Higher home prices in four quarters

Bend housing market on the upswing

By Tim Doran / The Bulletin / @Newsinbendor

Published Feb 27, 2013 at 04:00AM

Housing prices in the Bend area increased in all four quarters of 2012, the first full year of home-price appreciation since 2006, according to federal data released Tuesday.

Single-family home prices in the Bend Metropolitan Statistical Area, which covers all of Deschutes County, rose about 3.5 percent in the fourth quarter over the fourth quarter 2011, according to the Federal Housing Finance Agency’s all-transactions housing price index.

It marked the fourth straight quarter of price appreciation in the index, which showed home prices depreciating in the Bend MSA for the 17 previous quarters. And, over five years, the index still shows home prices down 39 percent.

Overall, however, it’s positive news, said Timothy Duy, University of Oregon economics professor and senior director of the Oregon Economic Forum.

“The housing market is moving in an upward direction rather than a downward direction,” he said.

Nationwide, seasonally adjusted home prices increased 5.5 percent in the fourth quarter compared with the fourth quarter 2011, according the Federal Housing Finance Agency report, one of several released Tuesday related to housing.

The S&P/Case-Shiller index of property values increased 6.8 percent in December over December 2011. Nineteen of 20 cities in the index showed gains, according to a report from Bloomberg News. Case Shiller does not include the Bend MSA.

And home sales nationwide increased nearly 16 percent last month over December, the Census Bureau reported.

The Federal Housing Finance Agency’s all-transactions index tracks average house-price changes in repeat sales or refinancings on the same single-family homes, with data from Fannie Mae and Freddie Mac.

The last time the Bend area saw four quarters of house-price appreciation was in 2006, when real estate prices were soaring, according to the federal index.

In the first and second quarters of 2006, home values in the Bend MSA rose 35 percent and 37 percent, respectively, over the same quarters in 2005.

Prices fell into negative territory in the fourth quarter of 2007 and remained there through the fourth quarter of 2011, the index shows.

The timeline suggests single-family home prices in the Bend MSA hit bottom around late 2010 or early 2011, said Duy, who also created the Central Oregon Business Index. They reached the level where investors could buy a house, rent it out and turn a profit, he said.

“Prices got really, really cheap,” he said. “It became a better opportunity for investors.”

Fewer distressed sales — those involving foreclosed homes or short sales — also contributed, Duy said. Last year, 35 percent of home sales in Bend were distressed, according to figures from the Central Oregon Association of Realtors. Between 2009 and 2011 distressed sales made up about 55 percent of home sales, on average.

So, while home prices increased in 2012, they rose from the depths. In November 2011, the median price for a single-family home in Bend dropped to $166,000, the lowest price in six years, according to the December 2011 report from the Bratton Appraisal Group.

The housing market could still hit some bumps as it recovers. More distressed homes could come up for sale once Oregon lawmakers and major lenders work out issues that have redirected foreclosures into state courts, rather than going through a nonjudicial process.

An increase in foreclosed homes could depress prices somewhat, but Duy said the housing market’s upward movement has given it resilience.

“It’s part and parcel of the story, where the economy is gaining strength,” he said.