Bend, Oregon Residential Real Estate Trends for June 2010

Here is my take on the Bend, Oregon real estate market at early summer. Currently there is more interest from buyers from out of the area than folks that live here. People who live here are still nervous about the lack of jobs and the uncertainty of what the future will bring, many are waiting for more pain to come. Buyers from out of the area see this market as a great opportunity and generally come from areas with a rosier outlook on the economy. They are buying properties as rentals, retirement homes or second homes. The better properties that are priced well are moving quickly to these people.

Overall the market is stronger than a year ago but is by no means healthy. The properties that are being purchased are usually very good deals but not necessarily distressed. Inventories of homes is down to an 8.8 month supply, one year ago we had 14.4 month supply. We have been in the 8 month range since March of this year. The stats break out that 21.21% of the homes sold the last three months are short sales, 34.38% are REO's and the remaining 44.41% are traditional sales. The traditional sales are closing at a rate of 95.93% list price to sales price, short sales are at 98.13% and REO's are at 96.47%. Here is a scary number that most folks do not consider, the original list price versus the sales price, the number has improved from last year's 79% and is now at 85%. We have been in the mid 80% range since December of last year; I would expect that number to improve as people lower their expectations for what their home is worth.

To sum it up the lower end of the market $225,000 and under, there will not be much more downward movement. The $225,000 through $425,000 has all sorts of properties and pricing strategies. While most properties are priced reasonably there will be some more movement downward. Most brokers realize the value in having correct pricing but sellers can be quite headstrong on the original pricing wanting to give the higher price a shot before succumbing to reality. The $425,000 and up market has the most room for more downward pressure.

Charted below are the trend numbers for the past three months. To view in a full screen click on the box in the lower right.

Good News For Buyers Qualifying for the Home Tax Credit…

Home buyer’s looking to keep their homebuyers tax credit in play received good news today. The bill which extends the timeline for those buyers who had a qualified offer in to purchase a home before April 30th and receive the home tax credit was passed by the Senate last night. The original bill for the extension of the home tax credit had been tied to the additional unemployment benefits bill which had failed in the Senate earlier this week. Heavy lobbying by the National Association of Realtors® (NAR) enabled the bill to be introduced as a free standing bill which passed the House of Representatives and Senate. The bill now awaits the President’s signature.

The bill also contains additional provisions to tighten the rules to prevent tax credit fraud. Given the news earlier this month concerning prison inmates, some who are in for a life sentences receiving benefits from the tax credit, this should be a welcome inclusion to the bill. One can only imagine how many other scams are defrauding the program are out there, hopefully the provisions in this bill can curtail a good portion of the fraud.

The federal home tax credit was part of the American Recovery and Reinvestment Act signed into law in February 2009. The $8,000 credit was available to first time buyers who purchased a house after January 1, 2009 and was originally scheduled to expire on November 30, 2009. The credit was seen to have stimulated home sales, especially in the lower price ranges, and in November Congress extended it through April 30 and added a $6,500 tax credit for non-first-time buyers.

Those who had qualified offers in before the April 30th date were given until June 30th to close their transaction. In many areas title companies struggled with the added push of home buyers trying to complete their deals creating a backlog that could not be cleared by the deadline. Others struggled with cumbersome short sale proceedings, even the most straight forward transactions can take an excoriating amount of time to complete. The new date to complete transactions for the tax credit is September 30th.

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Home Tax Credit Extension Dies (for now) on Senate Floor…

Do you have a transaction that qualified for the home tax credit?


Today’s action by the senate killed a large stimulus bill which included business tax breaks, renewal of the flood insurance program and an extension of unemployment benefits. Also attached to the bill was an extension of the deadline for the home tax credit. Real estate transactions that had been in contract before April 30th have a current deadline of June 30th, the extension would give buyers until September 30th to complete the transaction.

Senate Majority Leader Harry Reid who is one of the bills biggest backers feels that the extension may survive through being attached to another bill that has a better chance of approval. Should the bill not survive as many as 180,000 transactions that have yet to close and are in danger of not qualifying for the rebate. Many of those who will not meet the deadline are tied up in a short sale transaction, which are notorious for their lengthy closings.

The failure of the bill may impact many who were counting on the credit to offset their closing costs or down payment. Those buyers could look to the seller to help offset the lose, though it may be a uphill battle if they are dealing with a large loan servicing company for approval of a short sale.

Stay tuned to see if the bill lives on…

Is Your Contractor Certified? Lead Paint The Next Big Thing…

Yesterday the EPA announced that it will ease the date for contractors to be certified and in compliance with more stringent abatement procedures. Originally set to be enforced starting this past April, contractors now have until September 30 to sign up for training and until December 31 to complete the training.


The new lead paint abatement rules involve home renovations for houses, day-care centers, and schools built before 1978. The new federal rule mandates that a contractor certified in the handling of lead-based paint be hired for any renovations. The rule is geared toward reducing lead exposure and poisoning in children.

Why is this a big deal for you and me? The requirements in this new program will add significant costs to any project on older homes and most likely will affect the value of homes from that are of pre-1978 vintage. Contractors who have completed the certification believe that the new rules will 20 to 40 percent to the cost of work done to these older homes. In addition to the cost increase will be the added time it takes to comply with the new requirements. What was once a six hour job will now become an eight hour job.

Even for the simplest job there will be a higher price tag. Since the new regulation governs areas as small as six square feet. For instance, because of the precautions, the repainting of a room that would have cost $500 could now cost more than $800.

Why the high cost? To start with, furniture and equipment has to be wrapped in plastic at least 6 mils thick, by comparison your average kitchen trash bag is only 1 mil thick. Similarly, floors, doorways and windows have to be lined with plastic and workers must wear protective gear, which must be removed and disposed of each time they leave the work site. There are also special vacuums needed for cleanup, costing as much as $850.

Previously if you were having your house re-sided the crew would come out strip off the old siding pile it up then haul it off. Now crews must hazard tape the perimeter of the property, notify all surrounding neighbors. The crew must wear protective gear while taking each board off individually, wrap it in plastic, seal it with tape then photograph it to document that the procedures were followed. Now these boards may be disposed of in the local landfill with no additional requirements.

Training and certification classes cost roughly $180 to $250 per student, and a business would have to pay an additional $400 to $560 to register as a certified contractor.

Contractors and handymen are required to keep detailed records of the work they do when lead is present, including photos, which could be reviewed by inspectors if a complaint was made. The fines for noncompliance are up to $37,500 per violation — for example, not taking proper precautions to contain and clean up dust.

Will buyers be put off by these daunting regulations? How will this affect values in our older home inventory? Will lenders require more documentation for these homes? Hard to say, safe to say we should all buy stock in the 3M Corporation if these regulations stay.

For more in depth information visit:

http://oregon.gov/DHS/ph/lead/Renovation_Repair_Painting_Rule.shtml

http://www.epa.gov/lead/pubs/renovation.html

Interest rates and opportunity...

If you were in Bend the last time we saw the housing market take a tumble, you would have witnessed scene reminiscent of today’s struggles. Many watched as the homes they purchased in the late 1970’s and early 80’s fall in value by as much as 40%. Such a dramatic drop in values presented those with the means the opportunity for some incredible bargains, which they turned into huge profits in later years. Most folks who wanted to purchase these bargains found them unobtainable as interest rates soared into double digits preventing most from taking advantage of what was at that time the “opportunity of a lifetime”.


As history has repeated itself and “opportunities of a lifetime” are once again plentiful. Your advantage in this go around, interest rates! What once crippled the housing industry has swung the other direction to a point so low one would not have imagined it possible just a few short years ago. Since late April interest rates are at historic lows and hover below 5%. As this week comes to a close rates have remained steady with a thirty year fix rate loan coming in at 4.72%. While under writing standards are as tough as they have ever been, we are seeing folks take advantage of today’s market to seize what will be tomorrows “I wish I would have bought that…” moment.

Many industry experts had anticipated a rise in rates this past spring, yet with the stumbling of the European financial markets our bond markets have remained a strong value for investors to invest their money. Common sense would say that as the markets stabilize interest will slowly begin to climb. As the rates climb the window of affordability for buying will shrink, the ability to snap up properties at a great value may slip away.

Will you be one of those that follow past cries saying “I could have bought that property five years ago for…”? While our market will not see rapid appreciation any time soon, now is the time to buy low so in five years you will be the one selling high.

USDA Rural Loan Guarantee Program Has Funding Extended ...

Great news for folks trying to purchase rural properties in Central Oregon.

Two weeks ago on May 26, 2010, the Department of Agriculture, authorized the issuance of Conditional Commitments for USDA’s Section 502 Single Family Housing Guaranteed Loan Program beginning immediately and continuing until $2.5 billion in loan limits is exhausted. If you are looking to purchase property outside of the Bend urban boundries this program maybe of great benefit to you!!

There are many properties close in to Bend and far from Bend that will qualify for these programs. Let me do the homework for you in your search for these properties!