Encouraging news continues to filter through regarding Central Oregon’s volatile residential real estate market, with a new industry report indicating potential progress towards stabilization – though public confidence continues to be the wild card.

One real estate report’s authors also identify an interesting recent trend of more out-of-state buyers, who may have been monitoring the region before deciding that now is the time to move off the fence and act on what are perceived as good value opportunities.

The November 2009 review included as part of the “Perspectives” newsletter issued by Taft Dire Real Estate Resources reports that overall Bend’s inventory is down to under five months supply (based on a 90-day moving average) and that new construction stands at a more normalized level of just over six months supply.

Multiple Listings service (MLS) data shows closed properties continuing to increase each month as inventory drops. Even the bank-owned and short sale picture shows some improvement.

The year began with bank-owned properties comprising almost eight per cent of the total listings, while short sales made up about 16 per cent. Last month ended with bank-owned down to 5 per cent but short sales at 41 percent.

Combined, that means that almost half of the active listings in Bend were “short” or bank-owned, with the majority being short.

Taken as the sole indicator, that doesn’t sound like an improvement, but a number of points need to be taken into consideration:
• Firstly, short sales seemingly hit their peak in August with 446 properties listed or contingent, while bank-owned properties topped out in February at 106. By November this year, we had 356 short sales listed and only 49 bank-owned. Local realtors are hoping this downward trend will continue;
• Bank-owned properties closed per month have risen from 20 in January to 64 in November, while short sales have increased from 9 in January to 40 in November. If this momentum is sustained, we could burn through the distress-oriented inventory at a rapid pace, which is anticipated to help stabilize pricing;
• The sold and closed price per square foot for short sales hit a low of $100/sq ft in the summer and has been increasing to the $109/sq ft level by last month. Bank-owned closed price per sq ft hit its low of $103/sq ft in May and is now hovering around the $112/square foot range;
• Contingent short sales contracts written peaked in September with 89 recorded. October and November were 47 and 46 respectively;
• The length of time between the contract written for a short sale and the actual closing continues to average over 90 days. Of the 173 contingent short sales in the MLS, 26 percent were written in November, 22 percent were written in October, 24 percent in September and 28 percent were written prior to September 1.

Taft Dire CEO/Principal Broker Bill Duffey commented: “Inventory is going down, for example in respect of new homes because not that many people have the capacity to build in the current tight lending climate.

“We are also seeing, at the higher end, money coming in from other areas and finding value in the
Bend area.

“For one thing, the stock market has held up surprisingly strongly, and some affluent buyers are maybe feeling more optimistic regarding the economy’s prospects. They are bringing in money that has been sitting on the sidelines and are willing to step in, and see Bend as value right now.”
Duffey observed that in the realm of bank-owned property, the banks had shifted their stance towards a more aggressively priced mentality and as a result were seeing multiple offer scenarios, while “bottom fishers” were missing out.

He added: “I am really curious to watch what happens in the next 90 days or so.
“The fundamentals of the market appear to be stabilizing, but it will be interesting to see if confidence is back.”

“If the current apparent trends continue, 2010 could be an encouraging transitional year.
“Also, one of the pleasing things we have seen over the last six months is the amount of people from out of state who have been buying in Bend, including those hailing from everywhere from Alaska to Washington D.C. and Tennessee.

“It appears interested parties with liquidity have been watching our market and feel good about our current value range.”

Taft Dire CFO/Broker Pat Huber also assisted in compiling the company’s “Perspectives” update.
Meanwhile, Shelly Hummel, of Coldwell Banker Morris Real Estate in Bend struck a slightly more sober tone.

In recapping the market as the year draws to a close, she acknowledged that sales have improved, but says that we may have only hit the bottom “in certain market sectors.”

She said: “The fact remains that around 50 percent of the closed transactions are either bank owned or short sales, mostly in the under $300,000 category, and these sellers are not moving back into
the marketplace.

“In a more normal climate, people would typically take advantage of equity appreciation and ‘move up’ into the next tier of properties, so, for example, the $300,000-$600,000 range properties could suffer from the negative impact on demand.

“That is the other part of the short sale scenario – that those people who give their properties back are now renters for the next three to five years, plus they will lose the tax benefit of mortgage interest relief derived when you own your personal residence. And they likely can’t get back in to the market any time soon.

“We may not have seen the bulk of the potential distress that could be around the corner.”
Hummel added that what happens in California could be key to our potential future success, and the powerhouse state would need to see some turnaround in its fortunes to help us the Central Oregon market regain some tractions in terms of in-migration.

All active listings for Bend decreased by 101 to a total of 793 properties last month, representing 4.6 months of inventory with another 182 homes closed in November - the same as October.

Of the total active listings, 131 were for new construction (16 percent).  Some 26 new construction homes closed last month, bringing the supply to 6.6 months including “to be built” inventory.

All active listings for Redmond decreased by seven to a total of 367 in November. There were a total of 66 homes closed last month, which represented a 90-day rolling average of 5.4 months of inventory. Seventy-five percent of the closed homes were under $150,000.

Of the total listings, 47 were listed as new construction (12 percent).  There were 13 new construction homes closed in November. Based on a 90-day rolling average this gives 3.6 months of new construction inventory. Around 61 percent of the closed new construction sold for under $150,000.

Taft Dire can be reached at 541- 728-0033 or  info@taftdire.com
Shelly Hummel: 541-383-4361;  shelly@sellbend.com