It may be too early to call a real estate recovery in Bend and Central Oregon . But 2012 through October has shaped up as a year showing signs of stabilization and noticeable improvement.
New construction has shown substantial strength in Bend
Sales of entire shovel-ready subdivisions have increased, mostly to investors in a buy and hold pattern. But in others there is new building cautiously underway.
From January through October there were approximately 380 single family permits recorded by the City of Bend’s development department, nearly 70 percent more than in the comparable period of 2011.
A notable result of a difficult market turning the corner is the dwindling supply of single family inventory. From more than a 13-month supply of listed homes at mid-decade inventory was barely three months going into the Fall. That’s below the five to six months considered healthy to meet demand in a “normal” market.
With a more active market, however, one trend is clear -- prices have been drastically reset from the bubble days of only five to six years ago when Bend and Central Oregon rose to the top of the appreciation list of more than 300 statistical areas tracked by the Federal Housing Finance Agency.
From the summit of national housing statistics the region fell to the bottom of the heap – dead last in appreciation – in only two years as the wave of bad loans collapsed into defaults and brought prices back to pre-2000 levels.
The latest report in August of 2012 from the FHFA placed Bend/Central Oregon at No. 96 in housing appreciation among 304 Metropolitan Statistical Areas (MSAs).
New homes dominated the early boom market
In the most recent January through October period there were 1,935 single family home sales in the greater Bend area, 18.20% above the same period of 2011. The median sale price rose to $229,000, an 11.70% increase from $205,000 the previous year, which marked lowest price point since 2002.
A review of the January through October periods beginning with 2003 dramatically illustrates the rise and fall of the Bend real estate market.
For the 10-month period of 2003 the Multiple Listing Service of Central Oregon database shows there were 1,747 single family home sales at a median price of $206,405. Total sales volume was $439,003,821.
In only two years units sold peaked at 2,673 (up 53%) in 2005 from 2003 with a median closing price of $283,000 and total volume of $923,254,314 (a 110% increase). Among those statistics more than a third of the total unit sales, 1,055 homes, and sales volume, $324,380,185, resulted from new homes built in 2004 and 2005.
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| This new traditional home in Northwest Crossing is one indication of new home sales in the Bend market. |
In its early stages the market was driven by a demand for new homes with rising prices, followed by a precipitous decline in prices and new construction. The share of new Bend single family homes built in a two year period peaked at 884 homes, or 44% of sales in 2006, with the median price of $365,000 notching the high of the past decade for a January through October period.
Then four years later in the comparable 10-months of 2010 there were only 87 newly-constructed single family homes sold in Bend, a mere 5.5% of the 1,572 total. And the median price was down to $205,000, a 43% decline.
The impact of housing growth translated into boom times for architects, engineers, home builders, craftsmen, real estate brokers, home furnishing retailers and others closely tied to the housing industry. It also meant more disposable income funnelled throughout the business community into restaurants, the leisure and entertainment industry and auto dealers.
Distressed properties still a factor
Bend was the darling of national and regional media with glowing features in the travel and lifestyle sections of such prominent publications as the New York Times, Men’s Health, The Washington Post and Sunset.
But as the downhill housing trend continued nearly all sectors of the local economy suffered with real estate brokers dropping out of the regional broker association, contractors looking for alternative projects, and furniture stores and restaurant shutting their doors. Also hard hit were charities as former donors fell off their lists.
Now, as the market begins to recover, short sales and foreclosures continue to account for a significant number of single family transactions. But the percentage has declined from 52% in January through October 2011 to 38% for the comparable 2012 period.
On the surface this appears to be a positive trend. However, some of the decline in foreclosures could be attributed to new state legislation that took effect in July.
One new law requries lenders who opt for “non-judicial” foreclosure to meet with delinquent homeowners. Another bill requires lenders to show the ownership trail of the original mortage, a complicated requirement given the method in which residential mortgages were bundled into securities during the housing boom.
Thus far the legislation, lacking firm guidelines, has resulted in most lenders opting for judicial foreclosure, sidestepping the new law and putting an additional burden on already cash-strapped courts. Instead of filing “notices of default” to trigger the non-judicial foreclosure process, lenders now file a “lis pendens” to serve notice that a lawsuit is clouding the property.
Note: This analysis focuses on the greater Bend area, which accounts for more than 60% of all single family housing sales in Central Oregon. Statistics on other regional sub-markets will be included in a year-end report.
Median home price for 2002: $190,557
Minimum
|
0
|
1.00
|
498
|
$40,000
|
$37,500
|
0/0
|
Average
|
3
|
2.19
|
1,854
|
$242,367
|
$237,795
|
142/140
|
Median
|
3
|
2.00
|
1,728
|
$192,999
|
$190,557
|
109/109
|
Maximum
|
8
|
7.25
|
6,191
|
$1,495,000
|
$1,400,000
|
1465/1226
|
Total Dollar Value
|
$420,658,765
|
Median home price 2012 (thru October): $229,000
Minimum
|
0
|
0.00
|
624
|
$49,000
|
$53,000
|
0/0
|
Average
|
3
|
2.38
|
2,078
|
$278,588
|
$272,130
|
137/150
|
Median
|
3
|
2.50
|
1,910
|
$233,400
|
$229,000
|
101/105
|
Maximum
|
6
|
6.00
|
6,869
|
$1,695,000
|
$1,625,000
|
1760/1819
|
Total Dollar Value
|
$507,794,808
|
up 20.17% from post 9-11 decline in 2002 to October of 2012
Median home price for 2007: $358,500
Minimum
|
1
|
1.00
|
624
|
$142,500
|
$135,000
|
0/0
|
Average
|
3
|
2.40
|
2,101
|
$467,230
|
$448,930
|
171/189
|
Median
|
3
|
2.50
|
1,965
|
$369,000
|
$358,000
|
140/162
|
Maximum
|
7
|
5.50
|
5,960
|
$3,500,000
|
$3,500,000
|
806/806
|
Total Dollar Value
|
$745,223,180
|
down 36.12% from peak year 2007 through October of 2012
SOURCE: Bend housing statistics from the Multiple Listing Service of Central Oregon database.
