Speculators ‘Trying To Sell And Flooding The Market’
A housing report from Oregon. “At Northwest Crossing, construction crews are working at a torrid pace and literally laying a foundation for the future of Bend. with Brooks Resources Corporation describes Northwest Crossing. Already, 350 homes in Northwest Crossing have been sold, with another 100 expected to be snatched by buyers in the next year. Developer Mike Holleren says the master-planned community will have more than 700 new homes.”
“Builders are cashing in, too. The Central Oregon Association of Realtors reports the median sale price for a home in Bend is $343,950 for the first half of 2006, a 33-percent jump from last year. Compared to Portland, the median home price in Bend is nearly $80,000 higher. In fact, Money Magazine listed Bend as the fifth most overpriced housing market in the country.”
“‘Prices have gotten a little higher maybe (than) they should have,’ said Holleren. Holleren said the red-hot housing market was showing signs of slowing down. ‘Right now the housing market is cooling,’ he said.”
The Columbian from Washington. “Clark County’s housing market continued to cool in August with home sales down nearly 30 percent from sales in the same month last year. According to an appraisal firm in Vancouver, 944 new and existing homes sold last month compared with 1,331 homes in August 2005.”
“Last month’s sales decline continues to signal the end of the red-hot real estate market of the past three years and the return of a more normal market, said (broker) Scott Mikel in Vancouver. He said market conditions call for more patience on the part of sellers.”
“The decline could reflect fewer buyers purchasing homes as investments, said Randy Hunzeker, president-elect of the 2,200-member Clark County Association of Realtors. ‘The average buyer is still out there, but those who invested last year are now trying to sell and they’re flooding the market,’ said Hunzeker, an agent in Vancouver.”
“While the median selling prices remained firm at $271,000, experts say prices could soften as the number of houses for sale climbs. ‘Perhaps sellers have an unrealistic sense of what their house is really worth,’ said broker Kathy Rylander. ‘The higher prices have slowed, there’s no question,’ Rylander said.”
“Mikel..agreed buying has cooled here and nationwide. ‘We’re doing OK,’ Mikel said. ‘Most of the people we sell houses to are people from outside the area coming here. I believe that will continue.’”
‘Sherwood may look like a pleasant place, but an economic analysis says the city has an ‘abysmal’ mix of jobs, too few, and housing, way too much. ‘Things look very poorly for the city if you define it by tax base — 80 percent is residential,’ said Kevin Cronin, Sherwood’s planning supervisor.’
‘The report points out that Sherwood has grown rapidly, with the population increasing from about 3,100 in 1990 to nearly 15,000 in 2005. But the city emerged ‘housing rich and jobs poor.’ ‘It’s a beautiful and healthy place to live, and people like that,’ Consultant Kirstin Greene said. ‘It’s evidenced by the residential demand.’
I live next to Sherwood (Tualatin), the place is overpriced with no economic growth.
I live in Tualatin, too. I agree that Sherwood is overpriced, just like everywhere else, but I don’t think economic growth matters. The people who live there commute, they don’t expect to work there, do they? The people I know who live there like the small-town feel, and don’t mind commuting to where they work.
Dang - I’m in Tualatin myself! We should start a bubble blog chapter or something.
MV, I think you’re right about the small town feel people are looking for but by moving there en masse, people kill the thing their seeking.
“Call some place paradise - kiss it goodbye.”
ACCROYER,
My wife worked for a Fortune 500 Co. off of SW 72nd for years. They (like many others) packed up and moved to Wilsonville! When we say that Sherwood is housing rich but job poor couldn’t that describe just about any town in OR?
Except for Hillsboro/ Beaverton (intel, Nike). Oregon will soon be known as a two state employer. If you move here, you better like shoes and computers.
ACCROYER,
I’ve heard old-timers say we have three types of employment in Oregon. Timber employed, State employed and……un-employed.
(Substitute as you see fit!)
Sounds like nonsense. Can you provide some numbers so I can try to quantify “two state” employer? I’d like to be able to say “If you move here, you better like shoes and computers because Nike and Intel account for X% of Oregon’s economy.
Oregonian September 6, 2006
There is a very good article talking about the impact intel will have on the local economy, considering they pay about double when compared to other tech jobs in the vicinity. this article also goes on to mention is in the same boat. The industries I forgot to list were a Barista, Nurseries (hope you like Christmas trees), construction and landscaping.
Michael: Obviously, this is anecdotal, but when I lived in Eugene I had to fight to get a part-time, minimum wage job in retail. I was flat-out told that my college degree was a liability. One of my co-workers was a bilingual lady (Ukranian and English) with a doctorate, and after she was framed for false returns (the manager who “caught” her was later implicated, but only after she’d framed several employees), she had to go work in housekeeping.
I went on a retreat in Southern Oregon, and another attendee told me she was in training to be a receptionist, her “dream job” and one of the biggest-paying positions in the Roseburg area at $12/hr.
Also while I was in Eugene, the only tech employer pulled out of the city, with a job loss of 600 people. Eugene runs about 160,000— with the University of Oregon. 600 people is pretty significant.
When people say there are no jobs in Oregon, it isn’t just a joke. It’s a sad, sad reality.
(NB: there are some reliable jobs in the state, especially in regards to farming and nursing.)
Agreed….about like West Linn and any number of other communities feeding the Rose City. Last I checked, about the only one with an real jobs was Beaverton. I don’t know if the Intel layoffs have affected the area. Any idea?
“It’s a beautiful and healthy place to live, and people like that,” Consultant Kirstin Greene said…
———————————————————————————
Isn’t that special.
Lots of places in this world are “beautiful and healthy” places to live.
Only proplem is, most of those places are isolated and devoid of any decent homeowner-wage type jobs.
I could move back to the beautiful hills of Southwest Virginia; but my job choices would be between the sawmill and the coal mines.
No thanks. Nice place to grow up and to return for visits….but because of the lack of a strong economy it’s not a place to try to buy a home and make a station in life.
Excellent post. I anticipate the plethora of bubble towns across this nation which offer little, if any, jobs to support the insane spike in housing prices will face absolutely staggering price declines.
BanteringBear,
Like my dad always used to say:
“Son, you can’t eat scenery”!
Oh and thanks for sticking up for me the other thread!
Yep,
like my very wealthy uncle used to say about very, very high restaurants..
You can’t eat the ambiance.
DinOR
Wow! My dad used to say “You can’t eat a view!” when considering a real estate purchase. To this day I do not think I understand what he meant. It’s interesting that your dad said something similar as I have never heard the phrase anywhere else.
PNW_Terry,
Well my dad used to say a lot of cr@p. (Some of which I later learned was true!)
DinOR: some truths take aging to understand. Some more aging than others….
Maybe you can’t eat a view but a view can be taxed.
http://www.boston.com/news/local/articles/2005/12/28/a_tax_bill_as_big_as_the_view/
Assessors valued his property and land at $300,000 and then slapped on an extra $200,000 for the panoramic view of Mount Cube and Smarts Mountain. Bouzoun, who received his property tax bill this month, was shocked to learn he owes the town more than $8,000.
Yeah….she forgot to mention it’s the People’s Republic of Portland….where no tax is too high.
Maybe she should strole done to Pioneer Courthouse Square one evening.
I work in Vancouver next to a development of row houses that went up last year. People who were here when they broke ground said there were lines to buy the units pre-built. Now out of 130 houses, 31 are for sale. Its been between 30 and 33 all summer long. 20 on one street - it would make a great picture for the gallery but I never remember my camera.
Every time MSM listed these “nice places to live/retire to ,the locust would go in and buy it up regardless of economic base . These stupid speculators bought at peak prices .
Bend sound like it might make a good retirement town , but people are looking for a deal when they retire ,not peak prices .
“It’s a beautiful and healthy place to live, and people like that,” Consultant Kirstin Greene said…”
They say that about Boise too- and we’ve had several days this year when the air has been worse than LA because of smog and wildfires.
The equity locusts end up ruining these “nice” places through runaway growth that brings traffic, crime, smog, and other social ills.
Yeah, Flagstaff, Taos and Sedona are great too. If you have a trust fund or telecommute.
And Bend is about the same as those others… no visible means of support (at least very little). Time will tell.
One blogger who lives there once described Bend as “poverty with a view”.
Or if you roast coffee beans, take tourists in a pink jeep to see harmonic rocks, sell “visual poems”, or grow pot.
Don’t forget the power of a vortex, which arises because of the magnetic rocks.
Those people were hilarious, especially to a physicist.
Remember the “harmonic convergence”?
Locals called it the “moronic convergence”.
Are you a local? It’s a beautiful place… I’d love a on-the-ground report of RE there.
Go to the Bend Economy Blog (google it, it will pop up). I am going there this weekend to visit friends.
27 years in bend, 2.5 on the edge in the city. Developers have stopped knocking on my door with offers of 1.5M Bulldozers all day long on all sides. I love it here. 300 year old stand of pines, over my dead body. Hope you’all stay away. Free and clear remodeled mfg. home. Where whould I go with dollars not worth 80%. Thanks to this blog, I will just sit tight until they bury me.
just got back from bend and they are still building homes on the deschutes upstream from general patch bridge.took my dad fishing he loves it there.the fish are getting smaller due to too many people.great place to retire but not much work unless you build homes.there is a cutie bartender gal at vicks bar and grill in la pine though.
How does Garland’s stay in business there in Sedona? I love the place and have bought several rugs from them but they’re EXPENSIVE and surely everyone who lives there is rugged out!
Next time you’re in Gallup, stop at Richardson’s Trading Post/Pawn Shop in old downtown, and check out their rugs. Better prices, better quality, and their old pawn stuff is amazing. I mean, museum quality.
I’ve been there. Love that Four Corners area.
Do you really like Gallup?
The other bad news about ‘beautiful places’ are that the locals are, all too often, subhuman, ugly and mean.
Funny you should mention that, Frank. There used to be a poster on here who lived in Vermont or New Hampshire; he’d talk all the time about how beautiful it was, and how it was being ruined by those subhuman, ugly, mean Italians coming up from the cities.
Of course, just from reading one sentence from you I’m sure you’re a beautiful human being.
I liked those threads, until it got over the top blatantly political.
There is a genuine issue with equity locusts looking for greener pastures and bringing the problems they hate with them to new places and fouling those places.
The grass is NEVER greener and most humans problems are internal to those specific humans. Your problems travel with you.
“Flippers Flee, Long-Term Investors Hold On”
http://www.voiceofsandiego.org/articles/2006/09/14/news/01invest.txt
That’s rich! It reveals the secret to risk-free real estate investing, where you never, ever will lose a dime:
‘Dennis Balagtas doesn’t flip over get-rich-quick schemes. A land surveyor by day, real estate investor on the side, Balagtas has a long-haul attitude about the four properties he’s purchased in San Diego and South Carolina since 2001, and the two in Colorado currently in escrow.
“I don’t anticipate selling any of my properties,” he said. “Ever.”‘
Believe it or not, it gets better! I am sure with Option ARMs on all his properties in a market with rising interest rates and falling home prices, Balagtas will have no problem hanging on to his real estate empire forever. Luckily for him, he has followed his investment advisor’s suggestion and diversified into other markets. As we all know, there is no national real estate bubble, only a few locally frothy hot spots.
———————————————————————-
Balagtas has used adjustable-rate mortgages on all of his properties, a decision he said he researched extensively before making. He said the payment options allow him some breathing room if another of his mortgages adjusts.
“You have to ask, ‘Do you have enough cash reserve to make the payments?’” he said. “The reason I’m not as worried about it is because I have expanded to other markets.”
That advice came to Balagtas from Lisa Vander, president of Pacific Blue Investments in Solana Beach. She said the slowdown in the housing market of late hasn’t dampened her estimated 3,000 clients’ enthusiasm for investing in real estate.
“I have been touting conservative investing — get out there but make sure you know what you’re doing,” she said. “Take the money (home equity) out safely and strategically.”
“she said. “Take the money (home equity) out safely and strategically.” ”
Err…..substitue ATM for home equity and you’ve got a bank commercial….
Sorry to go on-and-on, but the logic here is dumbfounding. I cannot overstate how much I look forward to the day when all of these folks are lamenting what a terrible idea it was to invest in real estate.
Check out this guy, who understands that flipping homes in Phoenix is bad, but is highly confident that his own recent modest investment in a single second home, purchased near the end of the biggest-ever speculative runup in US real estate prices, is sure to appreciate in value over the next decade:
———————————————————————————
Dennehy thinks people should buy the house that they live in and not much more, so as not to disturb the supply-and-demand cycle that keeps the economy stable.
“You do not need to get on a bus and go to Phoenix with 40 people to buy condos,” he said. “That skews markets. It’s not real demand.”
“When everybody does it, it’s over,” he added. “They had a good time until 2005 or so.”
Dennehy purchased a home himself earlier this year, and trusts its potential for long-term appreciation, despite any short-term fluctuations its value may sustain. He said historical data show that values for San Diego housing, when viewed in 10-year chunks, have always increased, even though they may have seen some ups and downs.
“I’m confident that my house will go up in 10 years,” he said. “I’m not so confident that in 12 months, my house is going to go up.”
The parallel to “bad stock trade” psychology is uncanny here. You buy QCOM thinking it’s going to go to $1,000 like that analyst said in late 1999 or early 2000 (forget the exact date). You aim to flip your shares quick and make a killing in a short period of time.
But horror of horrors, your shares don’t rise … they start sinking. So you decide your quick “trade” is really a “long-term investment.” You convince yourself the market is wrong, and that by just hanging on for a bit longer, you’ll end up making money. What really happens, though, is your loss grows by the day … the week … the month … and eventually, the year. And when it’s all said and done, you end up selling when you just can’t take the pain any more. And that’s when the stock bottoms.
Unfortunately, in real estate, there are hefty carrying costs you don’t have with stocks. You literally have to come up with hundreds, or even thousands, of dollars to support your bad investment month in and month out. Amazing that after going through the dot-com boom and bust only a half-decade earlier, people got caught up in the same stupid type of mania with housing.
“You literally have to come up with hundreds, or even thousands, of dollars to support your bad investment month in and month out.”
Lucky for all these investors that so many of them are able to at least keep their monthly payment to a bare-bones minimum through the magic of Option ARM financing
Lucky for us, we get to watch the exitement as when their loan balance reaches 110% or the origination, the loans “convieniently” convert to fully amortized.
I agree. Thats why the analogy is more appropriately buying QCOM on margin… since your pets.com stock was doing so well…
“But horror of horrors, your shares don’t rise … they start sinking.”
An old, old story on Wall Street. An Investor is a burned Speculator”
Flippers Flee, Bagholders Hold On
Anyone know whats going on in Eugene OR? I have a friend that bought some land there a couple years ago and says that RE is still booming.
I think his pride could be in the way of the truth.
Eugene is not booming and never was. All you there is the Uof O and a bunch of pot smokers.
and lumber jobs… but there is some semiconductor manufacturing, and some software. Eugene grows slowly, as does most of Oregon. Remember, they don’t call us webfoots for nothing… it rains here. My joke is : it only rains 36.5″ per year, which is less than New York, Miami… but what they don’t tell you is… it’s a tenth of an inch a day. Every day.
Gene,
To my knowledge much of the “boom” has passed Eugene by. The heaviest concentrations of equity locusts are in (of course Bend) also Ashland (basically on CA border) and Bandon (basically on CA coast). Eugene and Corvallis have seen above avg. appreciation (both are college towns) but nothing like “resort” towns. I suppose a lot of parents bought for their college aged kids but that goes on in any college town. There are a few examples left where incomes and home prices have to stay “tethered” b/c professors aren’t likely to want an I/O mortgage?
By the way, Oregon colleges pay poorly. We’re #46 in the nation in per-capita higher-education spending. Thus, you get people like me - California-educated.
We don’t have rich professors getting big mortgages, I/O or otherwise.
MacAttack (and others)
I realize that posts in your neck of the woods have a natural tendency to attrack folks in that area but I had NO IDEA this large a percentage of “regulars” were from the PNW? Never in a million years. I’m frankly a little shocked.
Then again should I be? Even though our homes “appear” cheap to CA’s etc. I consistently see data that Portland has gone from one of THE, to one the LEAST affordable metro areas in the country! (Yet we’re fed a steady diet of: “It may crash hard elsewhere”) yada yada. It’s reassuring for me to see so many locals view our market in a similar light.
Brandon and audet certainly included! (Included in what, I have no idea!) See you all at Oktoberfest!
DinOR: I’m also from the Portland, OR area (Vancouver, WA), and regularly read the blog. Maybe somebody should start a Portland blog (you?)…
I’m from Vancouver, WA too!.. Someone I know bought a house in Longview, WA with the intention of flipping it. That was about a year ago but the house hasn’t sold and is starting to bite him in the butt.
vancouverwa,
WOW! Up until now all I’ve been fed was “it’s different here”, “we won’t be affected at all/as much/as bad” etc. etc. You’ve probably heard it all too! I would love to! (If I knew how to set up a blog!) Please “rattle my cage” over the next few threads or if Ben would be open to having a “Debacle NorthWest” thread I would be open to that as well. Denial, sadly…. runs deep in the PNW!
I’m a long time lurker on Ben’s blog in Nob Hill area near downtown Portland. I think a blog or something we could set up for this area would be great! It’s pretty simple to do really. I’m a web designer and could point out how to do it, but I’m rather a newbie when it comes to real estate and I am enjoying learning from everyone’s wisdom and experience. The PNW’s time is definatly coming. I’m glad and appreciate all of the recent articles on this blog and always look forward to your comments DinOr and others.
Yes! Start a Portland blog : )
with another 100 expected to be snatched by buyers in the next year….
when donkeys fly
It always warms my little heart when I hear Bend, OR being referred to as the FIFTH most overpriced market in the whole country! For those of you on the east coast and mid-west how many can point to Bend on a map? Seriously. Uh, that’s what I thought.
Yet somehow it’s managed to out pace most in it’s sheer greed! When it’s all said and done Bend (and surrounding cow towns) will become one of the great poster children for “flippers gone wild”. Like I say everyone there is either a builder, contractor, realtor or mortgage broker! And people talk about CA’s post 9/11 recovery being RE dependent! What’ll be great is that so many “fake money” people from Portland will wind up losing their primary residence trying to salvage these white elephants in Bend!
Mr. Seinfeld, more strawberries? More champagne?
Yes, I’d like more……everything!!!
For those of you on the east coast and mid-west how many can point to Bend on a map?
I’m not entirely sure I can find Oregon on a map.
NW Crossing is a big speculative/flipper development. Equity locusts caused the prices in that neighborhood to increase from the $270’s to over $600K. However, the Bend market has cooled as inventory is skyrocketed and prices are starting to drop. It is estimated that up to 40% of new homes built were speculative.
Here are the August MLS numbers:
Sales down 37% YOY
Inventory 290% YTD
Median Price is still increasing ($380K) but median and average list prices are coming down.
mwj,
Thanks for the “on site” intel! Sales down 37%, inventory UP 290%? You’re kidding right? No seriously, t h o s e a r e t h e n u m b e r s? Not numbers like that? T h o s e a r e t h e n u m b e r s?
Oh but median price is still increasing so everything is cool, right?
Yes, go to Realtor.com and you’ll find 2200 listings for Bend… 800 more in the area. Some are repetitions or timeshares (a few) but we’re not counting the FSBOs, either. I’m blown away. I don’t see 4400 new family-wage jobs dropping in any time soon.
DinOR,
No, things are not cool here (although we may get some snow in mountains this weekend). As you are probably aware, Bend’s economy is very RE & tourism driven. Everyone here is drinking the kool aid and has no idea the train wreck heading our way.
The local media has always been pro RE but the last article did at least look through latest median price increase.
http://tinyurl.com/pq3mr
DinOr-
Isn’t Bend one of those boomer retiree areas that’s been slowly building for decades? I’m guessing a lot of people drove through, liked it, or followed their neighbors and bought their “vacation home” there.
Could you guys find out what happened to the listings on these homes?
115 S. Mohler Drive, Anaheim Hills 3,800 sq ft+ 4bd/3 1/2 bath $1,485,000
and
111 S. Mohler Drive, Anaheim Hills 3,645 sq ft 4/3.5 $1,495,000
The builder is SEPULVEDA BUILDERS, Inc.
This is the email I received from the ziprealty agent about the financial state of the builder:
Builder’s construction loan has expired needs to refinance. but if we submit offer today may be able to hold off from the refinance. If he does a refinace that means it will cost probably $10,0000 or more in cost for him to do so. which would eat into the profit and cause less reduction for you if you still are serious.
Time is of the essence,
Connie Beverly
Broker Associate, REALTOR (R)
ZipRealty, Inc.
Licensed in California
connie.beverly@ziprealty.com
Toll Free: 1.800 CALL ZIP x5204
Cell: 714.914.6115
Fax: 888.754.6048
My Profile: http://www.ziprealty.com/agent/cbeverly
Run away screaming. Unless you were informed about this need to refinance, along with today’s date, this is a scam in order to invent pressure.
There are going to be one zillion properties that are good or better than this in 6months, so walk away, or use the opportunity to throw a heckuva lowball.
That is one sleazy note. It’s basically “threatening” you with having to pay a higher price if you delay?
I’d lowball these people BIG TIME. And then walk away happily if they say no.
OT — I just saw a banner ad for a $200K loan requiring no SSN and was wondering what would stop someone who already got a huge liar loan from going out and getting another one and lying about the loan that they already have, ie not telling the loan officer/bank that they already have a loan.
Now that I think about it, why is there even a ceiling on what people can borrow with the liar loans if they can just borrow 125% of whatever they want and just make up their income and provide no documents? Can I just buzz over to the nearest mortgage place and get a loan for a million bucks even though I’m unemployed?
WTF? These articles portray speculators like they are the anomoly in the market. LIke if they went away, all the serious grown-ups would buy/sell in a very healthy market.
Hell, they ARE the market.
They are whole mother*shutyourmouth* economy.
Our economy is entirely based on bubbles.
Lol . Catherine you are so right in saying “they are the market “.
testing posting delay….
Sorry if this is a re-post:
This thing
http://realtytimes.com/rtcpages/20060914_goodmarket.htm
starts out quite promising. No more newspaper bashing! Are you listening Blanche Evans?:
“It’s never easy to be the messenger of not-so-good news, but it apparently has fallen upon “the media” to bear the bad tidings of the slowing market and all that it entails.
A business writer I know produced an exceptionally even-handed piece on the most recent Office of Federal Housing Enterprise Oversight report showing home prices increasing in the second quarter at a 4.7 percent annual rate, “the slowest since the fourth quarter of 1999.”
The next day, a Realtor accused the writer of filling the newspaper with negativity and threatened to pull advertising — an idle threat, since brokerages and builders tend to increase advertising in markets in which houses aren’t selling themselves.”
Then it turns silly:
“Now is the time to buy, because there’s a lot on the market, fixed interest rates Sept. 7 were 6.47 percent and one-year Treasury-indexed ARMs just 5.63 percent, and when you consider that fixed rates when I bought my first house were at 18 percent, you’d be foolish not to.
In addition, there are a lot of mortgage products that will provide the first-time buyer with even lower rates and costs, if they shop around. Even in the 18 percent days, I was able to find a 13.5 percent fixed rate. With more houses on the market and less competition, buyers can take a little more time.”
Did you catch that: “there are a lot of mortgage products that will provide the first-time buyer with even lower rates and costs”
And now for the investment advice:
“If you want property, buy a condo that is lingering on the market and rent it until median prices return to their dizzying climb. The focus on condo construction and conversions have reduced inventory of rental property in many urban markets, and that’s the situation you want to take advantage of until circumstances change.”
We’ll take that one again: “rent it until median prices return to their dizzying climb”.
“Better” investment advice in that article was to invest in REIT’s, which are going to get crushed in the coming RE downturn. My investment advice would be to listen to that guy’s advice and do exactly the opposite of what he says.
Bend, Ore. is sorta like Jackson Hole, Wyo., but not as scenic and without the celebrity megawealth.
but you can get a steak and lobster in jackson hole.bend has nothing.just got back from there and its nice place to retire.they got nothing to do,no nice restaurants and nothing but ex californians thinking they are oriagonians.
Some crusty old surfers live in Bend.
Gerry Lopez
Grubby Clark
But yeah, I would say that Bend was the most Californicated town in OR.
Bingo! The white shoes give it away. Bend is an extension of South California. It’s $80K more expensive than Portland (where actual JOBS exist) and full of HELOC-powered Excursions and Tahoes. Actually, it reminds me of Fresno. Sorry, but it does.
Bingo! The white shoes give it away. Bend is an extension of South California. It’s $80K more expensive than Portland (where actual JOBS exist) and full of HELOC-powered Excursions and Tahoes. Actually, it reminds me of Fresno. Sorry, but it does.