Happy days are here again in the local real estate market, if you go by the headline in yesterday’s Bulletin.
“Housing inventory plummets in Bend,” the headline said.
“Plummets,” no less. Not merely “drops” or “falls” or “declines,” but “plummets.”
The proof of the plummet, according to a report by the local Bratton Appraisal Group, is that in mid-November of 2008 there were 1,365 single-family homes on the Bend market, but as of Nov. 10 this year there were only 782.
The drop in inventory, according to Bratton, is mainly due to an increase in sales. In October 175 single-family homes were sold in Bend, the most in any month since August 2006.
So the outlook is nothing but blue skies from now on, right? Well, maybe. But there are other possible factors behind the inventory drop that The Bulletin doesn’t appear to have looked at – or at least given much weight to.
For instance, how many homes have been taken off the market because their owners have simply given up trying to sell them? How many others have been taken off temporarily because we’re now in winter, and winter is always the toughest time to sell a house?
Maybe the biggest question is how much “shadow inventory” is lurking out there in the form of houses that are in the foreclosure process or have been foreclosed on but not put on the market yet. The Bulletin story does address that issue, somewhat.
Bill Watkins, a California economist who tracks the Bend market closely, “believes banks have generally been slow to list foreclosure properties, and that may account for some of Bend’s decline in inventory,” the story says. “More than 3,000 notices of default [the first stage in the foreclosure process] have been filed in Deschutes County this year. ‘There’s some evidence banks are slowing down their foreclosure process to keep the market more orderly, but that’s probably not enough to account for a 50 percent decline in inventory,’ Watkins said.”
And the experts acknowledge that the recent buying spree (such as it is) has been driven by low mortgage interest rates and the $8,000 federal tax credit for first-time buyers. That credit was due to expire at the end of this month, but Congress extended it to April 30. It also enacted a $6,500 credit for buyers who have lived in their present houses for at least five years, and that should spur sales too.
But what happens then? It reminds me of the old joke about the guy who leaped off the top of the Empire State Building and, as he passed the 35th floor, called out: “So far, so good!”
If The Bulletin didn’t have a track record of first being in denial about the bursting of the bubble (“It won’t happen here – Bend is too special!”) and then trumpeting every crumb of positive real estate news as if it was the Second Coming, I might put more credence in this latest declaration that the good times are about to roll again. As it is, I’ll wait and see.
Meanwhile, Jeff Mapes of The Oregonian is hailing developer Dave Hill for trying to transform the former Brightwood mill site on SW Century Drive into a retail center – sort of a mini-Old Mill District.
“Clearly, some folks are betting that Bend has too much going for it to stay down for long,” Mapes writes. “It's the kind of optimism I've seen in communities that have made the transition from their traditional natural resource-based economy.”
I wish Hill all the success in the world, but frankly I don’t see what Bend has going for it now that it didn’t have when the bubble popped. In fact, it has a lot less now in terms of jobs and economic opportunity.
And as for transitioning from a natural resource-based economy, Bend has been trying to do that without much success for about 30 years.