Bulletin E-Edition:
Home sales up as prices level out
Economists caution that record foreclosures, joblessness could keep up pressure on market
By Zack Hall / The Bulletin
Published: October 18. 2009 4:00AM PST
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The Central Oregon housing market showed signs of improvement in the third quarter. But the market is far from out of the woods, according to some economists.
Two of the three months during the July-through-September period recorded the highest monthly sales totals since 2007, according to the Bratton Report, a local analysis of real estate sales data released last week by the Bend-based Bratton Appraisal Group. In July, 152 single-family homes sold in Bend and another 148 more sold in September.
And that’s good news for a market that is working through a historically high level of foreclosures and high inventory of unsold homes.
“Sales are improving,” reported Sheree MacRitchie, Realtor for Bend-based Steve Scott Realtors and president-elect of the Central Oregon Association of Realtors. “And literally I think it was this last quarter that it happened. It’s like the floodgates opened, and the phones started ringing.”
The increased activity can be attributed to several factors, said Tim Duy, a University of Oregon economist who tracks the Central Oregon market.
The $8,000 federal tax credit, which is set to expire in November but could be extended; historically low interests rates around 5 percent; and easier government-sponsored financing options have all helped spur interest from potential homebuyers, Duy said.
In addition, prices have dropped significantly this year as bank-owned properties and short sales have been unloaded, creating pricing pressure. The median price — the point at which half of the homes sold for more money and half less — hovered around $200,000 in Bend and $150,000 in Redmond during the third quarter.
That is well below Bend’s high of $396,000 in May 2007 and Redmond’s high of $289,000 in 2007. In January 2009, Bend’s median rested at $233,000 and Redmond’s at $177,000.
“That sharp drop of price has really brought some people back into the market that had been locked out in the previous two or three years,” Duy said. “So what we saw really this summer was all those events coming together to put some support under the housing market.”
The median price per square foot, considered by most in the industry to be a better measure of home value, also showed encouraging signs of stabilizing.
In Bend, the median price per square foot ranged from $109 to $118 during the third quarter, ending at $113 in September. Through the entire year, Bend has ranged from $109 per square foot to $119. Similarly, Redmond ranged between $91 and $86 during the third quarter.
While not saying the area’s median price has hit bottom, Duy believes prices are more in line with what Central Oregon can afford based on income levels.
“You’re much more in the range of support when you get to that 150 (thousand-dollar) to 200 (thousand-dollar) zone,” Duy said. “That is sort of where I’ve always been looking for. And Bend got there relatively quickly.”
But the market still has its challenges.
Foreclosures are still high and builders are still sitting on a high number of vacant lots, Duy said. Notices of default, the first step in the foreclosure process, were 106 percent higher in Deschutes County through the first nine months of this year than the same period last year.
In addition, the economy is still weak. And a direct outgrowth of the recession is Central Oregon’s high unemployment rate, which ranged from 15.8 percent in Deschutes County in August, the latest data available, to 18.8 percent in Crook County. September figures are scheduled to be released Monday.
Unemployment could still put pressure on the housing market, according to Dan Hamilton, director of economics for the Center for Economic Research and Forecasting at California Lutheran University in Thousand Oaks, Calif., which is producing the Central Oregon Economic Forecast Project, an economic research project sponsored by local businesses.
“The unemployment rates are still quite high,” Hamilton said. “The foreclosure rate is likely to remain fairly high, maybe not historically high, but higher than we want it to be and much higher than it should be for a normal economy. So it looks like we will still have a dynamic that plays out for a while yet.”
For those that are in a position to buy, now is a good time, MacRitchie said.
One byproduct of the housing bust has been that buyers have changed their behavior, she said. Instead of buying houses based on investment, homebuyers have begun to take a more pragmatic approach, gauging how a home fits into their lifestyle.
“I think people are making decisions for their life at this time,” MacRitchie said. “People have options and they are able to talk to their Realtor and go out and see property and make a decision. And that is the basis of our improving market.”
The smaller Central Oregon markets showed similar encouraging signs. The number of third-quarter sales in La Pine, Jefferson County, Crook County, Sisters and Sunriver all rose compared with third quarter 2008 and second quarter 2009.
Of those areas, only La Pine saw a drop in median price compared with the second quarter.
Zack Hall can be reached at 541-617-7868 or at zhall@bendbulletin.com.
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