Sales of distressed homes — bank-owned properties and those sold in short sales — in Bend and Redmond dropped significantly in 2013, according to data from the Central Oregon Association of Realtors.
Nearly 11 percent of all homes sold in Bend last year were distressed sales, according to the association’s figures. In Redmond, about 18 percent of all sales involved distressed properties.
In 2010, distressed sales represented nearly 60 percent of all home sales in Bend and nearly 70 percent in Redmond, according to the data.
“I think there are a number of variables behind what has happened,” said Wendy Adkisson, president of the Realtors’ association.
One variable, she said, is the requirement imposed by the Legislature in 2013 that lenders provide homeowners facing foreclosure through the courts an opportunity to meet and modify their mortgage terms. Previously, the law only required lenders to meet with homeowners facing nonjudicial foreclosures, known as advertisement and sale. As a result, lenders, seeking to avoid mediation, filed foreclosures in state courts.
Since August, when the new law took effect, requests for mediation have risen, and until they’re processed, the number of foreclosures filed in Oregon is expected to diminish temporarily.
Gorilla Capital, a firm that specializes in buying and rehabilitating distressed properties, reported a slight increase in court foreclosures filed in January in the 20 Oregon counties the firm monitors. Lenders sought 284 foreclosures in court in January, compared with 165 in December, according to the firm.
“We expect foreclosures to climb in (the first quarter), but not reach the high totals of 2008 through 2010,” CEO John Helmick said in a news release.
Rising home prices also factored into the drop in distressed sales, Adkisson said. The median price for a single-family home in Bend in 2010 stood at $191,750. Three years later, it reached $269,000, according to the association. What had been a potential short sale in 2010, in some cases, sold for a profit in 2013, Adkisson said.
“Short sales weren’t a huge amount of money. From $220,000 (median price in 2012) to $269,000, it’s no longer a short sale, and I can get out from under it,” she said.
The sheer number of homes sold in Bend topped 2,200 in 2013, according to association data. In both 2010 and 2011 in Bend, 1,684 homes sold. Redmond had 726 sales in 2010. The demand for homes last year dried up the available inventory, which drove up home prices, real estate brokers agree. Most agree prices will continue to rise in 2014 but offer varying opinions as to what degree.
Adkisson said she expects prices to climb this year, but not as high or as fast as they did in 2013.
Expect two or three quarters of relatively slow price increases as builders bring more units to the market, she said, and before a surge in interest spurred by plans to build an Oregon State University-Cascades Campus in west Bend.
“We have to accommodate the influx of people that’s bound to occur,” Adkisson said. “There’s a whole new reason to move to Bend.”
Climbing real estate prices may provoke thoughts of another bubble, but Adkisson and mortgage broker Larry Wallace, of Bend, said this market bears little resemblance to the market of 2007.
For one, “there’s no funny business as before,” Adkisson said, meaning loan requirements are tighter now, and standards that underwriters must follow now are more strict. Plus, home values are still below the 2005-06 level, at lower interest rates. Prices may climb, but only as far as the market will bear, she said.
“No matter what, there will be a natural stopping point,” she said. “If we have almost no inventory and a ton of buyers, no one will pay what they can’t pay.”
Wallace said a number of buyers jumped off the fence in 2013 as rents climbed and the rental market dried up. Those buyers will stay active in the lower end of the market, at $350,000 and less, as will individual investors, he said. Wallace said he believes many institutional investors have left the market, a trend across the country.
“Investors got in at one point because they felt the market had bottomed out,” Wallace said. “And not only were they getting in, and maybe not so much in Bend, but across the country institutional investors were buying in bulk. I think the institutional investors have paused, but the mom and pops are still in.”
Wallace said contemporary homebuyers see their purchases less as an investment and more as a place to live. Aging baby boomers looking for a last chance are one class; renters who see their opportunity are another. Even mortgage holders looking to refinance are doing so in order to shorten their loan terms, not fund a makeover or another large purchase.
Homebuying has become financially conservative, he said. But a boom of sorts is on. Out-of-town buyers are interested again, Wallace said. Even condominiums and manufactured housing, normally sidestepped, drew buyers’ attention as prices climbed, he said.
“I had a good year last year, but a really good November and December,” Wallace said. “In the first part of the year, the phone started ringing and hasn’t stopped.”
— Reporter: 541-617-7815, firstname.lastname@example.org