RISMEDIA, Jan. 15, 2007-(MCT)-Despite the doom and gloom of the past six months, Central Oregon home prices posted solid gains through the end of 2006, according to the regional Multiple Listing Service.
If, that is, you could sell a house.
Home sales in Bend plunged 27% in 2006 below the red-hot numbers of 2005, sinking to levels not seen since 2003.
Meanwhile, the median price of the homes that did sell–meaning the price at which half were higher and half were lower-soared to $351,978 for the year, up 25.75% from 2005.
Similar numbers were posted in the region's other major markets, with one exception.
Jefferson County, where Madras and the little towns of Culver and Metolius are on a growth binge, saw home sales rise 56.29%. The median price also rose 23.66%–but to $165,080, a price that apparently looked much more affordable to buyers than Bend's median, and was nearly $100,000 less than Redmond's $262,749.
The year-end MLS numbers, released yesterday, reflect sales activity through the entire year.
To home sellers, the numbers might look pretty good. Sales prices are up, after all, even though sales have dipped.
But the year in local real estate was actually a fairly wild roller coaster ride, with soaring highs and dramatic dips. And the ride may, or may not, be over.
–Sales volumes sailed upward in the first five months of 2006, continuing the booming trends of 2005. Since then, sales have slowed in the three-county region's pricier markets, while the inventory of unsold homes has soared.
–A considerable amount of air has leaked out of listing prices. The average list price in all of Central Oregon, which includes Crook, Jefferson and Deschutes counties, was around $450,000 in April, The Hasson Company Realtors Principal Broker Bill Berger said Wednesday. Now it's at about $403,000.
–People have continued to move to Central Oregon. But potential new buyers have hung back, waiting for list prices to drop further, Berger said, while the property speculators who helped to fuel the boom of 2005 and early 2006 have pretty much fled altogether.
There are signs that the market may be firming up.
In Bend, sales closed on 130 homes on less than an acre in December, down considerably from the 251 in December 2005 but up significantly from the 102 that closed in October and the 120 that closed in November, according to an analysis of MLS numbers posted on RE/MAX Equity Group Broker David Foster's Web site, www.davidfoster.biz.
The number of homes for sale in the Bend market also fell to 1,112 in December, according to Foster — still up 393% since the first of the year, but down more than 23% from the high of more than 1,400 reached in August.
That still leaves a little more than six months worth of inventory for sale in the Bend market, given the average sales volumes of the last 12 months.
But there may be reasons to believe that the inventory will be chipped away further as the new sales season gets underway, in earnest, in the spring, Berger said.
Among them: Mortgage interest rates have fallen back, reaching an average of 6.18% on 30-year fixed rate loans by Jan. 4, according to national lending giant Freddie Mac, down more than a half-percent from their peaks in July. And sellers who are serious about selling have cut their asking prices to the point where active buyers are starting to re-emerge.
"Buyers are starting to stick their heads out their holes again," Berger said. "They're kind of peaking around and thinking maybe it's a good time to come back to this market."
Which could start bringing the current inventories down again, Berger notes-if builders don't crank up their production, and if sellers who have pulled their homes off the market for the winter don't come back, en masse, in the spring.
And if-and this could be the most important if-mortgage interest rates don't rise again.
At current interest rates, even Bend financial advisor Bill Valentine, who turned bearish on the housing market during its boom months, thinks the local housing market could see a good sales year in 2007.
"But we're not out of the woods yet," Valentine said, noting that around $1 trillion in adjustable-rate mortgages are scheduled to reset this year, which could suck billions out of the national housing market if prevailing rates rise too high for borrowers to keep up.
Until that testing point is safely past, Valentine said, "I think it's entirely premature to call the quote-unquote 'adjustment' in real estate over."
The National Association of Realtors, meanwhile, is doing exactly that.
After the 9% drop in sales that marked 2006, the association's economists are predicting strengthening sales and strengthening home prices by the second quarter, with sales rising 5% and prices rising 2% nationally.
"The market," NAR Senior Forecast Economist Lawrence Yun pronounced in the NAR's monthly newsletter last month, "has essentially already bottomed."
Just down the road in California, state Association of Realtors president Colleen Badagliacco said home sale levels appear to be stabilizing after dropping 22% in November from the same month in 2005.
Median statewide home prices in California stood at $550,290 in November, according to the CAR, up 1.4% from November 2005.
Meanwhile, as other markets struggle to stabilize, Jefferson County continues to bask in its boomlet.
Sales there jumped to 261 last year, up from 167 the year before, according to the Central Oregon MLS. It was the only market among the eight major markets of the region that set a new sales record.
With a new state prison about to open, with more than 500 relatively high-paying jobs; with Yarrow, a new 800-acre housing development, beginning to break ground on hundreds of brand-new view homes; and with housing prices still averaging far less than the region's, the future for real estate still feels bright, former Madras Mayor Rich Allen, a Lowes Commercial Real Estate broker, said yesterday.
"People were looking for places they could afford to buy," Allen said. "Basically, we were discovered, and we were affordable."
Copyright © 2007, The Bulletin, Bend, Ore.
Distributed by McClatchy-Tribune Information Services.