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U.S Department of Housing and Urban Development
o
U.S. Department of the Treasury
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Spotlight on the Housing
Market in the Portland-VancouverHillsboro, OR-WA MSA
U.S. Department Efforts to Stabilize Development | Office and Help American and Research
The Obama Administration’sof Housing and Urban the Housing Market of Policy Development Homeowners | June 2013
The Portland-Vancouver-Hillsboro, OR-WA Metropolitan Statistical Area (Portland) is located on the border of Oregon and Washington in the
western part of the states and includes five counties in Oregon and two counties in Washington. The foreclosure crisis in the Portland MSA
developed later and differently than in many areas of the nation. Home price appreciation during the housing bubble started and peaked more
than a year later in Portland than nationally, and although home prices rose less steeply, their decline was nearly as sharp. Falling property values
and the resulting underwater mortgages were partially fueled by investor speculation and excess housing construction in the years leading up
to the housing crisis. Rising defaults due to unsustainable mortgage lending and rising unemployment during the subsequent recession added
further to the decline in property values. Aided by a strong economy, the share of distressed mortgages in the Portland MSA-- those 90 or
more days delinquent or in the foreclosure process--actually declined from 2003 through 2006, whereas, comparable shares in the rest of the
nation generally remained flat or increased slightly. When the rapid rise of distressed mortgages in the nation began in 2007, the share of
distressed mortgages in Portland soon followed suit. As with the nation, rapid increases in local mortgage distress continued in 2009 with the
downturn in the economy, but the share has remained below the national rate. Economic and housing market conditions in the Portland MSA are
improving, but the foreclosure crisis has taken its toll. The Administration’s broad approach to stabilize the housing market has been a real help to
homeowners in Portland and surrounding cities. This addendum to the Obama Administration’s Housing Scorecard provides a summary of trends
and conditions in the local economy and the impact of the Administration’s efforts to stabilize the housing market and help local homeowners.

Population Growth, Employment,
and Housing Market:
With 2.2 million people according to the most recent
Census, the Portland MSA is the 23rd largest in the
nation. From 2000 to 2010, the population increased by
an average of 29,800 people, or 1.5 percent a year. In
addition to natural population growth (births minus deaths),
53 percent of the population increase was the result of
people moving to the area. Over the last decade, an
average of 15,900 people per year moved to Portland,
with this number increasing to 19,100 per year during the
economic expansion of 2004 to 2008.
During the decade spanned by the Census, new housing
production exceeded household growth in the Portland
MSA. Net annual housing unit growth of 1.7 percent was

Household Growth During the Past Decade
Date of Census

4/1/2000

Annual Growth Rate

4/1/2010

1,927,883

2,226,009

-

Annual Growth Rate

1.5%

745,531

Portland MSA Households

867,794

-

Annual Growth Rate
Source: Census Bureau (2000 and 2010 Decennial)

1.6%

790,876

925,076

-

Portland MSA Housing Units

1.7%

greater than the corresponding population and household growth rates of 1.5
and 1.6 percent, respectively. This excess construction, while not as great as in
some parts of the nation, nevertheless contributed to an oversupply of housing.
According to the Census Bureau, the number of vacant units increased by an
average of 1,200 units, or 2.6 percent annually during the 2000s, compared
to a 4.4-percent national increase. The excess supply of housing is likely to
have influenced the sharp decline in house prices that began in 2007. Investor
speculation was a factor in the overbuilding in the years leading up to the
housing crisis, as a large share of Portland area home purchases were by
non-occupant investors. Specifically, from 2000 to 2006 investor home sales
rose from 7.2 to 15.1 percent of total sales in Portland while the corresponding
increase for the nation was from 7.8 to 14.6 percent of sales. As reported
by the Oregonian, another cause of overbuilding in Portland was speculative
construction of condominiums in and around the central business district.
From 2000 through 2007, approximately 50 projects consisting of 6,100
condominiums were built and by 2008, the excess supply of condominiums
on the market resulted in the conversion of 900 planned condominiums to
apartments. Subprime lending also contributed to the overbuilding in Portland.
A study by the National Bureau of Economic Research indicates that in 2005,
Portland ranked 37th out of the top 107 metropolitan areas with the highest
share of subprime mortgage originations relative to housing units. In addition,
a conservative estimate based on HMDA (Home Mortgage Disclosure Act) data
indicates that subprime originations tripled nationally between 1998 and 2005.
According to a study by the Center for Responsible Lending, approximately 90
percent of subprime mortgages experience increases in monthly payments of 30
to 50 percent within a few years, causing subprime loans to typically default at
more than 7 times the rate of other mortgages.

Spotlight on the Housing Market in the Portland-Vancouver-Hillsboro, OR-WA MSA | Page 1

U.S. Department of the Treasury
h

U.S. Department Efforts to Stabilize Development | Office and Help American and Research
The Obama Administration’sof Housing and Urban the Housing Market of Policy Development Homeowners | June 2013

An economic recovery is underway in Portland.
The local economy grew fairly rapidly after the 2001
recession, with nonfarm payrolls increasing at an average
annual rate of 23,350 jobs, or 2.5 percent, from the
third quarter of 2003 through the first quarter of 2008,
compared with a national increase of 1.3 percent
over the same period. The impact of the 2007-2009
Recession was more severe on Portland than for the
nation. Jobs in the Portland MSA declined at an average
annual rate of 46,350, or 4.4 percent, from the second
quarter of 2008 through the end of 2009, compared
with a national annual decline of 3.5 percent over the
same period. Recovery from the Great Recession has
been slightly stronger in Portland, with jobs increasing
at an average annual rate of 15,500, or 1.6 percent,
from the first quarter of 2010 through the first quarter of
2013, compared with a national rate of 1.3 percent.
The Portland MSA is known for its diverse local economy.
During the recent recession, job losses were severe in the
construction and manufacturing sectors, which declined at
average annual rates of 13.1 and 8.2 percent, respectively;
declines also occurred in financial activities (4.8 percent),
and professional and business services (-4.6 percent).
The professional and business services and manufacturing
sectors have led the recovery in the Portland economy,
growing at average annual rates of 3.2 and 2.0 percent,
respectively, with education and public health (1.6 percent)
and the leisure and hospitality sector (1.5 percent) also
contributing to the expansion. Growth in these sectors have
more than offset average annual job losses in construction
(-1.6 percent), government (-0.5 percent), and financial
activities (-0.4 percent). The unemployment rate for the
Portland MSA peaked at 11.1 percent in May 2009
and has since fallen to 7.3 percent as of May 2013. The
national unemployment rate peaked in October 2009 at
10.0 percent, falling to 7.6 percent by June 2013.
Existing and new home sales in the Portland MSA
began a dramatic decline in 2005 but stabilized
in 2009, and a recovery took hold in 2012. After
reaching a peak of 59,300 units sold in 2005, existing
home sales dropped by an average annual rate of 19
percent between 2006 and 2008. Existing home sales
stabilized from 2009 through 2011 and began to rise in
2012, increasing at an average annual rate of 16 percent
(albeit on a low base) and reaching a pace of 29,700
homes sold. New home sales also peaked in 2005 at
12,125, before falling between 2006 and 2011 by an
annual average of 13 percent. New home sales increased
by 7 percent in 2012 to 3,000 homes sold.
Portland MSA house prices rose later and
somewhat less steeply than for the nation during
the housing bubble. The CoreLogic repeat-sales
house price index (HPI) shows that during the housing
bubble, home prices increased at close to 90 percent of
the national rate in Portland and peaked more than a year

later. However, house prices fell by 29 percent from their peak in July 2007 to
their low in April 2011, nearly the same as the national peak-to-low decline of
31 percent. A relatively high level of distressed sales (involving bank-owned
properties or short sales) played a role in the price decline in the Portland MSA,
as distressed sales—at 22 percent of existing home sales during this period—
were close to the 25 percent national rate. In the last 12 months, the share
of distressed sales averaged 25 percent in Portland compared to 24 percent

Spotlight on the Housing Market in the Portland-Vancouver-Hillsboro, OR-WA MSA | Page 2

U.S. Department of the Treasury
h

U.S. Department Efforts to Stabilize Development | Office and Help American and Research
The Obama Administration’sof Housing and Urban the Housing Market of Policy Development Homeowners | June 2013
nationally. The rise in house prices in Portland during the
bubble was likely spurred by investor speculation, as home
sales to investors averaged 13.8 percent during the upturn
in the bubble-—slightly higher than the 13.2 percent share
for the nation. As described earlier, subprime lending is
also likely to have spurred demand and fueled home prices.
Home prices in Portland have since bounced back by
16 percent from their 2011 low, outpacing a 12 percent
national increase in prices since the end of the bubble.
The Portland rental market continues to be tight
despite increased apartment construction activity.
According to Reis, Inc., the Portland-Vancouver-Hillsboro
apartment vacancy rate was 4.7 percent in the first quarter
of 2013, down from 4.9 percent a year earlier, representing
tight market conditions. The slight decrease in the vacancy
rate occurred despite the large number of new apartment
projects entering the market during the past year; the
demand for rental units has been especially strong in innercity Portland. The national apartment vacancy rate declined
from 6.3 to 5.8 percent over the same period. During the
first quarter of 2013, the average apartment rent in the
Portland MSA increased by 9.6 percent from a year ago
to $1,006; the average rent nationwide increased by 4.0
percent to $1,080 during the same period.

Trends in Mortgage Delinquencies
and Foreclosures:
Portland homeowners continue to struggle with high rates of
mortgages at risk of foreclosure. According to LPS Applied
Analytics, as of April 2013, Portland placed 176th out
of 381 metropolitan areas ranked by share of mortgages
at risk of foreclosure (90 or more days delinquent or in
the foreclosure process). LPS data show that mortgages
at risk of foreclosure decreased by 19 percent during the
last year in the Portland MSA to 15,650 by April 2013,
compared with a national decline of 26 percent during the
same period. CoreLogic data since 2000 indicate that
the rate of mortgages at risk of foreclosure in the Portland
MSA have been consistently below the national rate, with
the gap starting to widen in 2003. Mortgages at risk of
foreclosure in the Portland MSA actually declined from 1.3
to 0.6 percent between 2003 through 2006, when the
average share of distressed mortgages for the nation had
remained steady or increased slightly. In 2007, when the
foreclosure crisis began for most of the nation, mortgages at
risk of foreclosure in the Portland MSA followed the national
trend but had a significantly smaller share of mortgages in
distress—rising from 0.6 percent in December 2006 to 2.3
percent by the end of 2008 compared with a rise of 1.6
percent to 4.4 percent nationally. In 2007 and 2008, singlefamily foreclosures were largely driven by unaffordable loan
products. Beginning in 2009, foreclosures were increasingly
driven by loss of income, unemployment, and strategic
defaults as the economy worsened according to research by
the Federal Reserve Bank of Chicago. A sharp spike upward

in the rate of distressed mortgages occurred in 2009 for both Portland and the
nation. By early 2010, mortgages at risk of foreclosure reached a peak of 8.0
percent nationally, and have since fallen to 5.6 percent. The share of distressed
mortgages in the Portland MSA reached a much lower peak of 5.4 percent in
early 2010 and has since fallen to 4.8 percent as of March 2013.

Spotlight on the Housing Market in the Portland-Vancouver-Hillsboro, OR-WA MSA | Page 3

U.S. Department of the Treasury
h

U.S. Department Efforts to Stabilize Development | Office and Help American and Research
The Obama Administration’sof Housing and Urban the Housing Market of Policy Development Homeowners | June 2013
Realty Trac data indicate that the foreclosure completion
rate in the Portland MSA has been comparable to the
national rate. As of May 2013, the number of foreclosure
completions as a percent of all housing units in Portland
since April 1, 2009 is 2.7 percent compared to a national
rate of 2.6 percent. Foreclosure completions have been
trending downward nationally and in the Portland metro
area. For the first quarter of 2013, completed foreclosures
in Portland were down 57 percent from one year ago,
while completed foreclosures in the nation fell by 25 percent
during the same period.
For the first quarter of 2013, the rate of foreclosure
completions in Portland was 0.06 percent compared to a
national rate of 0.11 percent. This lower foreclosure rate
is likely the result of successful lawsuits against lenders for
improper foreclosure procedures and a decision by the
Oregon Court of Appeal’s in July 2012 that ruled against
most non-judicial foreclosures (see Realty Trac’s May 2013
Foreclosure News Report), which have caused foreclosure
completions to drop dramatically in Portland in the last two
quarters. The impact of recent legislation on foreclosure
procedures in Oregon is uncertain, however. In June 2013,
Oregon’s Supreme Court partially reversed the Court of
Appeals July 2012 decision and reinstated non-judicial
foreclosures in certain cases.
The efforts of numerous state and local entities and financial
institutions in partnership with the federal government have
helped contain the rate of foreclosures. Lender processing
delays and a lengthy judicial process have also contributed
to the national decline in foreclosure activity. In the wake of
the February 2012 National Mortgage Servicing Settlement,
foreclosure activity has started to pick up a bit, primarily in
states where the process slowed dramatically in the last two
years. CoreLogic reports that 11.7 percent of mortgages in
the Portland MSA were underwater as of the first quarter of
2013—far lower than the 19.8 percent nationally—but still
representing additional homeowners potentially at risk.

The Administration’s Efforts to Stabilize the
Portland MSA Housing Market:
The Administration’s mortgage and neighborhood assistance programs
-- the Home Affordable Modification Program (HAMP), the Federal Housing
Administration (FHA) mortgage assistance programs, the Neighborhood
Stabilization Program (NSP), and the Hardest Hit Fund (HHF) program –
combined with assistance from the HOPE Now Alliance of mortgage servicers
and the National Mortgage Servicing Settlement have helped stabilize the
Portland MSA housing market.
From the launch of the Administration’s assistance programs in April 2009
through the end of April 2013, nearly 35,000 homeowners received mortgage
assistance in the Portland metropolitan area. Nearly 17,600 interventions were
completed through the HAMP and FHA loss mitigation and early delinquency
intervention programs. An estimated additional 17,400 proprietary mortgage
modifications have been made through HOPE Now Alliance servicers. While
some homeowners may have received help from more than one program,
the number of times assistance has been provided in the Portland MSA is 40
percent greater than the number of foreclosures completed during this period
(25,100). Under the landmark National Mortgage Servicing Settlement,
nearly 7,000 Oregon homeowners had benefitted from over $450 million in
refinancing, short sales and completed or trial loan modifications, including
principal reduction on first and second lien mortgages provided as of March
31, 2013. In Washington, more than 15,000 homeowners had benefited from
over $1.2 billion in consumer relief. Nationwide, the settlement has provided
more than $50 billion in consumer relief benefits to more than 620,000
families. That is in addition to the $2.5 billion in payments to participating
states and $1.5 billion in direct payments to borrowers who were foreclosed
upon between 2008 and 2011.

First Quarter 2013
Foreclosure

Foreclosure

Foreclosure

Foreclosure

550

0.06%

25,230

2.7%

139,100

Portland MSA

0.11%

3,392,100

2.6%

Note: Foreclosure Rates as Percent of All Housing Units;
Data through May 2013 for foreclosures since April 2009
Source: Realty Trac and Census Bureau

Given over three rounds, the Neighborhood Stabilization Program
has invested $7 billion nationwide to help localities work with non-profits and
community development corporations to turn tens of thousands of abandoned
and foreclosed homes that lower property values into homeownership
opportunities and the affordable rental housing that communities need.

Spotlight on the Housing Market in the Portland-Vancouver-Hillsboro, OR-WA MSA | Page 4

U.S. Department of the Treasury
h

U.S. Department Efforts to Stabilize Development | Office and Help American and Research
The Obama Administration’sof Housing and Urban the Housing Market of Policy Development Homeowners | June 2013
NSP1 funds were granted to all states and selected local
governments on a formula basis under Division B, Title III of
the Housing and Economic Recovery Act (HERA) of 2008;
NSP2 funds authorized under the American Recovery and
Reinvestment Act (the Recovery Act) of 2009 provided
grants to states, local governments, nonprofits and a
consortium of nonprofit entities on a competitive basis; and
NSP3 funds authorized under the Dodd–Frank Wall Street
Reform and Consumer Protection Act of 2010 provided
neighborhood stabilization grants to all states and select
governments on a formula basis.
In addition to stabilizing neighborhoods and providing
affordable housing, NSP funds have helped save jobs.
Each home purchased, rehabilitated and sold through the
NSP program is the result of the efforts of 35 to 50 local
employees.
Overall, a total of $31 million has been awarded to the
State of Oregon through NSP1, NSP2, and NSP3. Of
this, $10,681,706 has been expended to recipients in
the Portland MSA. The State of Washington was awarded
a total of $33 million through NSP1 and NSP3 and the
State has expended approximately $2,397,160 in the
Portland metropolitan area. Approximately 127 households
in Portland have already benefited from NSP, and
activities funded by the program are expected to provide
assistance to an additional 163 owner-occupied and renter
households. Examples of how these funds have been put to
use are provided below.
• The City of Portland and Multnomah County
received a total of $3,255,160 in NSP1 funds and
$787,409 in NSP3 funds. The City and County’s
NSP programs have focused on providing homebuyer
assistance through down payment, closing cost, and
rehabilitation assistance loans. To date, 17 households
have received these loans, four of which were female
headed households. The City of Portland and Multnomah
County partnered with, Proud Ground, a local land trust
to create permanently affordable housing through the
purchase and rehabilitation of foreclosed homes; to date,
eleven households have benefitted from this program.
The City and County used some of the NSP funds to
partner with Habitat for Humanity in Portland, which
purchased foreclosed property and built 45 condos on
the land. Thirteen of the condos have already been sold
to buyers with income at or below 50 percent of median
income in the area.
Projected Completed

127
Homeownership assistance to low-and moderate income

55

41

235

23

16

16

7

7

5

-

5

Homeownership assistance to low-and moderate income

86

23

-

• Clackamas County received $2,229,334 in NSP1 funds and $997,347
in NSP2 funds. The County has used some of these funds to assist
households through down payment, closing costs, and principal write-down
assistance and rehabilitation loans. Twenty-five households have already
benefitted from this program. The County has also used these funds to
purchase, rehabilitate, and sell homes to buyers through a community land
trust (CLT). The CLT retains ownership of the land and sells homes on the land
to low-income homebuyers, who lease the land from the CLT under a 99year contract; this arrangement insures the future affordability of the homes
when there is a change in ownership. To date, nine homebuyers have
been assisted through this program. A tenth structure was purchased and
rehabilitated by a nonprofit and converted into a 5-unit building for very low
income persons with disabilities.
• Washington County received $2,420,807 in NSP1 funds and $904,807
in NSP2 funds. The County used NSP1 funds to provide homebuyer
assistance and loans for rehabilitation, and partnered with a local non-profit
to acquire and rehabilitate homes for income-qualified buyers. So far, 19
households have benefitted from these programs. NSP2 funds have been
used by the County to provide homebuyer assistance and to create rental
properties through a local non-profit, with an additional 8 households
benefitting from these programs.
• The City of Vancouver and Clark County, WA received a total of
$2,397,160 in NSP1 funds. The City and County partnered with nonprofits
to purchase and rehabilitate abandoned and foreclosed properties with the
NSP funds. The City and County also worked with the Vancouver Housing
Authority (VHA) to recover a large foreclosed parcel within the city limits.
With the help of a number of different funding sources, this parcel is now
being developed by the VHA to provide over 100 units of much needed
low and moderate income, multi-family rental housing. The City and County
also partnered with the local nonprofit, SHARE, to purchase and rehabilitate
rental property and to provide group homes to homeless veterans and
individuals struggling with substance abuse.
The Administration allocated $220 million from its Hardest Hit Fund to the
state of Oregon. The Oregon Department of Housing and Community Services
administers these Hardest Hit funds through the Oregon Homeownership
Stabilization Initiative (OHSI), which was launched in December 2010.
OHSI provides several programs to assist Oregon homeowners who are at
high risk of default or foreclosure. These programs include: the Home Rescue
Program (unemployment and reinstatement assistance), the Rebuilding American
Homeownership Assistance Pilot Program, and the Loan Refinancing Assistance
Pilot Project. Under the Home Rescue Program, OHSI provides the lesser of 12
months of mortgage payment assistance or $20,000 to qualified borrowers;
they also bring delinquent mortgages current if homeowners are no more than
$10,000 behind on their payments.
Available in Crook, Deschutes, Jackson, Jefferson, and Josephine Counties,
the Loan Refinancing Assistance Pilot Project uses HHF funds to purchase
underwater loans at a discounted price to refinance and lower mortgage
payments ( 35% of monthly income). The Rebuilding American Homeownership
Assistance Pilot Program provides funds to assist underwater Multnomah County
homeowners to refinance into a new loan with lower monthly payments and
permit them to rebuild equity faster than their existing payments will allow. As of
the first quarter of 2013, the most recent quarter for which data are available,
OHSI had assisted 7,787 homeowners, with more than 80 percent of program
funds already spent or committed. For additional information, see
http://www.oregonhomeownerhelp.org/.

Spotlight on the Housing Market in the Portland-Vancouver-Hillsboro, OR-WA MSA | Page 5


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