Oregon Mortgage Activity, Home Sales Up in Ashland

As Oregon home price increases slow, sales of existing homes in Ashland are on the rebound after a slump in 2006.

In the three month period from Dec. 1, 2005, through Feb. 2006, 45 existing homes sold. The numbers are up to 61 existing homes sold from Dec. 1, 2006 through the end of February this year, according to the Southern Oregon Multiple Listing Service Statistics Committee.

The median price ticked up slightly from $400,000 to $405,000.

While spring and summer are generally the prime times for home sales, the early figures show Ashland’s housing market may be recovering. Sales of existing homes tumbled from 437 sold in 2005 to 288 sold during 2006.

“We are seeing a return of houses to the market,” said Colin Mullane, a home mortgage broker for Re/Max Realty Group and spokesperson for the statistics committee. “Sellers had to get their head around the fact that they were not going to get the price they wanted. The myth that the bottom of the housing market was going to fall out also faded. Buyers are confident that the house they’re buying won’t fall in value.”

The picture for sales of new homes is less clear, in part because overall trends are hard to see with the relatively small number of new homes being sold.

During the three-month winter period last year, 12 new homes with a median price of $409,000 sold. This winter, two homes with a median value of $467,000 sold during the three months that ended Feb. 28.

Mullane said the overall Ashland, Oregon housing market appears to be recovering, but the white hot market of a few years ago will probably not return anytime soon. Price increases will likely continue at a moderate rate because gains in income have not kept pace, he said.

The recent jump in the number of existing homes sold in Ashland mirrors a national trend. The National Association of Realtors reported home sales rose 3.9 percent in February, the biggest percentage increase since March 2004. The median price fell by 1.3 percent to $212,800 in February compared to February 2006.

Lending problems emerge
The February rise in sales across the nation came before news of widespread lending problems began surfacing in March. Congress held a hearing on Friday where borrowers said they were duped into taking out bad credit home loans with unrealistic terms, the Wall Street Journal reported.

Mullane said he expects to see lenders tightening their requirements and asking for more documentation from people applying for mortgages. That will affect first-time home buyers as well as investors who are buying houses, he predicted.

He said he expects Ashland’s market to remain healthier than some areas of the country because of the large demand for homes here and the limited supply.

Joan Broadfoot, broker/owner of Ashland Mortgage, Inc., said her company deals mainly with quality Oregon mortgage loans, not the subprime loans used more often by people with credit problems.

“Usually to afford a home in Ashland, you usually have good credit,” she said.

In March, Broadfoot estimated her company brokered twice as many mortgages compared to February as more people bought homes and went through with mortgage refinancing on existing loans.

She said people who are interested in taking the step into home ownership should visit a lender and get prequalified for a loan. But Broadfoot cautioned would-be buyers to be aware of their budgets and not just take out the maximum amount they can get.

“I tell people, ‘I can get you approved at this level, but that doesn’t mean you should do it,’” she said.

Linda Cade, housing director for the Consumer Credit Counseling Service of Southern Oregon, also said buyers need to exercise restraint.

“A lender’s job is to get the most money for you. Your job is to know if you can afford it,” she said.

A good method to determine if you can afford a mortgage payment is to set aside the difference between renting each month and the cost of paying a mortgage, property taxes and home maintenance costs.

If after six months, putting the money in savings was not difficult, consider buying a home. A bonus to the method is that buyers can use the savings to help with a down payment, Cade advised.

Paying the mortgage
Cade said she is seeing people from throughout the Rogue Valley, including Ashland, come into the CCCS office in Medford because they bought houses and are now having problems paying their mortgages.

The problem is less about shady lending practices and more about the pressure people felt to buy when prices were skyrocketing. Many people felt that if they didn’t buy a home soon, they would never be able to buy a home, Cade said.

Some people bought more expensive homes than they could afford because they thought they could sell a high-end house for greater profit. Then the market cooled, she said.

People who were barely making their mortgage payments find it very difficult to do so when faced with an event like a job loss or divorce, Cade said.

Some home buyers are running into problems because their initial interest-only payments have switched to interest-plus-principal. Some mortgages also start out at a fixed interest rate and then change to a higher adjustable rate, Cade said.

If a homeowner’s credit is in good standing, refinancing may offer some relief. Changing to a longer-term loan may also help, although homeowners need to keep in mind that they will pay more over the life of the Oregon home loan, she said.

CCCS offers a range of services, from budgeting classes to help people who just need to control their expenses, to more intensive counseling for people with serious financial problems. As a last resort, some people may need to sell their homes.

“Two years ago, if we suggested people sell their home, people were very resistant,” Cade said. “Now people are coming in and saying, ‘I know I can’t keep it. It’s too much for me at this time.’ All indicators are it’s going to be a challenging time.”

SOURCE: The Ashland Daily Tidings