Rollercoaster ride: Local housing market ups, downs and turnarounds

By Linda Whitmore

Just as sighting the first yellow crocus after a long period of dreary days portends a brighter season ahead, the gloomy real estate market is seeing signs of improvement. But whether that promise blooms or fades is yet to be seen.

Real estate brokers in the region all say the past couple of years have been very difficult. In 2008 the number of property sales plummeted, and prices fell. It has been hard on those who make their living selling houses and devastating for those who have had to sell at a loss or have lost their homes through foreclosure.

“It’s tough. We’ve had a really tough 2009,” said Judy Yriarte, managing principal broker of Prudential Real Estate in Silverton. But there are signs of recovery, she and others noted.

Many of the brokers said the federal tax credit for first-time homebuyers broke the log jam last fall. Sales started to pick up in September and October over 2008 year.

Looking at a local-area sales report, Yriarte said, “In Silverton, in October 2008 there were five homes sold. In October 2009 there were 17 sales.”

The tax credit – later extended – had been expected to end in November, so there was a push to close sales before the deadline.

“The first time homebuyers incentive helped. Yes, it’s a good program,” said Ray Salter, principal broker of Your Home Real Estate Services.

The $8,000 tax credit for first-time buyers was extended, and has since been joined by a $6,500 federal tax credit for current homeowners who have lived in their houses for at least three of the past five years. Both are expected to expire in May.

Realtors think the credits stimulate sales. Chuck White, principal broker of Silverton Realty, said the tax break for new homebuyers will encourage some people to get into the market, and the credit for existing homeowners will be advantage for folks now living in starter homes and wanting to move up. The stimulus should have “a domino effect” on sales, he said.

“But the key there is whether people feel comfortable in their job situation to make a move – if they’re comfortable to take the risk (of committing to a mortgage,)”  White said.

Much of the nation’s gloomy real estate scene is due to homeowners who got into adjustable-rate loans that climbed above their ability to make payments. As they got into serious situations they dropped listing prices drastically to get out from under the debt.

This affected the price for everyone wanting to sell.

Connie Hinsdale, owner and principal broker of Coldwell Banker Mountain West Real Estate in Silverton, said, for potential sellers, “We’re recommending to people now if you don’t have to sell, this is not the time to be on the market. They would be competing with people who have to sell, and that drives the prices down.”

Part of the blame for the continuing sales slump goes to the banks as well.

“The trend seems to be that the banks don’t want to lend money. There are people who want to buy, but it’s hard for the average person to get a loan,” said Salter. “Once the banks start loosening up, I think things will pick up.”

To help potential buyers stymied by inability to get a loan, real estate brokers are suggesting alternatives.

“Pretty popular now is the lease option,” Salter said, of a program where people lease a home until they can get a bank loan. “It allows people not to have to get financing for a year or so. It’s a good option for people to get into a place – and for the people who want to sell. It’s a win/win situation.”

Another possible option is owner financing, but the seller must own the property free and clear, and this is rare, he said.

For those who are able to get a bank loan, now is a great time to purchase a home, Hinsdale said. “There are some really good buys now.”

But prices are beginning to recover.

“Our market is getting stronger all the time,” she said. Prices have been gradually rising and the number of sales is increasing.

There are dual advantages of buying now, Hinsdale said.

“If a buyer waits and misses out on the (low interest) rates we have now, he’ll be paying more in the long run. A 1 percent increase in rates is equivalent to a $20,000 increase in the price of the home. So if they wait too long, they’re going to get hit twice as hard, because the price will be higher and the rates higher.”

In the past two years most local homes sold in the low- to mid-$200,000 range, she said. “We didn’t see any sales in the $300,000s until the past four months. Now we have some in the 3s, 4s, and even a couple in the $500,000s,” she said.

Explaining that the Silverton area has a diverse demographic, Hinsdale said families with children and folks who are retiring are drawn to the area because of the small-town appeal, good schools and the sterling reputation of the hospital. “People want to be here,” she said.

And just as the current downturn in real estate didn’t come as soon as other regions across the nation and didn’t hit as hard, she thinks the turn-around will come quickly. “We didn’t have the significant swings like areas that were overbuilt and we are coming out of it faster,” she said.

“If they’re priced right, we’re seeing homes with multiple offers. It’s not as common as the boom years, but it certainly is happening,” Hinsdale said.

“I feel very optimistic about next year,” she said. “I think we’ve seen the worst – it’s not over, we have peaks and valleys – but overall, it’s so much better than it was a year ago.”

Salter had a similar view. “I think we’ve hit bottom. (The market) can’t go anywhere but up – I’m an optimist,” he said.

Yriarte is also taking a hopeful, yet guarded look at the future. “I recently came from a conference where banks, the FDIC and Realtors came together to get an overview of the market in the nation,” she said. “It was reported that in the next two years, there are another 10 million loans due to reset (at a higher rate.)”  That could cause more adverse consequences.

White’s optimism is also tempered. “In the ideal world you’d like to get back to two, three years ago,” he said, but looking at the situation realistically, he’d rather there was a sustainable market than the boom and bust cycle.

Continuation of improvement in the Oregon real estate market is based on the job market, White reiterated. “If people feel secure, we’ll have more likelihood to sustain the growth.”