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Housing inventory plummets in Bend
October home sales were at highest level since August 2006
By Andrew Moore / The Bulletin
Published: November 12. 2009 4:00AM PST
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In an encouraging sign that the local real estate market is shaping up for recovery, the number of single-family homes for sale in Bend is roughly 50 percent off its peak.
In August 2007, there were more than 1,600 single-family homes listed for sale in Bend, according to the Bratton Appraisal Group. This month, the number is averaging close to 785, according to Bratton and Realtors with access to the Central Oregon Multiple Listing Service. Redmond is showing a similar pattern.
“That’s absolutely good news,” said Bill Watkins, a California economist who studies the Central Oregon economy. “A decline in housing inventory is a precondition for a recovery.”
It’s particularly beneficial for sellers, as less inventory generally translates into higher asking prices as long as demand stays strong, which it appears to be doing.
In October, 175 single-family homes sold in Bend, the most in any month since August 2006, according to the Bratton Report, a monthly sales report released Tuesday by Bratton.
What’s behind the decline in inventory?
The short answer is more homes are selling, said Dave Woodland, the owner of Signet Mortgage in Bend.
“Record-low interest rates have probably been the biggest motivator and, secondly, the ($8,000) first-time homebuyers credit has got people out of their chairs,” Woodland said.
The average interest rate for a 30-year fixed mortgage as of Nov. 5 was 4.98 percent, according to Freddie Mac’s weekly national mortgage survey. A new weekly average will be announced this morning.
The $8,000 tax credit for first-time homebuyers, which was set to expire Nov. 30, has been extended to April 30.
Congress also created a new $6,500 tax credit for homebuyers who have lived in their current homes for at least five of the past eight years, which could further spur demand, said Sherri MacRitchie, a Bend Realtor with Steve Scott Realtors who will take over the presidency of the Central Oregon Association of Realtors in 2010.
“A client of mine who wants to buy a house here said she’s noticed the market (for homes) under $300,000 is shrinking, and she’s right, because things have been selling,” MacRitchie said.
In October 2009, according to an analysis of the Bratton Report, there were 416 homes listed below $300,000 in Bend and 132 sales, which means it would take a little more than three months to sell all of the inventory at current sales levels. In other words, the housing inventory was three months.
Housing inventory of less than six months traditionally signals a seller’s market, and inventory of more than six months is traditionally considered a buyer’s market.
In October 2008, there were 602 homes listed below $300,000 in Bend and 68 sales, or a housing inventory of more than eight months.
Watkins follows the region’s economy in his role as executive director of the Central Oregon Economic Forecast Project, which is sponsored by local businesses and produced by the Center for Economic Research and Forecasting at California Lutheran University in Thousand Oaks, Calif.
He believes banks have generally been slow to list foreclosure properties, and that may account for some of Bend’s decline in inventory. More than 3,000 notices of default — a filing that initiates foreclosure proceedings — have been filed in Deschutes County this year.
“There’s some evidence banks are slowing down their foreclosure process to keep the market more orderly, but that’s probably not enough to account for a 50 percent decline in inventory,” Watkins said.
The Oregon Bankers Association could not be reached for comment Wednesday, which was a holiday.
Watkins said strong sales that have helped whittle housing inventory, especially in the lower price ranges, have likely been fueled by first-time buyers taking advantage of the tax credit, Californians who still find the region’s housing cheap by comparison and investors looking to turn homes into rentals.
MacRitchie, mining MLS data, said there were approximately 793 single-family homes listed for sale in Bend on Wednesday. Of those, she said 287 were either short sales or bank-owned properties, or roughly 36 percent. That figure was closer to 60 percent a year ago, MacRitchie said.
“For a while, Realtors didn’t want to show short sales because they were such a hassle; then, they had to because there were no other (listings). But now, if there is a short sale (listing), it will sell quicker because the banks are getting smarter,” MacRitchie said.
She also said more retirees are showing renewed interest in moving to the region now that the stock market has somewhat recovered. The Dow Jones Industrial Average has gained more than 57 percent in the past six months.
“They know things are better and can retire and can get a foothold in our market,” MacRitchie said.
The median price for a single-family home in Bend bottomed at $195,000 in April, and ticked up to $220,000 in October, according to the Bratton Report. The peak median price was $396,000 in May 2007.
Andrew Moore can be reached at 541-617-7820 or at amoore@bendbulletin.com.
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