Saturday, February 28, 2009

California Dreamin' and Bend Reality

In a way, you have to admire the indestructible optimism of Bend realtors. If you could take an extract from their brains and turn it

Posted By on Sat, Feb 28, 2009 at 12:00 PM

In a way, you have to admire the indestructible optimism of Bend realtors. If you could take an extract from their brains and turn it into a pill it would be better than Prozac.

In a post on his blog two days ago, Jim Johnsontook a look at an Associated Press story reporting an uptick in home sales in California last month and saw it as a harbinger of better times soon for Bend.

"Home sales in the Western U.S. surged in January as first-time home buyers, real estate investors and others seized on bargain-priced foreclosed homes in California, Nevada and Arizona, according to two reports released Wednesday," The AP said.

"A total of 74,000 existing homes and condos were sold in January in the 13-state region. Sales were up 32.1 percent from the same month in 2008, without adjusting for seasonal factors, according to the National Association of Realtors."

Based on this rough sketch, Johnson painted a rosy scenario:

"California home sales are a leading indicator of Bend, Oregon home sales. This tells me our real estate market may see the bottom this spring or summer. I showed property last weekend to two different cash buyers and they both wrote offers on bank foreclosures in Bend."

Some observations by The Eye:

  • A total of 74,000 homes and condos sold in a 13-state region is not an impressive number, especially if that region includes California.
  • Johnson's two, count 'em, two offers on foreclosed Bend properties is not an impressive number either.
  • As the AP story says, the surge in California sales was propelled mainly by investors (read "speculators") coming into the market to snap up bargains on foreclosed properties.
  • Median home prices in the West dropped 26% in January from the previous year to $220,000, the realtors' association said. (The same pattern, incidentally, holds true in Florida, where January sales were 24% higher than in the same month last year - but the median sale price for existing homes has plummeted 33% in a year, to $139,500 from $206,900.) If the market really had turned around shouldn't we see prices rising, or at least holding steady?

Believe it or not, The Eye really would LIKE to see the Bend housing market bounce back (though not to the insanity of 2004-2006). After all, we live here and own property here too.

But continuing to spin gossamer dreams out of every thin thread of semi-encouraging news is not going to make it bounce back any sooner. Our guess is that no matter what happens in California, we won't see any real turnaround here until our excess housing inventory has been drained off and prices drop to affordable levels.

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