Bulletin E-Edition:
Home sales still sliding as prices inch upward
By David Fisher / The Bulletin
Published: June 13. 2007 4:00AM PST
more photos
advertisement:
Last year, the houses that Sun Creek Homes built in its little subdivision on Parkview Court in east Bend flew off the market nearly as fast as they went up.
Not this year, though.
The 14th and last home, finished in the spring, still stands unsold, Meridian Realty owner Natalka Hamilton said Tuesday.
Despite its granite countertops and double-screened fireplaces. Despite a 13.25 percent price reduction. And despite the builder's offer to pay thousands of dollars in closing costs.
Why?
Investors who could have easily afforded its $338,000 price tag have long since fled the market, leaving mostly first-time buyers to pick up homes in the region's lower-end $250,000 to $350,000 price range, Hamilton said.
And, with the rug pulled out from under the market's once plentiful supply of no-money-down, no-documentation loans, fewer first-timers can afford to buy, even if they wanted to.
"You actually have to have 5 percent (down) of your own money right now," Hamilton said. "And there aren't a lot of people who have that kind of money sitting in their bank accounts."
"I could take anybody and get them qualified for a loan a year ago," she said. "Now I have to tell them they need to save money. Which is a good thing for the market in the long term, but in the short term, our market is definitely in a correction."
May typically marks the beginning of the region's summer selling surge, but not this year.
Sales of single-family homes on less than an acre in Bend slumped to 121 in May, the weakest May sales figure in five years and the weakest month of the year so far, according to the Central Oregon Multiple Listing Service.
In Redmond, the month's sales plunged to 38, according to the MLS, 61 percent off of the still hot-market sales of May 2006, and also the weakest May in the last five years.
Compared with May sales of 2004 through 2006, May 2007 sales also were off in Crook and Jefferson counties, where sales are dominated by the typically less-expensive Prineville and Madras markets, and in less-expensive La Pine. Only sales in Sisters held about even with patterns of the past five years.
Inventories of unsold homes continued to rise, reaching 1,500 in Bend by June 4, a nearly 22 percent increase since April 2, according to tracking data compiled by Bratton Appraisal Group's Mike Caba. That means that about 11 months' worth of housing inventory is on the market now, assuming that the average monthly sales volumes of the last six months hold steady.
Mixed messages
On the surface, prices don't appear to have dropped in response.
Median sales prices in Bend nudged up a bit in May, reaching $351,900 for the year, according to davidfoster.biz, a Web site maintained by RE/MAX Equity Group broker David Foster.
Across the region, average list prices bumped upward as well, The Hasson Company Realtors principal broker Bill Berger said, leaving him to wonder where the market is really heading.
"We've just got so darned many pieces of conflicting information here, I just don't know what to make of it," Berger said. "I honestly wish I had a better handle on it."
"I think it's just kind of that transitional period where we are trying to find a balance. I don't know."
Among the possibilities: Sales have remained relatively strong in the upper price levels, Hamilton said, with sales still going smoothly for people moving here from outside the region with money they've taken out of another home. On the lower end, though, the slowdown is more pronounced.
A broader look at the region's sales numbers tends to bear that out.
In Bend, sales of homes worth $400,000 or less last month were down 65 percent from May 2006, according to the MLS. Sales in the $400,000 to $750,000 range were down 39.7 percent, while sales in the $750,000 to $1 million range slid 22 percent.
Eleven homes worth more than $1 million closed sales in May in the Bend-Tumalo-Alfalfa area, according to the MLS, accounting for nearly 10 percent of the month's sales - apparently a coincidence, since seven of them had been on the market for 11 months or more. One to three monthly million-dollar sales has been the norm for that market for the past six months, Berger said.
Redmond's generally lower-priced market showed even more weakness compared with May of last year, with sales in the $250,000 to $400,000 range off 71 percent and sales of $250,000 or less off 33.3 percent. Nothing sold for more than $522,000 in Redmond in May.
Builders
Contractors continued to rein in the pace of new building in May, without stopping altogether.
Only 169 building permits were issued throughout the region in May, according to Cascade Central Business Consultants President Don Patton. That's about on a par with the first five months of this year but 52 percent less than the torrid pace of May 2006 when the market was still booming.
Last spring, contractors were straining to build enough houses for a crush of investors and speculators, along with normal home buyers, WoodHill Homes President George Hale noted. This year, 75 percent of the three to four buyers a month who are picking up homes in his lowest priced subdivision, WoodHill Park off Empire Avenue, are first-time buyers, and Hale has trimmed his projection of home starts this year from 80 or 90 to about 60 while he waits to see where the market goes through the summer.
Houses are still selling and contractors are still making money, said Brian Bergler, vice president for communications at Pahlisch Homes, the region's largest volume home builder over the last few years. But the pain of the slowdown is easier for some to handle than others.
Dennis Pahlisch, who founded the company in the early 1980s when 18 percent mortgage interest rates were devastating the industry, steered a relatively cautious path through the boom years of 2005 and 2006, taking care to avoid straining the company's credit lines with overconfident land buys and building schedules, Bergler said.
Partly because of that, Pahlisch's sales numbers aren't showing many dramatic shifts. It has averaged sales of about 14.5 homes per month through the first five months of this year in its various subdivisions, Bergler said. The company still plans to start about 200 homes this year, he said. It sold 149 homes in 2005 and 218 in 2006.
Slowdown coming?
So far, the real estate and construction slowdown seems to be fairly well contained to those industries, even in a growing city where housing and housing-related sectors play a greater role than most.
The Bend Chamber of Commerce's roster stands at 1,567 members this month, Chamber Vice President Jeff Nielson said, up about 70 members in the past 18 months. In sectors that aren't tied directly tied to real estate, "I'm not picking up any kind of a despair or panic or anything like that," Nielsen said.
Inside the industry, the strains are more apparent.
Subcontractors are easier to find in nearly all trades this spring than they were last, Hale said, and their prices are either down or have at least stopped rising.
"It really hits everybody," Hale said. "Mortgage brokers, Realtors, title companies, anybody who has any kind of piece in the real estate industry is really feeling the slowdown."
Mortgage brokers, in particular, have been whipsawed by fallout from the sudden decay of the subprime lending industry, said Rockland Dunn, last year's president of the Central Oregon chapter of the Oregon Association of Mortgage Professionals and the broker of record for Summit Mortgage's Bend office.
Partly due to a nationwide rise in foreclosures, and partly due to the general slump in home prices, most lenders have tightened their lending standards considerably, Dunn said, insisting on more money down and better documentation of income and assets from borrowers, along with more critical appraisals of the homes they are buying.
That will result in a more stable and predictable housing market going forward, Dunn said. But the loss of loan volume to the investors and marginal first-time buyers who thrived for awhile on no-money-down, no documentation loans is painful for the mortgage industry in the short run.
Several offices around town, including Dunn's own, have laid off brokers, Dunn said. The rest are waiting to see where things stabilize.
"We rode the wave, and now it's going to get back to a normal buyers' market, rather than the artificial one we had created," Dunn said.
At least some of the "normal" buyers are apparently still coming, albeit more slowly than in past years, for reasons that sound familiar.
Sam Jauchius, Tum-A-Lum Lumber's new manager in Redmond, moved here a few weeks ago from Sacramento. After a successful career in the building supplies market in California, Jauchius said he and his wife, a registered nurse, were attracted by the prospect of settling down to a Central Oregon lifestyle.
He's living in his RV now while his wife tries to sell their old house - which could take awhile. But, even in Sacramento's slumping market, Jauchius figures he'll make enough to easily afford a Bend house and everything that goes with it.
"This is the only place I've found where I really want to live," Jauchius said. "It's beautiful. So I'm here for the duration."
David Fisher can be reached at 617-7862 or at dfisher@bendbulletin.com.
ARTICLE ACCESS: This article is among those available to all readers. Many more articles are available only to E-Edition members. Sign up today!
blog comments powered by Disqus
