Oregon Office of Economic Analysis

Just a quick update on the regional work in terms of the home price changes. One question that crops up periodically is “Just how bad were Bend and Medford?” We know that these two cities experienced the largest changes in the state, however their relative place nationally or even regionally is not always discussed. The following two graphs show just where in the national distribution Bend and Medford fall in both home price appreciation through their peak levels and then the subsequent declines. Data available here from the Federal Housing Finance Agency. Appreciation is calculated as the percent change from 1995 to each cities’ peak. Declines are calculated as the percent change from each cities’ peak to its lowest home price value after peaking.

Overall the FHFA has home price indices available for 384 MSAs. The average MSA price appreciation through the peak of the bubble was 105 percent – meaning prices essentially doubled. However, the distribution is not normal as some regions experienced massive appreciation while others saw only mild appreciation – evidenced by a median appreciation of 87 percent and the positive skewness shown in the histogram below.

Both Bend and Medford are significantly to the right of the mean and median. Medford’s appreciation of 176 percent ranked 43rd highest out of the 384 MSAs, while Bend’s appreciation of 198 percent ranked 27th largest.

Conversely, on the downside we see a similar pattern. Overall the correlation between home price appreciation across all MSAs and price declines across all MSAs is -0.78 which is a very strong relationship. That means the higher prices rode during the boom, the further they fell during the bust. The average price decline across all MSAs was a little more than 16 percent, however the median was nearly 12 percent, again due to the distribution of losses across the various regions. Bend’s declines of 46 percent rank 354th best, or 31st worst, while Medford’s declines of 39 percent rank 341st best, or 44th worst.

Finally, the last table shows the price changes for all MSAs in Idaho, Oregon and Washington along with their respective rankings. Remember, a ranking of 1 means the largest, strongest or most positive gain while a ranking of 384 means the smallest gain or most negative change.