Veteran real estate broker: 'Slowest July I've ever seen'

By Barney Lerten and Kelsey Watts, KTVZ.COM

Bend-area home prices are on their way down - no surprise to anyone buying, selling or watching from the sidelines. But new federal data out Tuesday shows they are dropping here much faster than the national rate - some would argue because they had much farther to go from unsustainable levels.

Meanwhile, a private firm's report shows Bend foreclosure rates were four times higher in June than seen a year ago.

The Office of Federal Housing Enterprise Oversight says U.S. home prices fell 1.4 percent in the second quarter of the year and 1.7 percent from a year ago.

Bend, in 2006, hit the very top of the OFHEO's market-appreciation list, as well as another ranking that showed Bend's homes were the most over-appreciated, meaning priced beyond their true value.

That's definitely not the picture any more.

The Bend metro area - which is actually all of Deschutes County - ranked No. 240 out of 292 metro areas in the latest OFHEO home-price rankings, with a second-quarter home-price drop of 3.91 percent and a year-to-year plunge of 7.15 percent, though the five-year appreciation figure still shows a (smaller) gain of 66.08 percent.

"This is the slowest July I have ever seen in real estate," said Jim Brennan, a real estate broker who has worked in Central Oregon for several decades.

That's after years of new construction, quick sales, and a booming market. "We had some prices that were going up 30 percent, 40 percent in one year, in certain price ranges," Brennan explained Tuesday.

Our once-soaring housing market is now making headlines for prices dropping fast.

"There's a lot of land that was sold in Bend for very high prices," Brennan said.  "And now, if you can find a buyer, it would go for half the price."

"Every block you go in town, there's probably four out of 10 houses that are for sale, in one form or another," Brennan explained.

And that's making for slow sales across the board.

"Where I may have shown seven or eight houses before, now I'll show 30 houses before anybody makes a decision - if they make a decision," Brennan said.

Bend is not alone in its home-price tumble, to be sure. But as OFHEO Director James Lockhart noted, many - in fact, most - cities still saw a rise in year-to-year home prices.

"Tighter credit conditions and relatively high inventory levels led to some sharp price declines in the second quarter," he said. "However, the majority of metropolitan statistical areas posted positive four-quarter growth."

The full report can be viewed at http://www.ofheo.gov/newsroom.aspx?ID=452&q1=1&q2=None (Adobe Acrobat Reader required.)

Meanwhile, Bend's foreclosure rate among outstanding mortgage loans reached 0.8 percent in June, four times the 0.2 percent seen in June 2007, according to First American CoreLogic, a real estate market research firm.

Still, that's only half the 1.6 percent national foreclosure rate reported in June, the firm said.

Bend's mortgage delinquency rate also is way up, according to the report, with 2.2 percent of loans 90 days more delinquent in June, compared to 0.5 percent a year ago.

Jill Armstrong knows all too well what's happened to developers on the High Desert, as well as home buyers and sellers. She and her husband bought two acres of land in Redmond and got city and zoning approval, creating 16 town home lots.

"We got it through on time and under budget, thought we were doing great - until there were no buyers," Armstrong said.

With so many properties on the market, the Armstrongs didn't sell, and the bank took it back.

"We went through a million dollar foreclosure, we lost a rental house, we lost a lot of money we had into it," she said.

Although the deal officially wrapped up in February, the family is still struggling to pay it off.

"We still have things that we could lose," Armstrong said.  "So it's a matter of fighting the fight every morning when you get up."

First American CoreLogic's data that tracks price trends for repeat home sales showed a much larger drop in Bend home prices, off more than 15 percent in June, compared to a year earlier, to a current median of $310,000. By comparison, the report says home prices nationwide are down 10.7 percent from a year ago, to a median price of $208,000.

On the sales side, Bend's single-family home sales were off almost 30 percent in June from a year ago, with 89 transactions, compared to 126 a year ago. That's only a bit better than the 35 percent drop in home sales seen nationwide, the firm reported.

Of course, the slowdown has to turn around sometime.

"It's happened before, it'll happen again," said Brennan.  "This is just a bigger bump than we've probably ever seen."

Obviously, it's nearly impossible to predict when the market will turn around.  But many experts agree, we won't see any big changes until the inventory that's on the market now sells.