At first glance, it sounded like the perfect home loan.
When times were tight, Lola could pay as little as 1 percent interest on her Ashland home, postponing a payment or two until the end of the loan. And it was an adjustable-rate mortgage, which typically starts out lower than a fixed-rate Oregon mortgage.
There is no argument that the Jackson County, Oregon housing market is far afield from what it was two years ago.
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.
People looking for houses to buy in Lane County right now are enjoying more of a buyer’s market than the area has seen for years, with more homes to choose from and more time to make up their minds.
The number of houses put on the market in Lane County last month jumped by 25 percent, compared with February a year ago, according to the Regional Multiple Listing Service. Oregon mortgage applicants had about 1,500 listings to choose from in central and eastern Lane County. That’s an increase of 9 percent since December, and a whopping 39 percent more than the number on the market a year ago.
The Florence-Mapleton area had 357 listings on the market in February, up 13 percent since the end of the year. The multiple listing service just began reporting coastal figures in mid-2006; therefore, February comparisons were not available.
The February statistics compiled by the multiple listing service also offer some good news for sellers in the Oregon housing market, though. The number of deals closed last month were up more than 7 percent from the year before. The only dip in the figures came in the pending sales category, where the number of sales agreements signed in February dropped by just over 2 percent from the same month last year.
Norm Brock, principal mortgage broker with Brock & Associates Real Estate, says both buyers and sellers should take care when trying to read the local real estate market.
“At the moment, things are slowing a bit, and the number of houses on the market has increased, but it’s a situation that could turn around quickly,” Brock said. “Sellers have to be more competitive to close a deal, but the increase in closed sales means the inventory may start to go down, so buyers shouldn’t wait too long to make their decision.”
For the year to date, new listings are up 16 percent compared with last year, while closed sales are up 4 percent.
Home prices in Oregon continue to rise, although not as sharply as the way they did in 2004 and 2005. In February, the median sale price for houses in Lane County stood at $233,800. The median sale price of homes sold in January and February taken together was $225,000.
The time it takes to sell a house also has slowed substantially, providing home mortgage loan shoppers with more time to think about their purchases. The average number of days on the market in February was 73 this year, compared with 60 for the same month last year.
The inventory of homes for sale also is higher than it’s been for years, with more than 5.5 months worth of homes available for the first two months of this year. But Brock said he’s confident that the housing market will be good this year.
“We’ve gone through this kind of slowdown many times before, then all of a sudden it turns around and the market heats up again,” he said. “I think we’re in for a good year all the way around - I think everyone’s going to be happy.”
SOURCE: The Register-Guard
Portland housing market buyers are finding more inventory to choose from as the market starts to cool and sellers start to lower asking prices.
The overall number of houses for sale jumped by 80 percent - to 9,901 on March 1 - from 5,503 a year ago, according to figures from the Regional Multiple Listing Service.
The increase reflects the backlog of houses for sale for several months, as well as a 44 percent rise in new listings - 4,155 houses in February, compared with 3,397 a year ago. The number of closed sales fell 6.8 percent in February, compared with a year ago, consistent with falling demand since last fall.
Though Oregon mortgage demand is falling, prices have yet to drop as they have in other parts of the country. The median price was $279,000 in February, 5.9 percent higher than in February 2006.
That’s the lowest appreciation rate since April 2004, when the median increased 5.4 percent.
“Nonetheless, it is still doing better than the rest of the country — nationwide there is still a price decline,” said Lawrence Yun, senior economist with the National Association of Realtors.
The RMLS data cover sales of new and existing houses and some condominiums in Clackamas, Columbia, Multnomah, Washington and Yamhill counties. Many condo sales are handled in-house by agents who don’t list them with RMLS.
Economists don’t expect Portland to experience a sharp drop in Oregon house prices in the months to come. Job growth in the area beat that of the national economy for more than a year, while local growth constraints keep supply from overwhelming demand, said Jerry Johnson, of the Johnson Gardner economic consulting firm.
“It stops developers from doing what they do best, which is overbuilding a market and inadvertently providing affordable housing,” Johnson said of the local home mortgage market.
A year ago, mortgage broker Cheri Axt had very few listings for previously owned homes. It was a classic seller’s market, as frenzied buyers snatched up houses.
“There’d be three, four and five offers on one piece of property,” she recalled. “One even had 11 offers.”
Now, the big change in sales of homes in outer East Portland is its boost in inventory.
“I have twice the amount of listings this year as last,” Axt said.
In addition, buyers are taking more time to decide to purchase a house in this Oregon housing market.
According to the National Association of Realtors, at the end of 2006, the median home price in Portland was $278,000. That was up significantly from a year earlier, when Portland’s median home price was $252,500.
“Last year was the best year for home sales of all time,” said Ron Hackenberg, a broker with John L Scott Real Estate in Southeast Portland.
How much home price appreciation goes on depends a lot on where in Portland they are located, Hackenberg added.
“West of 82nd is still hot,” he said. “The closer you get to the city, the hotter the market.”
In outer East, while the market is still good, prices are coming down, said Axt, who works out of RE/MAX Equity Group, Inc.’s office at Northeast 122nd Avenue and Halsey.
“We have the lowest-priced homes,” she said. Axt lives in East County, and sells houses here. For all of Southeast Portland, the median home price in November was $239,950, and for Northeast the median was $250,000.
“We’re a little bit less,” she said of outer East’s prices compared to the rest of Portland. For that reason, the area attracts a lot of young, first-time home buyers. “Many of them are from out of state, especially from Southern California,” Axt said.
As young people become homeowners in suburban neighborhoods — such as outer Northeast’s Argay neighborhood of sprawling ranch houses and split levels on oversized lots built in the 1950s, 1960s, and 1970s — older homeowners are downsizing.
Another type of Oregon mortgage applicant driving outer East’s housing market is out-of-state investors, Axt said. They tend to purchase (often sight unseen) outer East’s newly constructed, skinny houses on narrow lots, and then use them for rental income.
Outer East Portland’s housing market has adjusted from a period of double-digit appreciation, but that doesn’t mean prices of houses won’t go up again.
“We’re self-correcting,” Axt said. “Our home sales here are great. We’re still going to see appreciation.”
SOURCE: The East County News
Permits for single-family homes dipped 15 percent in Lane County, Oregon, last year, compared with 2005, U.S. Census figures reported by yesterday’s edition of the Register-Guard indicate.
In spite of that, most local home builders still had a good year, according to Ed McMahon, executive vice president of the Home Builders Association of Lane County.
Coming off two red-hot years in the Oregon housing market may make last year’s statistics look artificially gloomy, when in fact they indicate a return to a more stable level of development.
Even so, other ingredients in the construction mix - high Oregon mortgage costs, land scarcity and rising development costs - mean the future for local home builders may not be as rosy as the recent past.
Home builders took out 864 permits for new homes in 2006, the value of which exceeded $179 million. In addition, local officials signed off on more than 80 mobile or manufactured homes, for a total of $11 million.
Last year was good for local builders partly because the Mountaingate subdivision in east Springfield opened up a lot of ready-to-build land.
But McMahon worries that the future may not look as promising.
“We’re seeing more and more of a trend where land that opens up is being built on by a real estate developer. Instead of developing the lots and selling them off to other home builders, they’re keeping it for themselves,” he said.
Available land for housing in the Eugene-Springfield metropolitan area has been shrinking rapidly, McMahon said, driving up mortgage prices and forcing area builders to look to outlying communities for buildable land.
The Home Builders Association has urged Eugene and Springfield to expand their urban growth boundaries, contending that making more land available for residential and other development would lower costs for prospective home mortgage seekers and strengthen the housing industry.
Recent escalation of land costs has led to more development being done by big, out-of-town builders with deeper pockets than most local home builders.
In fact, almost 25 percent of the permits for single-family homes issued last year went to non-Lane County builders.
Housing giant D.R. Horton Inc., founded in Fort Worth, Texas, in 1978 and now operating in 84 markets in 27 states, led the pack with 97 building permits, mostly in Eugene’s far-west Bethel area.
D.R. Horton’s promotional materials tout the company, which completed more than 53,000 units in its last fiscal year that ended in September, as “the largest home builder in the United States.”
Other major out-of-town home builders in 2006 included Hayden Enterprises of Redmond, with 45 permits with a median value of $151,000; JLS Custom Homes of Beaverton, which took out 28 building permits with a median of $166,000; and Adair Homes of Beaverton, with 23 permits and a $143,000 home price.
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In the Portland, Oregon housing market, area home sales slowed in January, with more people trying to sell their homes and fewer trying to buy than in the year before.
Compared with January 2006, new listings were up nearly 20 percent, while closed sales fell more than 9 percent and pending sales by 2.2 percent, according to the January Market Action report from the Regional Multiple Listing Service, or RMLS.
New construction was off as well, with seven percent fewer properties listed as “proposed,”"under construction” or “new construction.” It makes sense: until Oregon mortgage activity picks up, why waste time and money on new building?
The slowdown hasn’t hurt sellers yet. The average home price rose to $322,000, an increase of 8.4 percent, and the median sale price rose to $275,000, an increase of 12 percent. The average and median prices for new construction both increased 16 percent.
According to RMLS, the inventory of 9,841 homes for sale would satisfy demand for approximately 6.2 percent, the highest level in recent years.
The inventory was 3.4 percent in January 2005 and 3.2 percent in 2006. The lower the number, the hotter the market. Rising inventories tend to benefit buyers or mortgage seekers because they can negotiate for lower prices.
According to the Register-Guard, experts predict that 2007 will be a year of continued, albeit slow, growth in Lane County, Oregon.
Financial expert Bill Conerly sounded a note of caution, however, saying he is telling his clients they need to plan for a worsening scenario.
A year ago Conerly, an economics consultant based in Portland, put the chance of a nationwide recession at one in 10.
Now, he is putting it at between one in 10 and one in 5.
Conerly cites a housing market that he says is overbuilt nationally and the volatility of the economy locally as the causes for his concerns this year.
He said he tells clients that they need to develop an early warning system pegged to the sources of revenue that are specific to their enterprise.
Ed Whitelaw, founder and president of consulting firm ECONorthwest, said he was also concerned about the U.S. real estate market, particularly the growing percentage of people’s wealth, or savings, that is in their homes.
Oregon foreclosure rates are increasing, Whitelaw said, which he found troubling.
The housing market is becoming increasingly volatile, Whitelaw said, making it that much more likely that a downturn in housing can coincide with high Oregon mortgage payments and an unforeseen event such as unexpected medical bills.
U.S. Bancorp economist John Mitchell said that, even with the weakness in housing and auto sales, however, the U.S. economy continues to grow and is in the sixth year of an expansion.
Consumer spending also continues to grow, and demand for home mortgages should remain high, he said.
Portland State University professor and consultant Tom Potiowsky said that businesses are going to continue to be in an expansion phase in 2007, after being cautious in the initial stages of the state’s economic recovery. The Oregon housing market should rebound slightly this year.
Brian Rooney, regional economist with the state Employment Department, said he expects new home construction in Lane County to slow down in 2007, “but I don’t expect it to drop off the face of the Earth.”
The Oregon Department of Consumer and Business Services (DBCS) announced this week that it will be making changes to its regulations of the home mortgage lending industry.
The state agency said the changes - which include adopting new rules and guidelines and increasing education and enforcement efforts of existing Oregon mortgage regulations - are a response to repeated consumer and industry concerns.
The new rules, effective Thursday, will implement more stringent requirements for mortgage professionals and ensure that every mortgage broker and/or lender will effectively supervise its loan originators.
The Division of Finance and Corporate Securities also is addressing the increasing number of non-traditional mortgages (often called bad credit home loans) offered to Oregon residents by adopting guidelines for state-regulated lenders.
The guidelines are based on federal guidelines for national banks and other financial institutions, and outline best practices related to two types of non-traditional loans: “payment option” and “interest-only mortgage” ARMs.
With these types of home loans, borrowers exchange lower payments under a low initial interest rate period for higher payments down the line. In an interest-only mortgage, a borrower only pays interest at first, but later must pay interest and principal each month.
The payment could increase substantially - even doubling in some cases.
“[Bad credit loans] appeal to the consumers who may not qualify for a conventional mortgage, and these borrowers often do not understand the risks they may face,” David Tatman, administrator for the division, said in a statement.
“These guidelines will protect those borrowers by directing the mortgage lender to clearly explain the implications of the loans and evaluate the borrower’s ability to make monthly payments even when the loan rates are adjusted after a few years.”