You know the real estate news must be grim if even The Bulletin can't find a way to put a positive spin on it. Bend's daily newspaper reported this morning that a record number of notices of default were filed in Deschutes County in the first six months of 2010.
Happy Fourth of July, everybody.
Through June 30, The Bulletin's Business section reported, 2,053 NODs - the first stage in the foreclosure process - were filed in the county. That was almost 18% more than in the corresponding period of 2009, and we all thought THAT was pretty bad.
As long as foreclosed properties keep piling into the market at fire-sale prices we can't expect to see any rebound in local home values, which are continuing their relentless plunge toward a bottom that still seems to be nowhere in sight.
Zillow.com, a mine of information about real estate prices and trends, has a really cool interactive chart that allows you to visualize how prices have behaved in various cities across Oregon. The line for Bend looks like a ski jump, except it doesn't show any little upturn at the end.
Four years ago, on July 1, 2006, Bend had the spendiest homes in the state with a "home value index" (similar to a median) of $349,000, according to Zillow. (Portland was Number Two, at a mere $287,000.) Then came the dive, and it was a frighteningly steep one: down to $320,000 by April 1, 2007, to $216,000 two years later, and to $168,000 on April 1, 2010. In less than four years we went from the highest home prices among the Oregon cities Zillow tracks to the lowest.
Despite Bend's supposed super-desirability as a place to live, which we heard about ad nauseam during the bubble days, homes elsewhere in the state held their value much better - Portland down 5.9% over the year that ended April 1, Eugene 5.5%, Corvallis 5.4%, Salem 4.8%. The statewide median home value is $209,000, down 7.2% year-to-year; Bend's value is down almost 22%.
And home prices in California, that alleged hell-hole that everybody supposedly couldn't wait to escape to Bend from, actually WENT UP 1% over that same one-year period.
Bend appraiser Dana Bratton paints a somewhat rosier picture in the Bulletin story. According to him, "the median price for a single-family home in Bend has remained in a narrow range since January, perhaps signaling a bottom." Of course this is the same fellow who predicted the Bend market would turn around on April 25, 2008.
According to experts quoted in the Bulletin story, we're now experiencing the second, or maybe third, wave of foreclosures. The first wave was people who bought homes at grotesquely inflated prices that were far more than they could afford; those folks are long gone. Now we're seeing defaults by "investors" (read: speculators) who bought houses at what they thought were bargain prices, only to see their value continue to drop until their equity first disappeared and then went negative. And we're also seeing more and more people who walk away from their homes even if they can afford to make the mortgage payments - so-called "strategic defaults," which may account for as much as 12% to 20% of all defaults nationwide and god knows how many here.
Is there any way out of this real estate death spiral? If there is, I can't see it.