Tomorrow, April 25, marks the day when the Bend real estate market is supposed to pull out of its slump – at least according to the cheerful prediction that appraiser Dana Bratton made publicly two months ago. The EYE can’t say we’ve seen any clear signs of a turnaround so far, but maybe it’s too soon to tell.
Meanwhile, however, it’s interesting and possibly instructive to take a peek at the spring “Economic and Real Estate Trends” report (available for download here) recently put out by PMI Mortgage Insurance Co.
Looking at the national picture, PMI’s economists say: “Our models indicate that the decline in house prices is only about one-third to one-half over, due primarily to the magnitude of the supply/demand imbalance in the housing market. This assumes that the current economic downturn is both short and modest, and that the disarray in financial markets ends soon.”
Page 7 of the PMI report features a fascinating map of the United States showing where PMI’s analysts believe home prices will continue to decline. Metropolitan Statistical Areas (MSAs) where the analysts think prices are 60% to 100% likely to drop over the next two years are marked in bright red.
Pretty much all of Southern California is a solid sea of red, as is a big chunk of Northern California and southern Florida. But go north of California a few hundred miles and you’ll spot a little island of bright red smack dab in the middle of Oregon – Deschutes County.
If PMI’s projections are correct, it looks like “The Best Buyers’ Market in 20 Years” hasn’t quite arrived yet.
This article appears in Apr 24-30, 2008.
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The party is officially over! In an article published on 4/24, the Wall Street Journal lists Bend as the most overvalued real estate market in the country. We are the next Florida and we need to get used to it!
mms: That’s kind of old news — originally published in June 2007. The “most overvalued” rating was based on data from the 4th quarter of 2006. Anybody have anything more current?
Great to be in the company of So. Cal, Fla, Az, and Nev. But wait, tomorrow the market turns around – right?! Are you wearing your magic underwear and doing a special dance?
The Bend economy is strong, and the Real Estate Market here will recover faster than the rest of the country for the reasons that even you “doom and gloomies” choose to live here. Keep spewing your negative thoughts, while the experts like Dana prove you wrong. This will be the best time to buy in many years, and nothing you say from here on out will change my mind.
The recovery has arrived.
Ken Powell
Cascade Capital Partners
Ken,
Would you like to back your opinion up with some numbers?
What I am seeing is inventory at just over 1400 homes on city lots and as of today only 69 sold this month. We will probably hit 75 this month. Year over year that’s a 50% drop in sales. Our inventory is up YOY. We have 15-18 months inventory of homes for sale. A balanced market – where prices stabilize – is 4 to 6 months. It will take us a couple years to work through the inventory we currently have.
Prices won’t be going up until we do get much much closer to 6 months inventory. Recovery isn’t when we move from 18 months inventory to 9 months inventory, it’s when we get close to that 6 months where prices will start going up. At 9 months inventory prices won’t be going down as fast, but they will still go down.
You may say Bend is different, but look at when our peak prices occurred and look at inventory levels before and after that. It was this way on the way up and will be on the way down.
Historically prices lag inventory by 6 months so we may not even see prices go up for months after we hit reasonable and healthy inventory.
Foreclosures in Deschutes County are up. Way up. I predict that at least one month this year we will hit as many foreclosures as sales. recordings.co.deschutes.or.us/
PMI – the mortgage insurance company – sees that Deschutes County is heading for big drops. media.corporate-ir.net/media_files/irol/63/63356/PMIERET_Spring08.pdf
Wells Fargo sees Deschutes County is going to continue to see drops and is requiring a bigger percent down. http://www.bendbulletin.com/apps/pbcs.dll/article?AID=/20080319/BIZ0102/803190386/1011&nav_category=
National City sees Deschutes County as the most overpriced still : http://www.nationalcity.com/main/micro-site/economics/commentary-analysis/pages/housing-valuation-analysis.asp?WT.vanity=HouseValuation
Yes, Bend is a nice place to live. No it won’t support the housing prices that we have had. We aren’t that special. Local incomes don’t support the housing prices and the prices of houses in our feeder markets have tanked. If you can’t sell your house in California you can’t buy a new house in Bend.
KTVZ had a report a month ago that moving companies are seeing more people move OUT of Bend than in.
That’s what I see. Ken, what do you see that is different?
Ken embraces the Doctrine of Bend Exceptionalism, which, in essence, holds that the same economic factors that apply to other places don’t apply here because … because … because … well, we’re SPECIAL!
Only thing is, as you say, we’re not that special. This place might be “paradise” if you’re a single 20-something whose whole life revolves around the skiing-snowboarding-mountain biking-rock climbing-kayaking scene and you either (a) have a nice trust fund or (b) are happy to share a crappy apartment or rental house with eight or nine other slackers and work minimum wage, but otherwise … fuhgeddaboudit!