Real Estate News for September 2010
July and August marked a significant downturn in the real estate market in Central Oregon. Sales of existing homes fell 27% for July and August which marked the worst level of activity in 15-years. New home sales dropped 12.4% in the same time period but they were so far down the toilet to begin with that this 12.4% figure is near meaningless.

I receive several weekly newsletters from various mortgage brokers and bankers. The authors of these newsletters are masters of applying lipstick to this pig of a market but lately the market has had the better of them and their newsletters are filled with the doom and gloom that their industry is experiencing. With rates as low as 4.0% for a 30-year fixed mortgage, I would think that the refi business would have them all celebrating but to read their newsletters you'ld think their mother's were all just assinated.

I keep looking for trends but the reality of my day to day business is that  all manner of properties are still selling. Primary residences, vacation properties, income properties and second homes. Condos and town homes have taken the greatest hit. 

I routinely see prices for properties 60% below what they would have sold for in 2006. If the real estate market has slowed it is primarily because the banks are finally back to doing what they should have been doing all along, i.e. giving out mortgages to qualified borrowers. Gone are the days that all you needed to get a loan was a heart beat.

We are now in a stable market. Yes supply has outstripped demand but this will sort itself out before too long. Right now, all of the people who shouldn't have received a mortgage in the first place are walking away from their obligations and in that we have removed about 50% of potential buyers by their inability to obtain a mortgage, we are left with fewer buyers and more bargain-basement inventory coming online everyday.

This fall and winter will be an optimum time to get invested in real estate. Will the next few months mark the bottom of a sliding market? I can't know the answer to this but I firmly believe it to be the case.

All of the things that make Central Oregon unique in all the world still exists. Drive from the Canadian border to the Mexican border along the sunny, eastern flank of the Cascades and the Sierra Nevada ranges and you will not find the complete package that we have created here in Central Oregon. Here we have it all and we have kept the look and feel of small town USA while still having the advantages of bigger cities. We have the big box stores and we have a healthy supply of the mom & pop establishments. We have the best outdoor recreational opportunities close at hand and the incredible year-round weather to enjoy them.

In 2005/2006 there was a great deal of talk about the historically unpresedented "Boomers." This enormous bulge of well-to-do humanity that was posturing for retirement and eyeing all of the great places they had been vacationing in for so many years. Though many of these boomers have had their financial wings clipped over the past four years, a very large number of them have not. The real estate market is no different than any other market. It is completely driven by supply and demand. I predict that the demand will steadily increase over the next four years and that supply will continuously dwendle during this same period. This can only drive prices upward.

One prediction I currently read forecasted an increase in Bend area home prices of 33.6% by 2014. Here is a link to that article:
http://realestate.yahoo.com/promo/housing-markets-that-will-be-strongest-by-2014

If I was forced to predict anything about the future of home sales in Central Oregon it would be this: Look for a sharp decline in the demand for McMansions. Buyers of trophy homes are becoming scarce. The current trend is for homes of less than 2000. Ease of maintenance is the new norm. I worry about newer resort developments that were based on the McMansion concept like Brasada Ranch and Pronghorn. These may lay half completed forever, monuments to a by-gone era.

On another note look for a major culling in the mortgage broker arena. New Federal guidelines have these mortgage brokers having to jump through a vast aray of new hoops the worst of which is the last hoop for them which is to submit to a credit check. Many of these brokers were forced to declare bankruptcy early on, before the days of no deficiency judgments on primary residences, they had to borrow heavily to keep the lights on and the wolves at bay. Now they can no longer keep their licenses without having great credit scores. Sucks to be them...

Give me a call and lets talk real estate or anything else you want to talk about.