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Real estate market improving in Central Oregon
Local trends are showing an increase in traditional real estate sales, and a large increase in closed transactions
January 07, 2013
Reports of home prices being at a three-year high on a national level seem to be following a similar trend on the Central Oregon Real Estate front.
Nationally, the influx is accredited to low-mortgage rates and an improved job market, resulting in boosted sales and cut inventories. Property values are up and inventories are at the lowest level in 11 years. The result is an increase in mortgage prices, but also in homes remaining for a shorter time on the market.
Kevin Pangle, Branch Manager for Evergreen Home Loans in Prineville and Bend, has worked in real estate in Central Oregon for more than 20 years. He said that overall, they have seen a 28 percent increase in closed transactions in Central Oregon in the past 12 months. He added that in Prineville, that percentage was 31 percent, and in Bend it was 25 percent.
“Our average loan amount for 2011 in Prineville was $111,000,” he said. “In 2012 it was $118,000.
Pangle added that in Bend in 2011, the average loan amount for Bend real estate was $158,000, and in 2012 it was $175,000.
He noted that Central Oregon has had the best fourth quarter in the 24 years he has been in the business.
“Personally, in my business and in the branches,” he remarked.
“What we are seeing is who ran out of supply first. I think Crook County ran out of supply before Deschutes.”
He said that he has seen more traditional transactions involving true sellers (not bank-owned or short sales) in Deschutes County while prices are low. According to the Central Oregon Association of Realtors website, the trend shows that the amount of residential real estate homes sold in Bend from 2010 to 2012 was up 17 percent. The average sales price was up 10 percent, and the amount of days on the market was down 4 percent.
In Crook County, the trend for the same time period shows the total sales of residential homes were flat, short sales were down by 28 percent, and the average sales price for homes in this category was up 16 percent. The average amount of days on the market was down 15 percent.
“We are seeing an increase in traditional sales, with people who have equity in their home that are selling,” Pangle added.
He also noted that history indicates that when prices and rates drop, people hold off buying until things hit “bottom.”
“They wait to catch it at the very lowest. It’s impossible to do so, so when things turn, when the prices turn and start coming back up and rates start coming back up—that is when you see activity. That is what we have seen recently,” he pointed out.
“What’s happened, as a result of prices changing third and fourth quarter last year, we are seeing a larger increase of buyers getting on board,” he added.
Pangle thinks that Deschutes County is ahead of the national trend, and over time he has seen Bend be the last to dive into financial recessions and the first to come out of them. He added that they are seeing this trend once again. Prineville is usually behind the Bend trend. He thinks that the missing link for Prineville is having enough inventory and construction for homes.
Mike Warren, real estate broker for Crook County Properties, has been in real estate as an agent since 2007, although he has been around real estate his entire life. He is the president of the Central Oregon Association of Realtors. He came into real estate as a broker at the height of the market in 2007, and has seen the decline over the past four years.
He said that the average of a 16-percent gain for the third quarter of resident sales in Crook County was a pretty accurate number overall. Warren said that in the middle of the year, sales prices were up more than 20 percent from the year before. He added that proportionately, Prineville is going up at about the same rate as Bend.
“Bend does tend to take off first, definitely.”
Inventory is down from last year, according to Warren, due to sales of properties, although there are several factors. He noted that there is still some bank-owned inventory on the market—although it is less. Short sales are about the same.
Warren said that one reason for this trend is possibly the fact that there are people who lost their homes in 2008-2009 who now qualify to buy a home. He said that we will probably see another spike in 2013-2014, and it could continue being a trend until 2016-2017.
“We are probably, even next year and the year after, going to see some foreclosures,” he said. He thinks there will be a big decrease in foreclosures toward the end of next year.
This recession, from Warren’s perspective, has been different than any other.
“Almost every recession we have had, real estate has kind of been the foundation to bring it back. This one has been a little different.”
New laws on short sales and foreclosures have made a difference as well. He said that although there were reasons for judicial foreclosures, it has complicated things.
The time frame from Thanksgiving to the first part of January has been busy for Warren’s business, despite the usual trend of this being a slow time of year.
He added that there is also the fact that many people are able to buy a house for the same price that they pay for rent. The issue of the fiscal cliff hasn’t been too big of a concern to potential buyers he talks to either.
“I don’t perceive it as a big issue when I am talking to people looking at property.”
In national trends, the refinance index decreased 23.3 percent from Dec. 14 to Dec. 28, and was the lowest since April 2012. Between those dates, mortgage applications decreased 21.6 percent, according to the Mortgage Bankers Association (MBA). The average contract interest rate for a 30-year –fixed mortgage increased from 3.51 to 3.52.