Investors focus on ready-made subdivisions. Excess supply being absorbed.

            One significant indicator that Bend’s housing market is stabilizing can be traced to the pace of builders purchasing already permitted and “shovel ready subdivisions.”          

            And there is also sales activity in acreage within the urban growth boundary, but not yet ready to build.

            A recent, well-researched report by Elon Glucklich in the Bend Bulletin noted that builders or investors acquired 24 subdivisions comprising more than 900 lots in the 2009-2012 period.

            The Bulletin reported that 18 of the 24 properties were foreclosures resulting from the market collapse that began in 2007 and has extended for nearly six years.

            One of the biggest players among investors has been a group involving Republican Congressman Gary Miller of California, along with Harry Crowell, a builder from the state. Under the umbrella of Long Term Bend Investors LLC the group has spent about $6 million on up to 400 lots, according to the Bulletin.

            Rep. Miller, who represents the California 31^st Congressional District including San Bernadino, is vice chairman of the House Financial Services Committee, and has a track record in developing planned communities.

            Among the LLC’s subdivision acquisitions, their location within Bend and the year bought are:

·        Rimrock Riders, northwest, bought from Liberty Bank, 2009;

·        Gleneden, southwest, from Premier West Bank, 2011;

·         Laurel Springs, south, from Darren Kelleher, 2012;

·        South Deerfield Park, south, from Sheldon Development;

·        Crosswinds, east-Hwy 20, from Liberty Bank, 2009; and

·        Mirada, northeast, from Edge Vertical Development Corp., 2009.

            Other subdivision investors in recent years with multiple purchases were Castle Partners, LP, of Hood River and buyers Richard and Jelinda Carpenter who joined Compass Commercial broker Bruce Kemp.

            One of the notable purchases reported by the Bulletin was Vancouver, BC investor Ender Milkay’s acquisition of about 100 lots in McCall Landing in northeast Bend for $1.6 million. Milkay and Bend’s Pahlisch Homes have teamed to begin building on more than a dozen of the project’s lots.
            The City of Bend has estimated that about 2,800 lots were available for development in Bend in early 2013, with approximately 700 of those scheduled for construction this summer.
During the last decade about 330 subdivisions were recorded but few have been filed since 2010.

            The Bulletin reported that the Central Oregon Builder’s Association estimates there were approximately 3,500 lots on the books in 2010.

            An independent review of currently active, development parcels in the Multiple Listing Service of Central Oregon data base shows the shrinking inventory of predominantly residential development parcels with multiple lots now actively listed for sale.

            Among the largest of the opportunities is 41 lots, ranging from 4,000 to 11,000 square feet in Phases 2 and 3 of the Holiday Park subdivision a few blocks north of St. Charles Medical Center. At a listing price of $3,485,000, those average lot prices of $85,000 would be a substantial premium to other subdivisions such as McCall Landing that sold for an average $16,000 per lot.

            Among other residential development properties in the MLS database in late January were:

• Vail Lane; a 4.70 acre 58-unit planned townhome subdivision listed for $1,625,000, or $28,017 per potential unit.
• Painted Ridge Loop in Broken Top; 0.76 acres permitted for eight townhome units in the established gated golf community; listed at $885,000, or $110,625 per unit.
• Awbrey Point Circle; 0.710 acres zoned residential mutifamily with potential for eight townhomes; listed at $402,000, or $50,250.

     The sampling of listed properties varies considerably in price depending on location and characteristics. However, one comparison that could provide a clue to 2012-2013 pricing trends is the sale in 2009 of a 1.38 acre parcel in Northwest Crossing, one of Bend’s most successful planned communities.

    Zoned multi-family with potential of up to 26 units, the parcel adjacent to a community park sold for $520,000 in November of 2009, or an average $19,307 per unit.

           For individual  “retail” buyers seeking a lot to build a custom home sales have ranged in 2012 from less than $20,000  in some subdivisions to the  $300,000 to low $500,000s range in gated communities with larger lots, mountain views and golf courses or other amenities. 
           In at least several cases, bare lots that garnered more than $1,000,000 in some gated communities during the boom sold as short sales or foreclosures for less than $250,000 in 2012. 
          Following is a statistical report for sales in established Bend-area gated communities showing a median sales price of $150,000. Not included is the Pronghorn golf resort, where there have been lot sales below $10,000, although buyers must commit to the resorts club membership valued at $115,000. 
          

      Property Type  Land    Include Property Subtypes  Lots 1 acre or more, Lots/Land to 1 acre    Areas  Sunriver, Crook County, Jefferson County, La Pine, Three Rivers South, Bend/Tumalo/Alfalfa, Redmond/Terrebonne, Sisters Additions  exact: Awbrey Glen,Bend Golf Club,Brasada Ranch,Sunset View Estates,Pronghorn,River Bend Estate,Ranch at the Canyons,Bbr,Tetherow,The Highlands at Broken Top,Caldera Springs,Crosswater,Vandevert Ranch Status  Sold (1/1/2012 to 12/31/2012) Price  100,000 or more           

Active: 0

Pending: 0

Sold: 61

Other: 0

Total: 61

	Bedrooms	Bathrooms	Square Feet	List Price	Selling Price	DOM/CDOM
Minimum	0	0.00	0	$109,000	$100,000	0/0
Average	0	0.00	0	$212,902	$191,431	247/302
Median	0	0.00	0	$175,000	$150,000	146/154
Maximum	0	0.00	0	$599,900	$523,761	1614/1960
Total Dollar Value					$11,677,261

Average DOM Breakdown and Average % of Listing Price received on Solds by Market time:

	0-30 Days	31-60 Days	61-90 Days	91-120 Days	120+ Days
No. of Listings	14	8	2	3	34
Breakdown %	22.95	13.11	3.28	4.92	55.74
Avg SP % LP	99.46	80.89	100.00	80.40	88.00

Average CDOM Breakdown and Average % of Listing Price received on Solds by Market time:

	0-30 Days	31-60 Days	61-90 Days	91-120 Days	120+ Days
No. of Listings	13	8	2	3	35
Breakdown %	21.31	13.11	3.28	4.92	57.38
Avg SP % LP	99.41	80.89	100.00	80.40	88.35

           

             

Good value in real estate? Homebuilding stocks.

            Invest in homebuilding stocks “back then?”

Admittedly it would have taken nerves of steel, intestinal fortitude and remarkable foresight not to duck and cover as debris rained down from imploding financial houses such as Bear Stearns and Lehman Brothers.

            But it’s been a good few years for those who could see far enough through the dust of late 2008.

            In fact, a sampling of five publicly traded homebuilder stocks shows that an investment of $1,000 in the top performing company would, as of January 28, 2013, be worth $8,770.

            Even the same $1,000 in the laggard performer of the five companies would have more than doubled to $2,390.

            And spreading $5,000 evenly in each of the five would have yielded a median return of 167%, or now be worth $13,150.

            By far the best performance was notched by Lennar Corp., the 777% return, followed by DR Horton at 346%. Toll Brothers, which specializes in higher-end housing, recorded a 163% increase.    

          

           

Not again? Runaway home prices in Bend?

            Could this really be? Another  invasion of the pricing bubble monster?

            As difficult as it might be to contemplate after Central Oregon’s protracted housing crash there are rumblings that pricing imbalances could return to the market.

            Thus far the possibility is not readily apparent  in single family home sales, although median prices have been creeping upward. But the culprit, in the view of some observers, could be a dramatically shrinking inventory—especially in the lower to middle market tiers.

            At the end of 2012 there was only a 1.9 months “supply” of active listed Bend single family homes on less than an acre—the type of housing that typically is most indicative of broader market trends.

            That’s far below the industry standards of 4-5 months considered “healthy” for normal sustainable growth without pushing prices unsually higher.

And it’s a remarkable drop from the bad old days of the market implosion when Bend’s supply topped 12 months.

            In a recent comment regarding Bend’s inventory of buildable land a official of the Central Oregon Bulder’s Association cautioned that the current pace of new single family construction could mean that prices could rise sharply if additional land is not available within the city.

            Some brokers also lament the lack of inventory, especially in homes in the $200,000s that are often considered entry level for buyers unable to offer larger down payments.

            The median price of a Bend single family home moved up 16% to $220,000 for the past year while properties sold rose 17% to 1,974.

            Short sales and foreclosures continue to comprise a significant percentage of activity, with 35%, or 688 of the Bend sales, falling into the “distressed” category.

            Also, among the 332 pending/contingent sales at year-end, 43% or 142 properties, were in the short sale/bank owned column.

            Of all areas tracked by the Multiple Listing Service of Central Oregon Bend is by far the largest sub-market in terms of unit sales, at 61%, and sales volume of 67%, or $398,063,883 of the total $586,434,562.

            Redmond is a distance second to the Bend market, accounting for about 20% of single family sales and slightly under 16% of sales volume at $90,956,564.

            The accompanying chart provides an overview of the single family housing market throughout areas reported on the MLSCO database.

            Among key points the chart reveals:

• Over the 12-year period of 2001 through 2012 home appreciation in the region was highest in Bend, at 30%, followed by Sunriver, 21% and Redmond, 12%.
• In the past year Jefferson County (Madras) had the highest percentage of distressed property sales, at 62%, followed by La Pine, 61% and  Crook County (Prineville and area), 52%. Sunriver was lowest at 14%.
• Among pending and contingent transactions in early 2012, Bend had the lowest rate of short sales/bank owned properties in contract, at 43%; Jefferson County was highest at 83%.
• Sisters had the highest inventory of available homes, an 8.87 months supply, followed by Sunriver, 7.71 months.

Note: the chart numbers may vary slightly, but not materially,  from other published reports due to sales recorded later in January by the MLSCO and not reflected when the chart was generated immediately after year-end.

  

Seattle: New skyscraper pegged to economic rebound

            The announcement of Seattle’s first major downtown skyscraper to be built in nearly two decades has been touted as a sign the Northwest’s largest metropolitan area is on an economic rebound.

            Stockbridge Capital Partners of San Francisco announced Jan 22 that it planned to begin construction on a 43-story project that could include about 16 lower floors and approximately 175,000 square feet for a hotel.

            The balance of about 525,000 square feet would be office space in the 660 foot tower, known thus far as the Fifth and Columbia building.

            Stockbridge bought the site in 2007 and agreed to retain the historic First Methodist Church sanctuary at street level. But damages resulting from demolition of the adjacent annex delayed construction. And the subsequent collapse of the financial markets and Seattle-based Washington Mutual put the project on indefinite hold.




A new 43-story skyscraper will join Seattle's downtown
skyline for the first time in decades

              Now Seattle’s economic revival has prompted Stockbridge to move ahead with what is estimated as a $400 millon investment.

            Elsewhere in the city major investment has occurred in office and mixed-use projects in the South Lake Union area. Prominent among the activity is online retailer Amazon.com’s  decision to consolidate its headquarters in the area with the whopping $1.16 billion purchase in September of 2012 of 1.8 million square feet of space previously leased from Microsoft co -founder Paul Allen’s Vulcan Real Estate.

That followed by less than a year the company’s acquisition of three full city blocks closer to the downtown core accompanied by announcement of its plans to build a 3.3 million square foot office complex.

            Meanwhile Stockbridge and  Seattle-based Capstone Partners revealed earlier in January plans for the 340,000 square foot Dexter Station, to be launched “on spec” with no tenants signed.

            Another mostly-spec project that came to market recently was 202 Westlake, developed by Spear Street Capital. Amazon eventually took most of its more than 100,000 square feet.

A vew across Lake Union to the booming south side
with downtown in the distance

            Also a potential factor in the South Lake Union area is Skansa USA, which has previously discussed the possibility of a 300,000 square foot office plus complex at 400 Fairview Avenue.

            A lingering question is whether demand in the South Lake Union area will spill southward toward downtown or whether much of the current activity is from what might be called the consolidating “Amazon effect.”

            The Gates Foundation, which spreads the philanthropic assets of billionnaire Microsoft co-founder Bill Gates and investor Warren Buffett, is also headquartered in the area.

            The newly-opened Museum of History and Industry, relocated from near the University of Washington, and adjacent waterfront park and boat museum is one of the many attractions along the inland Lake Union waterfront. The southern end of the lake is also the terminus of the Seattle streetcar line that runs into the downtown core.

The internationally recognized Fred Hutchison Cancer Center along with several medical research/development and high tech companies have provided much of the existing employee base apart from relative newcomer Amazon.

Previous posts:

“Nothing normal” in Washington’s largest real estate market

Bend's vision for growth: inward or outward

            The guiding vision and form of new Bend development will depend in large part on the outcome of a continuing process to define the city’s urban growth boundary.

            And central to the discussion is the fundamental issue of whether Bend growth will focus on outward expansion or be concentrated inward with higher building density on existing land inventory.

            A critical factor will be the inclinations of a newly-transformed city council following the November election, Another will be the earlier 2010 rejection by the state’s Land Conservation and Development Commission of the city’s proposal to add 8,500 acres to the UGB.

            State law requires cities to forecast population and estimate land that will be needed to accommodate growth in recurrng 20-year periods.

            In rejecting the  UGB proposal the LCDC said the assumption of three units per acre for existing land supply did not justify the forecasted need for additional acreage. Rather, LCLD said the city should look to unbuilt land within the current UGB.

The decision sent city planners and elected officials back to the drawing board. The housing crash has resulted in substantial inventory of shovel-ready but unbuilt subdivisions that could absorb some of the housing demand.

            As the new city council prepared to take office in January city planners acknowledged that additional acreage in the original proposal would likely be downsized. But the details of where redevelopment and “infill” would occur will depend on the new city council.

            City records show that up to 800 building permits could be issued in the current fiscal year. City planners say the population assumptions underpinning the UGB proposal were based on a stable range of 600 to 700 permits.

            Slow growth advocates such as the 1000 Friends of Oregon favor more density within current boundaries.  

On the other side officials of the Central Oregon Builders Association argue that improving housing demand means  the city could be on track to add up to 3,000 new homes in less than three years.  COBA says the demand could result in less affordable housing unless additional land is available.
       The builders group also says many buyers move to Bend and Central Oregon seeking more living space, although 1000 Friends points to trends with younger buyers who prefer living closer to the amenities of a more dense urban core.

“Nothing normal” in Washington’s largest real estate market

            Record-breaking rain at year-end 2012 apparently did not dampen home buying activity recorded by the Northwest’s largest real state multiple listing service according to new statistics.

            Buying activity in the NWMLS, which covers 21 counties of Washington, rose 1.5% over December of 2011 to 5,314 pending sales. Perhaps of more interest the pending volume oustripped the 3,856 new listings by a wide margin.

            It was the fourth consecutive month that pending sales topped new listings. Total sales in 2012 of 64,624 homes rose by 14.8% over 2011

            J. Lennox Scott, chairman and CEO, of John L. Scott Real Estate observed, “There is nothing normal about the combination of factors fueling the current market.”

            Among trends and factors NWMLS member brokers note:

• A housing rebound will continue but sellers should avoid over-pricing properties in order to sustain “controlled natural growth.”
• Rising rents and investor activity will continue to influence the market—along with low unemployment and record-low interest rates.
• Many individual owner-occupant buyers will avoid short sales and foreclosures given the complications, leaving space for investors.
• Prices are rising along with multiple offers on listings, likely the result of shrinking inventory.

In King County (Seattle), the NWML largest market, median prices for single family homes, townhomes and condos rose 17.5% to $342,000 over 2011. Inventory declined by 33.5% at year-end, leaving a scant 3.3 months supply of available homes compared with 5 months in 2011.
     Throughout the 21-county area served by NWMLS the number of homes that sold for more than $1 million rose nearly 56% from 68 in December of 2011 to 106 in the same month of 2012.

           

Statistical Summary by Counties: Market Activity Summary – December 2012

Single Family Homes + Condos	LISTINGS		PENDING SALES	CLOSED SALES
	New Listings	Total Active	# Pending Sales	# Closings	Avg. Price	Median Price
King	1,378	3,801	2,056	2,188	$425,210	$342,000
Snohomish	581	1,513	872	892	$279,231	$254,975
Pierce	701	2,734	986	808	$232,956	$200,563
Kitsap	170	1,183	267	226	$261,724	$219,975
Mason	60	590	52	59	$174,834	$145,000
Skagit	86	609	97	105	$257,427	$209,000
Grays Harbor	77	644	50	72	$139,675	$132,568
Lewis	56	549	58	50	$169,263	$162,500
Cowlitz	53	401	87	69	$159,092	$139,000
Grant	40	431	37	50	$161,897	$147,500
Thurston	187	988	248	223	$220,379	$203,000
San Juan	13	270	15	17	$565,059	$300,000
Island	61	573	83	76	$312,249	$257,500
Kittitas	33	346	35	37	$350,882	$220,000
Jefferson	29	340	33	37	$353,950	$252,000
Okanogan	23	335	16	15	$162,260	$145,000
Whatcom	160	1,059	164	197	$278,378	$255,000
Clark	22	176	47	36	$234,957	$179,550
Pacific	27	298	21	20	$133,061	$125,750
Ferry	1	75	2	4	$131,216	$147,950
Clallam	44	314	47	42	$200,033	$173,400
Others	55	489	41	44	$219,863	$155,000
MLS TOTAL	3,857	17,718	5,314	5,267	$322,252	$255,000

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	3706	4778	5903	5116	5490	5079	4928	5432	4569	4675	4126	3166
2001	4334	5056	5722	5399	5631	5568	5434	5544	4040	4387	4155	3430
2002	4293	4735	5569	5436	6131	5212	5525	6215	5394	5777	4966	4153
2003	4746	5290	6889	6837	7148	7202	7673	7135	6698	6552	4904	4454
2004	4521	6284	8073	7910	7888	8186	7583	7464	6984	6761	6228	5195
2005	5426	6833	8801	8420	8610	8896	8207	8784	7561	7157	6188	4837
2006	5275	6032	8174	7651	8411	8094	7121	7692	6216	6403	5292	4346
2007	4869	6239	7192	6974	7311	6876	6371	5580	4153	4447	3896	2975
2008	3291	4167	4520	4624	4526	4765	4580	4584	4445	3346	2841	2432
2009	3250	3407	4262	5372	5498	5963	5551	5764	5825	5702	3829	3440
2010	4381	5211	6821	7368	4058	4239	4306	4520	4350	4376	3938	3474
2011	4272	4767	6049	5732	5963	5868	5657	5944	5299	5384	4814	4197
2012	4921	6069	7386	7015	7295	6733	6489	6341	5871	6453	5188	4181

 

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Copyright © 2012 Northwest Multiple Listing Service

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