I was getting pretty overwhelmed by the grim financial news last week so I spent Saturday night listening to the This American Life episode Bad Bank, where two economics reporters take just 39 minutes to explain the mortgage crisis in a way that actually makes sense. Saturday night doesn't get better than that! Unless you've got Nesquik and whiskey on hand, which I didn't.
Anyway, then I was paging through the projected county budget (click on "General Fund Forecast Update") yesterday and came across these very scary graphs. Oregon ranks 9th in the nation for states with the most foreclosures, but it's not always obvious what that means on the ground. These graphs struck me with the same sort of feeling as the This American Life show — a clear and comprehensible vision of what exactly this "mortgage crisis thing" means in Portland.
Check this out:
AAAAA!!!! This graph compares the blue line, which is the change in average home price in Multnomah County, and the red line, which is the change in how much of their income the average person is spending on housing. As you can see, recently, Portlanders have had to spend a lot more of their income on housing, even though home prices are plummeting. This is a much different kind of recession than the one in 2001, because then home affordability was at least stable.
This is a nationwide trend. Here's how the average price of Portland's homes compare to other cities:
At first I looked at this graph and though, "Phew! Portland's not doing so bad compared to other cities. One more way in which we kick San Francisco's ass!" But county budget manager Karyne Kieta explained it's actually not the time to breathe a sigh of relief yet. For some reason, says Kieta, Portland's economy lags about two years behind the rest of the country's. If someone wants to concisely explain to me why the hell this happens, go ahead and try. The evidence of it is visible, though, in that graph. See how San Francisco, Seattle, Las Vegas all had their house price bumps in 2005/2006 and Portland's bump doesn't happen till 2007? "This is basically all bad news," says Kieta, probably staring out her office window at the endless March rain, "But what it tells you is that housing prices still have room to fall."
These is exactly what community-based affordable housing advocates told me back in November when we headlined an article about Portland foreclosures "It Will Get Worse". Now we have some depressing graphs to help us know how much worse, exactly.