyota is still higher than anyone else.
  • A luxury car will most likely be a German brand; and most likely a BMW, double the chances of Mercedes or Audi. Sometimes it may be a Lexus or Acura but if you see a Tesla, take a good look as you won’t be seeing another one for a while (1 in 70 luxury cars, and 1 in 200 vehicles of any kind)
  • The market share for top three US automakers (GM, Ford, Chrysler) is only about a quarter (1 in 4 vehicles)
  • Although VW was the world’s biggest auto manufacturer in 2016, it’s share is negligibly small (less than 1 in 20 vehicles)
  • Subaru (a Pacific Northwest darling!) is about one in six vehicles, despite not appearing in the top 20 global manufacturers.

 

Figure 2. See no evil, just Kaizen. Total number of vehicles by top 25 brands separated by different types. Toyota leads in every category except EV where the Nissan Leaf has been selling more than any other EV. The US automakers are heavily reliant on their SUVs & Trucks. And as a foot note, Mitsubishi called it quits to focus somewhere else.

Figure 3. Upstairs downstairs. Same plot as Figure 2 separated by Luxury and non-luxury brands. BMW outsells everyone else but recent efforts by Mercedes has started to attract the younger crowd besides all those ML350s. Tesla is now more valuable than Ford and GM on wall street, but not to be seen on the roads yet.

Figure 4. Lineage. Data consolidated by parent company. Not much change here except the Hyundai-Kia combination does bump them above the lower volume players.

I hear that in Detroit they are trying to show they can match the might of Silicon Valley by appearing cool. But it’s a long road to see anything meaningful. For now, I will have to be content with the 5% dividend they offer.

About this study

The data were collected mid-July 2017 over a period of two days in Washington County, Oregon. Six different locations were selected in Hillsboro & Beaverton. This ‘Silicon Forest’ area has several high tech employers requiring a diverse set of skills and therefore a wide ranging earning power. Additionally, people drive from across the Portland Metro area to these companies and therefore should reflect the overall vehicle ownership pattern of the whole area. The data were collected from 9-5 pm during the workweek to avoid any aberrations related to traffic patterns, weekend driving patterns, re-counts due to driving in and out of the area or any potential influence of purchasing power from number of hours worked.

The raw data is attached.

Portland-auto-survey-raw-data (.xls)

Portland-auto-survey-raw-data (.csv)

 

What Portland is driving?

(last updated 19 July 2017)

Ever wondered who is really driving all those Teslas? Every time when you are on the road is there really a German luxury car in next lane or are you just dreaming? Are they really taking over the US market!? Are US automakers pretty much relegated to selling Trucks? And their measly stock prices are indeed justified by what people are buying? Then what are the most reliable brands that everyone is buying?

The chart below from my recent study of about 4000 vehicles in Portland, OR helps answer some of these questions.

Despite being the most valuable automaker, the number of Teslas in market is even lower than Minis & Scions. Tesla stands at number 24, out of 25 top brands. Although Toyota & Honda are clear leaders in total number of vehicles on road, the German luxury brands are slowly getting closer to eclipsing the US automakers. In fact, the biggest segment for US automakers is Trucks/SUVs/Vans & they trail far behind in sedans. If you were to blindly guess the vehicle type for a US brand, you will be wrong more than half the time when picked a sedan.

So what are the key takeaways? I will have to go into details in a separate post, but here is a short summary.

To truly stand out, buy a Tesla or a Cadillac. Tesla: because they are the new head turner, and very rare. Cadillac because they are almost dead and nowhere to be seen. The Pacific Northwest prides in their hippie Subarus but they are not as ubiquitous as they are claimed to be. GM, Chrysler, and to some extent Ford, are mainly left with selling trucks. Toyota is beating everyone by a long margin, in total vehicles, in sedans, in trucks, and in hybrids. Honda is close but there is a long gap after that. Nissan is a surprise with as many as Subarus and more than Chrysler but their Fiat brand is nowhere to be seen. When you say hybrid, you might as well say Prius because there isn’t anything else out there. EV is not as popular as everyone claims to be. And whatever is there, it’s almost all Nissan Leaf. Did you know how surprisingly cheap it is? Just lookup (spoiler alert: there is an almost 65% discount on on it after dealership rebates, tax breaks, employer discounts & new credits from the recently passed $5.2 billion Oregon infrastructure bill).

This is the key plot. Take a look & let me know your observations. I will follow with a longer post later this week.