Could be as much as 24% based on price to median income and price to rent ratios.

And if they fell as much as 24% they would still be too high in most cases. Add to that, the fact that the economy is still sucking, the barista crowd can't afford homes even with the 24% cut ... bad time to be a realtor.

So...The property tax millage is to go up?

I ask because falling values will inevitably lead to reduced revenues to feed the SamRand gluttonous sinkhole of assinine projects.

I really wish that this weren't the case, but Portland probably has a lot further to fall. When I lived there in the Nineties, I remember people looking in surprise that houses they bought for $40k in 1985 were selling for ten times that in 1997. Without quick and easy credit, which is coming back about the same time we watch flocks of pterosaurs flying across the moon, it's going to be up to people with a significant down payment to maintain home sales. Sadly, that's not something you can expect from hipsters.

Hello Detroit.....

Texas - You nailed it.

I'm an anomaly in that the house I own is now occupied by my third generation original family. (Three of my immediate neighbors are also original owners, some dating back to the early 50's). I have seen the early 1980's fair market value of my home (11% mortgage interest at the time) multiply by a factor of over 700%, then fall back down to a still considerable 500%. Not too long ago a "starter house" was in the $60K range... Being frugal, refinancing at lower rates, and "wanting what we have," as opposed to "having what we want," has helped us to survive. But even now there is no guarantee. I guess being one generation away from the "Great Depression 1" gave us the opportunity to hear stories of how things used to be and could have been for us. Those who do not learn from history are doomed to repeat it.

Anyway, I hope I can be in a position to help my children out with their futures. But Portland seems to be overrun by characters out of Pinocchio anymore, expecting all the fun without the hard work necessary to achieve it. I hope the pendulum is finally beginning to swing in the right direction, so to speak, but as I said, there are no guarantees.

What is kind of baffling to me is seeing the continued build out of four story plus condo complexes in the city of Portland. There's got to be a glut of these units, depressing condo prices. But I also see many folks still demanding the single detached houses (with a bit of lot space). There is a bit of an echo baby boom going on among young white professionals, who naturally want some room and not a condo. I think the price movements really will depend hugely on what type of housing you are talking about.

A starter home should be in the 60-100k range for a young family. In weird Portland I've seen people advertise a starter home at 235k. The nominal annual income is in the 35-40k/year range, just how can that person reasonably expect to make payments on 235k+ home?

Property values have a loooong ways to fall yet.

It's always amazed me that west coast metro area home prices are so much higher than those in the mid-west and the south.

Websites like zillow.com make it easy to see this disparity, though it is best to look at trends and actual sales rather than some of the estimated values.

I agree, that prices will still go lower. Unfortunately, that value deflation is loss of real money for many people. Being so visible will surely remove any incentive for people to place a required large down payment. Perhaps many of those vacant condos will turn into rentals.

I find it disturbing that so few understand our property tax system. The milage rate is fixed by measure 5 and, except for a few scams like using bonds for operating it cannot go over $1500 per thousand. The assessed value on most properties is still far below market value in Portland, especially in N, NE & SE so changes in market value have no relation to property tax bills. But in outlying areas things are getting close.

There are a number of indications that show a declining economy in the region and State yet there's no sign public officials are adapting or preparing.

For instance this housing trend, along with other indicators, shows that property tax collections will be far short of what the government jurisdictions are used to.

Where's the funding going to come from? What's the plan for basic services?

The past long term trend of 4-5% increase in property tax revenue every year is not going to continue.

Obviously income tax revenue will further decline.

There is ample evidence to at least suggest the possibility of a significant second wave downturn and this recession turning into a global depression.

It's a bit odd and disconcerting to see public officials conducting themselves as if we have bottomed out and only thing to consider is the pace of our recovery.
There is no sign of any adjustments or preparedness for government maintaining core functions if the economy further tanks.
Here in Oregon Democrats don't think we need a special session, TriMet is about to push forward with the unfunded Milwaukie Light Rail and every agency in sight is operating as if we have a minor glitch and things can't get much worse.

Well suppose they do?
Is this what we get when government is too BIG and too insulated from the real world?

Don't worry be happy.

Is this what we get when government is too BIG and too insulated from the real world?

In Leonard's world the PWB is too big to fail because we are funding it with unnecessary double digit increases each year.

The price to rent technique for determining if housing is overpriced is not methodologically sound. I did a presentation with another economist a month ago and we both said that housing is historically cheap.

People make housing purchase decisions based on the size of their mortgage payment and their income. The mortgage payment is a function of interest rates and housing prices. Interest rates are at near record lows. Incomes are down, but still 90% of the labor force is working.

Based on a model using those factors, single family housing prices in the PDX area are at their lowest point in decades. Condos are another (sad) story.

"The price to rent technique for determining if housing is overpriced is not methodologically sound. I did a presentation with another economist a month ago and we both said that housing is historically cheap."

Oh, man, spoken like a true economist. "Aeronautical engineers have spoken! Bees cannot possibly fly!"

Yea! I'll believe anything coming out of Goldman Sachs

John above has it right, other than it's $15 per thousand, not $1,500.

And there is also built into M50 an allowance for a 3% increase in assessed value every year, regardless of the change in the CPI. It would take several more years of compounded 3% increases in AV, or some more significant RMV decreases, before AV hit the RMV limit and forced a reduction.

And this is only speaking broadly of the averages across Portland, of course. For specific cases, it all depends on what your RMV was in 1995-6, when M50 kicked in and froze AV to the track we're on now. And this varied widely neighborhood-by-neighborhood.

Robert.

Fine ignore price to rent. Look at price to income instead. The mantra of 'things are different here' doesn't hold water. Let's go back to historic lending practices, 28% front end ratio, 36% back end ratios at a MAXIMUM and 20% cash down payments. Yes, interest rates are low, but consumer debt loads are not. There's just too much bad debt in the entire economy.