2010-03-08 (Monday) by Gregory Tucker.

I put up some new photos from this weekend’s Portland Spirit cruise. We had a great time, and the weather really cooperated. I love Portland.

Posted in Portland, Family | Print | 1 Comment »

2010-01-25 (Monday) by Gregory Tucker.

This article does justice to cold brew coffee, though it neglects to mention you can buy the Toddy system for about $30, plus $10 for some extra reusable filters.

Pour 9 cups of water over 1.5 to 2 lbs of medium-ground coffee and let sit for 8-12 hours. No stirring necessary. The Toddy system includes the glass decanter for refrigerating and pouring the condensed coffee. It stays fresh for about 2 weeks. On serving mix about 1 part cold brew with 2 parts water and ice, suited to taste and served on demand.

In general cold brew is more refreshing in the summer, but it is superior to hot-brew coffee in all seasons. The Japanese call this ice coffee and offer it frequently in coffee shops, vending machines, and grocery stores without or without sugar added. The Japanese ice coffee sold in the supermarkets around Portland include only the sugar-added variety, which is inferior in taste.

Posted in Coffee, Portland, Japan | Print | No Comments »

2009-08-21 (Friday) by Gregory Tucker.

After a long day of packing and flying we arrived safely back in Portland. Nothing broken. Nothing lost. The kids are happy to be home.

Reon just lost Rock-Paper-Scissors to Aya, so he has to take a bath first. He is now throwing a temper trantrum.

Posted in Portland, Family | Print | 1 Comment »

2009-07-25 (Saturday) by Gregory Tucker.

Yesterday we took the kids to Silver Falls State Park, where we had a wonderful time. We walked the full 7+ mile circuit, where we saw no less than 10 waterfalls, four of which could be experienced from trails on their backsides.

Aya and Reon performed well. We established one (and only one) rule for the hiking:

1. No whining

Reon did well within these guidelilnes. He walked hard and never complained. Aya started to wear out around 4-5 miles, saying she was sleepy. We made her push through it, and within 20 minutes she was in a good mood again. The trail grade was easy and all the falls were very accessible. The beautiful waterfalls were ample reward for our efforts, and it is easy to understand why Silver Falls State Park is one of the most popular in Oregon.

The park is approximately 1.25 hours from inner-east Portland.

I uploaded some new photos to the MobileMe site, including this trip to Silver Falls and our 2009 trip to New Mexico with cousin Katy.

Posted in Portland, Family | Print | 1 Comment »

2008-11-26 (Wednesday) by Gregory Tucker.

The most recent numbers for Portland were poor again. Prices for September 2008 (the latest available) are down 1.31% from August, and down 8.62% from September 2007. All told Portland has declined 9.03% from its peak in July 2008, and all trends point to continued declines.

The graph above shows how the market has behaved since January 1987, the first data available from Case-Shiller. The data from January 1987 to June 2004 shows an extremely reliable trend (confidence 99.33%), and a bubble that began with the introduction of “funny money” financial products like Subprime and Alt-A loans. If current post-peak declines remain constant, Portland pricing will intersect the historical trend around December 2009, with further price reductions around 11%, or 19% from the bubble peak.

I cannot predict what will happen after 2009, but I am predicting further declines throughout 2009.

Posted in Economics, Portland | Print | 1 Comment »

2008-11-11 (Tuesday) by Gregory Tucker.

Portland does have most or all of the components it needs to build a world-class, leading edge cluster in a particular field.

Choosing the winners and losers from top-down is a recipe for disaster. Despite recent bubbles (dot-com bubble of the 90’s, the real estate bubble of this decade) markets are still better than governments at pricing. Portland as an industry cluster has to arrive ground-up, involving citizens, businesses, and government working together.

Working together involves a number of things:

- Providing and ensuring funding for start up companies

- Providing low-cost office and manufacturing space for start up companies

- Simplifying taxes and incentives for investments in Portland and the state

- Ensuring all human resources in the value chain are in supply in Portland, with sufficient levels of expertise. In some cases the city and state will have to “build bridges” with other communities until we have sufficient expertise locally

- Providing a strategic and coordinated marketing (and if necessary branding) effort to align local citizens and attract talent and investments from around the region, country, and world.

In my 1.5 years in Portland I have little confidence the city or state officials are up to the task of making this happen. On the other hand, a good crisis should never be wasted, because it provides both the incentives (political pressure) and the resources (people) to make novel things happen quickly. Real estate “infesting” had tied up so much of our entrepreneurial talent, that it starved the economy of innovations in other areas.

I admit I don’t know Portland well enough to speculate on what industries Portland could become a cluster. Portland already has a good brand as a green city, so this is a place to start. But Silicon Valley (the real one) is moving quickly in this area, and we cannot compete with them head-to-head, except in a few niche areas. Custom building bicycle frames will not get us there–and who put up that stupid display at the airport? Is this really how we want to market our city?

Posted in Portland | Print | 1 Comment »

2008-10-13 (Monday) by Gregory Tucker.

The following paper discusses my previous post in a little more depth.

http://www.kc.frb.org/PUBLICAT/ECONREV/PDF/2q07rapp.pdf

There are three major methods of valuing housing prices: average sales price during a certain time period (RMSL), same sales comparisons (Case-Shiller), and Hedonic pricing models.

Because of the statistical nature of same-sales comparisons, the models give us index values rather than actual prices. They are useful for determining underlying changes in the value of homes, but they are not useful for calculating the total value of a market. Moreover, they exclude new houses.

Hedonic pricing models require vast quantities of data, which probably do not exist for most markets. They might be useful for new home sales, but not for the broader housing stock, especially in more mature markets like inner Portland.

Observed pricing data is all we can use. Houses are heterogeneous, and are sold infrequently. Sample sizes are small. To some extent we should expect variation in the mean and median values due to small sample sizes. Even accounting for seasonal variations, some randomness shows up in the data, but I would argue sample bias may be only one to two percent of the mean.

In an asymmetric normal distribution we don’t expect the mean to equal the median. Is there evidence the distribution is not normal? Does RMLS even publish numbers broken down at this level? Is there evidence that the sample biases are larger than I suggested? I can imagine a lot of reasons why the samples might bias the averages, but I am not yet convinced they actually do show up in the data.

Posted in Portland | Print | 1 Comment »

2008-10-13 (Monday) by Gregory Tucker.

“How should the value of all the homes in a given market be measured?”

Market prices are determined by individuals making (more or less) independent decisions. The Zen but true answer is a property is worth what it is worth–nothing else. A seller may have felt his or her house was worth a certain amount at a certain time, but because they didn’t sell then, the “appraisal” was just a guess.

Self appraisals, especially in the housing market, are notoriously unreliable to behavioral economists. Emotions are involved in the selling decision. Sellers are viscerally averse to taking a loss. Even worse, when homeowners watch their home’s “value” at the market peak, they reset their expectation of what constitutes a “loss”. Many respond to weak market conditions by raising–not lowering–their fantasy price, apparently in hopes of building in negotiating wiggle room. This results in even lower liquidity at a time when markets are already dysfunctional.

Appraisers have more objective methods, involving recent comparable sales, or comps. When we sold our house in Dallas we obtained a $300 appraisal to price our home. Our home went a little below appraised value. The appraisal process was fairly reliable, because Dallas possesses vast tracks of suburban wastelands with row after row of identical houses. In Portland I asked our Realtor about the value of an appraisal, but he said it is only useful for getting the bank to sign off on the deal, nothing more–they simply verify the house isn’t wildly overpriced.

The total price of all homes in a market is simply the RMLS average price times the total number of properties. From there you can adjust for systemic risks. For example, the systemic risk in New Orleans or Miami or Southern California is higher than in the midwest, for example, which is free from hurricanes and earthquakes. Portland, by the way, is also subject to earthquake risks, though many homeowners don’t realize it. Systemic risks are those which can cause a severe imbalance between buyers and sellers.

The risk adjustment is roughly equivalent to the observation that Gates (who art in Redmond, William be thy name), may be forced to liquidate his positions in MSFT, causing a severe mismatch in buyers vs. sellers. Risk adjusted return calculations are a well-known albeit overlooked calculation in investing. Systemic risks could be positive as well. A company might open a major facility in Portland, or rapid changes in weather conditions in the U.S. induced by global climate change may encourage hundreds of thousands to move to Oregon and Washington in the course of a few years. Both could cause real estate values to skyrocket.

Posted in Portland, DFW | Print | 1 Comment »

2008-10-09 (Thursday) by Gregory Tucker.

Compare Phoenix with Portland. Using Case-Shiller numbers PHX has declined 34.4% since its June 2006 peak. PDX has declined 6.6% since its July 2007 peak. PDX data represent 13 mo. decline, and 13 mo. into its decline, PHX had also declined 6.6%.

Exactly the same. I am not making this up.

Phoenix has 13 more months decline than Portland. Where will we be in another 13 months? Some say we won’t decline that far–less drinking means smaller hangover. Others say we have another 27.8% to go, just like Phoenix–late to the party and late to the hangover. Affordability here is lower than Phoenix.

I personally believe we are not even close to the bottom. I think 13 months from now our decline (from peak) will be closer to 34.4% than 6.6%. Neither market has hit bottom yet, and fundamentals point to continued declines in both markets.

Posted in Portland | Print | 1 Comment »

2008-09-24 (Wednesday) by Gregory Tucker.

Earl Blumenauer represents Oregon’s 3rd District.

I am concerned about the bailout package proposed by the Treasury Secretary, which give his office carte blanche to hand out $700 billion of taxpayer dollars to failed companies.

Besides the morale hazard of privatizing gains while socializing losses, the proposals I have seen would give a Wall Street insider free reign to hand out rewards, with almost no accountability. We can easily envision that by the end of 2008, Wall Street executives handing themselves hundreds of millions of dollars, at the expense of taxpayers.

I understand the severity of the economic crisis, but the Administration is using a familiar tactic to pressure Congress into giving it everything it wants without restrictions. This looks like another disaster waiting to happen.

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