A Lull That Will Shake Down The Market
The Mail Tribune reports from Oregon. “A well-intentioned attempt to cash in on a red-hot real estate market has turned sour as the unsold home’s mortgage now gobbles up a big chunk of the regional Boy Scout council’s budget. Rather than selling quickly for a profit, the house has sat vacant for about a year. If it doesn’t sell soon, Boy Scout officials fear the project may end up costing them money, said Scout Executive Rick Burr.”
“‘I don’t think there’s going to be anything left over after we pay the Realtors,’ Burr said. ‘It could potentially put us into debt.’”
“The Crater Lake Council already has made about $30,000 in interest payments to South Valley Bank & Trust, Burr said. The council co-signed a $426,000 loan with local contractor Brian Monroe, an Eagle Scout and former Scout master. Monroe said he is not going to see any profit because he agreed to donate labor and solicited about $125,000 in materials, all to benefit the Scouts.”
“The Scouts approached Monroe about three years ago with the idea modeled on three previous Scout houses that all sold prior to completion. In each of those efforts, the builders took on all financial liability and returned profits to the Scouts, Monroe said. But he said he insisted the Crater Lake Council assume some responsibility for the loan.”
“‘There was too many houses on the market,’ he said.”
“After paying $140,000 for the lot, Monroe started building the house in summer 2005 and finished it a year ago. Listed before completion, the two-story home is priced at $499,900, a figure that’s been reduced several times. ‘Every month, it’s going down,’ Monroe said.”
“While an unusual method of raising funds locally, the Scout house project was approved by a healthy organization with an experienced board, said Dee Anne Everson, executive director of United Way of Jackson County, which helps fund Boy Scouts.”
“‘There’s no question you have to spend money to raise money,’ Everson said. ‘They didn’t see the bottom falling out of the housing market.’”
The Bend Bulletin from Oregon. “Multiple housing projects are being planned on at least 1,200 of the 2,299 acres on the city’s western and northwestern edge that could add up to 7,000 new home sites for Redmond by the time they are built, sold and occupied, said Nick Lelack, city planning manager.”
“‘All the (major) property owners are seeking plan approval and annexation in 2008,’ Lelack said.”
“Upon expected buildout within 10 years, the mix of new homes could bring between 14,000 and 17,500 people, he said. But developers are cautious about the number of years it will take to sell the lots and build what they are calling a diverse mix of housing types and prices.”
“‘It’s hard to say whether there will be enough people based on the number (of houses) projected,’ said Andy Crosby, managing member of Redmond Community Ventures LLC, which is planning between 1,200 and 1,400 housing units on 150 acres west of the current city limits.”
“‘There’s going to be a lull that will shake down the market and put an emphasis on quality,’ Crosby said. Some projects will fall by the wayside, Crosby said.”
“The city’s recent housing slide includes a 38 percent drop in sales of single-family homes for the month of April compared with the same month in 2006, according to the Central Oregon Multiple Listing Service. On June 1, there were 739 single-family homes on the market.”
“Median home prices in Redmond, meanwhile, have slipped to $255,500.”
“‘Right now, there’s a bit of a pullback, but if you look at the long-term dynamics, Central Oregon is very bullish,’ said Bruce Kemp, Redmond’s real estate agent of record. ‘The (slowdown) allows for prices to pull back a bit and as prices adjust down, sales will pick up.’”
“Eventually, more affordable housing prices will attract more companies, said Bud Prince, manager of Redmond Economic Development. The number of speculators and investors who sought to buy a piece of property, then resell it for a profit, have slowed to a trickle at his office, he said.”
“‘That’s a good thing, really,’ Prince said. ‘Because they drove the prices up for the end user.’”
“But the city’s resources make the city attractive for companies to relocate or expand their businesses, Prince said. ‘The attraction is there for people to move here from outside the region, but there’s a concern whether they can afford the houses,’ Prince said.”
The Bellingham Herald from Washington. “Condominium living has become a popular trend locally, and industry experts have watched with interest to see what happens when a red-hot home market starts to cool.”
“Spring and summer is the real-estate shopping season in Whatcom County, and this year buyers have plenty of units to choose from, with more coming available as projects finish. For sellers, it’s probably a time for patience, as the average time on the market is around 270 days. Heading into June, Bellingham condo sales are down 22 percent compared with the same period last year.”
“‘The next few months will be a crucial period to find out what will happen not only with condominiums, but single-family homes as well,’ said Julie Hansen, an economics professor at Western Washington University. ‘I’m concerned that the condominium inventory is around 10 months. With that much supply, there is a risk of price declines. If it does decline, I don’t believe it will be steep, but right now it’s too early to tell.’”
“She noted that home sales in Whatcom County dropped 23 percent in 2006.”
“While the condo market for first-time homeowners has been growing, more high-end condominiums are expected to hit the market in the coming months, including the refurbished Waldron building and the new Young building in Fairhaven.”
“The current supply for highend condos is around two years, and the new projects will be adding to it.”
“The apparent glut is not slowing some developers. Jim Laing of Vancouver, B.C., has two projects in the works; a mixed-use project on on Lincoln Street that will have 55 condo units for around $200,000 each and a work-live project East Bellis Fair Parkway that will have around 60 condo units.”
“‘There is about a year’s worth of existing inventory available, but the reality is there are quite a few opportunities in the Bellingham area,’ Laing said. ‘Once my projects are completed, this area will have worked through the current inventory and the demand will be back.’”
‘A 341-home subdivision on the fringe of this quiet town will transform the small city into a full-fledged suburb of Vancouver and Portland. ‘Woodland is the next frontier for commuting,’ said Joe Keizur, a spokesman for Vancouver-based Pacific Lifestyle Homes.’
‘Meriwether’s first neighborhood is already sprouting from the ground with 28 of the 45 homes already built. ‘These are our top-of-the-line product,’ he said. Prices range from $350,000 to $500,000. The development’s second phase, called Discovery, will include the clubhouse and other amenities, and more moderately priced homes, selling for between $275,000 and $400,000.’
‘Pacific Lifestyle is also building homes in Ridgefield and Vancouver, and the Oregon communities of Clackamas and Salem. The company’s largest development, with 366 homes in Washougal, is almost finished. Keizur said it will take several years to finish Meriwether. ‘You can’t do all at once,’ he said. ‘That would be too much housing for Woodland.’
“Keizur said it’s about a 20-minute commute to downtown Vancouver.”
They’d better hope that border crossing doesn’t tighten up.
I’m reasonably certain the border between Washington and Oregon will remain trouble free
Whoops — Vancouver, Washington. What is there to commute to, in Vancouver, Washington. It is some sort of quiet techie town?
Most of the jobs are in Portland which can take 40 minutes to reach the downtown from Vancouver. So it would take approximately 1 hour to commute from Woodland each way.
Chip: Vancouver is in Washington, with no state income tax. Work there, live there, shop across the river in Portland - no sales tax. Wyoming and Montana have a similar situation at border towns.
Vancouver always has a high unemployment rate, for that reason. If you end up working in Oregon, you still pay Oregon income tax, but at least you can shop in Oregon for non-major items, and pay no sales tax. Property taxes are about the same both places.
Um, that’s Vancouver, WA, NOT Vancouver, BC Canada you fool!
Sheesh. Get a map.
Thanks so much, Observer. I’ll remember you, and your tactful observation. Anon.
I used to be in economic development - did consulting. It’s amazing what a town like Bend will do to get new business - most towns will sell their souls to increase their tax monies.
“the Scout house project was approved by a healthy organization with an experienced board,”
Healthy? I really don’t know how to respond to this one. First pedophilia
I was going to say before my trigger finger prematurely fired off my post - First pedophilia, now housing speculation. How will the Scouts survive?
I’ll let you in on a bit of a secret about boy scouts…
I spend an awful lot of time in the wilderness, as do most of my friends and the one group that is habitually unprepared and the one we all dread, is a boy scout troop.
Typically the father figure doesn’t have a clue, and his young charges follow his lead.
Last year I came across an adult boy scout leader & his scouts breaking off limbs of a live tree, for firewood. There was plenty of dry dead wood on the ground, just 200 feet away.
This is all too typical.
Yeah, I went to an Outward Bound course back in the late 60’s when their curriculum was till based on their mission of saving downed RAF fighter pilots who went into the English Channel during the Battle of Britain.
This was way, way before the co-ed politically correct BS started.
The first to “cash-out” where the city “tough-guy” ghetto types followed by the Eagle Scouts.
I’m sure the operation is a far, cry from that now.
Can’t go away with diminished self esteem now from any undertaking, no matter what kind of a loser you are.
I can second that - I used to be on search and rescue, and boy scout troops were often the ones we had to search for and rescue. be prepared, indeed. this is esp. true in Utah, where the Mormons are very very big on Boy Scouts as a way to indoctrin…well, we won’t go there…
Oh, you poor soul. (My family is Mormon and a lot of them live in the Moab, southern, Payson areas.) Mormons. Yes, let’s not go there. Let’s concentrate on cheerfuller stuff, like the doom of the dollar, implosion of the American economy, onrushing second Great Depression, stuff like that.
Do they have a scout badge for Massage? Because I bet they could make a fortune inviting over guests to private rooms in the house. “You don’t have to be a Scout… but we’ll still call you Master.” Cha-ching!
My son was in scouts and all the money they needed was raised by a food booth yearly at the county fair. The boys learned how to work for the money including cleaning up after a long day. I guess it’s different in Oregon.
I STILL believe my scoutmaster SOLD my name to the local DRAFT BOARD when I was 13
Always Be Prepared To Lose Money
“A well-intentioned attempt to cash in on a red-hot real estate market has turned sour as the unsold home’s mortgage now gobbles up a big chunk of the regional Boy Scout council’s budget. Rather than selling quickly for a profit, the house has sat vacant for about a year. If it doesn’t sell soon, Boy Scout officials fear the project may end up costing them money, said Scout Executive Rick Burr.”
The boy scouts were flipping houses? Did they forget their own motto ‘Be prepared’?
that got a good lesson in housing bubbles and finance.
give them a Housing Bubble Merit Badge.
Screw the Boy Scout then. Little twerp trying to make money, hah…
In 69 (that WAS the year), my husband and I drove into some sand in Miles Standish State Forest (MA). Boy Scouts dug us out, to our chagrin. Later that same year, we hiked out of the Grand Canyon with a troop of Boy Scouts behind us, determined to beat the GD BS this time. We hated jingoist groups. Viet Nam, remember?
How could we forget? Oh yeah, they’re still Communist, aren’t they?
From the Bellingham article:
‘The marketing has primarily been toward Western Washington University students as an alternative to renting a place while they attend school, said James Heintz, a real estate consultant for The Muljat Group.
“We think it’s a viable alternative,” Heintz said. “After a standard 20 percent down payment, the mortgage is much like what they would be paying in rent, but instead they can have investment. It helps the parents if they are paying for school, or it can be the first step for the student in owning real estate.”’
Ha ha. Students coming up with 20% down. I’m sure that’s the most effective use of their limited funds. Nobody’s paying 20% down anyway, so the math still doesn’t compute. No wonder there’s an average 270 DAYS on the market! Welcome to the party, Washington. Florida and Arizona had eaten all the chips and dip, but San Diego and Virginia brought some more with them when they got here. I hope somebody asks Los Angeles to bring drinks when the get here this summer. I have a feeling we’re going to need them.
First credit cards, now this.
I’ve got one leg on the ladder to the bandwagon that believes this is all a plan to keep Americans in debt. To this point I’ve resisted, but this story is just unbelievable.
“Americans in debt”…. that’ what it is all about. How do you think the banks/lenders make all of their big profits, Wall St. boys if no one borrows? They would be hurting wouldn’t you guess? They all have their large houses, getways, bonus money to spend after loaning the money to all of the sheep.The sheep still have not learned the “real costs” of borrowed debt but a few of the smarter ones our starting to figure it out. For most the trap was set with “freshly green dollars” and most gladly reached for it. The trap was set and entangled the debtor with no real way to escape except paying, paying for years with future labor with little ability or comfort to be “set free”. Greed and lack of understanding are what the money changers were hoping for and they got their wish. History simple repeats itself but many are doomed to repeat it again.
Jerry, you been watching Debt as Money again on Google? Or The Money Changers??? Shame on you…
No watching here, just know reality, history and putting on rose colored glasses somehow doesn’t change things or the outcomes of what is happening today.
A great many of the earliest settlers not brought here in chains from Africa, arrived here as indentured servants, with debt chains. History does indeed repeat. It is depressing how many of our fellow Americans have sold their futures.
“Condominium living has become a popular trend locally.” Well, 270 days on the market does not sound too popular to me.
LOL…
I’m sure MD has some crab dip to bring, but DC will just show up at the party and expect everyone else to contribute on their behalf.
‘They didn’t see the bottom falling out of the housing market.’
Regardless of who is selling, this phrase is destined to be one of those that long outlives the housing bubble, just like the quotes from the 1929 crash.
LeLack of planning, Nick
“Multiple housing projects are being planned on at least 1,200 of the 2,299 acres on the city’s western and northwestern edge that could add up to 7,000 new home sites for Redmond by the time they are built, sold and occupied, said Nick Lelack, city planning manager.”
“‘There is about a year’s worth of existing inventory available, but the reality is there are quite a few opportunities in the Bellingham area,’ Laing said. ‘Once my projects are completed, this area will have worked through the current inventory and the demand will be back.’”
Faith Based Demand
why do they assume when current inventory is worked through it won’t be replaced by even more inventory?
and how can you look at houses, places built for people to live and that will last for hopefully a long time, as something you work through like a box of popcorn? It’s the ultimate consumer BS conditioning, I know people who aren’t happy until they’ve “worked through” something and can go get another box at the store or whatever. Contrast that with a friend in her 70s who grew up dirt poor and always leaves a “little dab” in the box until she can get another - a trick to believe she has more than she does.
It’s disgusting isn’t it? A throwaway society, throwing hundreds of thousands of dollars, as well as their freedom from financial obligations in some attempt to get rich quick. And in some cases those houses will turn into slums in a couple of generations. That money would have been better spent in a stock index fund. If it was going to be thrown away, donate it to education for children at least.
I still don’t get why they aren’t building to demand. They seem quite capable of understanding what the measurable demand is. They built for “demand” during the run-up. Now that demand is obviously down by 20-40% in most places, they keep building at the pace they did during the run-up and claim that demand will be back. WTF??
They have to exhaust all the land they own, which is a sunk cost. When that is done, building will almost cease. What they will soon stop doing is buying new land or exercising new options. Their plan is to cut prices faster than the FB and get their money out…
Laing could be right, if tomorrow he goes into a ten-year spasm of narcolepsy.
Yeah, I’m kind of trying to work through that theory myself. As far as I can see, the pictute looks like this.
Foreclosures => inventory +
Flippers getting out => inventory +
Borrowers over their head => inventory +
Builders’ projects in pipeline => inventory +
Normal sales pressures => inventory +
Increased lending standards => fewer qualified borrowers => demand -
foreclosures => credit scores - => fewer qualified borrowers => demand -
Falling prices => fewer investors and purchasers interested => demand -
So there are at least five sources of increased supply and three sources of decreasing demand. I’m really not sure how anyone thinks that these factors will all vanish overnight nor how the inventory will simply be “worked through” so long as those factors are still in play.
Spoke to a realtor at an open house recently who blithely told me that there are *ten times* the amount of houses on the market now as there were in early ‘05. (For all of Whatcom County, where Bellingham is). 250 in ‘05, 2,500 now.
He did not seem at all alarmed by this. So now we’ve got 10 X inventory in 2 years and 270 days on the market (both stats sound unbelievable to me) but everything’s copascetic because “everyone wants to live here”.
It really is a Faith - Based RE market now.
The realtors and University RE Profs may not get it yet but I think buyers are starting to because prices have begun to wobble.
“‘I don’t think there’s going to be anything left over after we pay the Realtors,’ Burr said.”
But I thought the realtors told us that real estate was one of the best investments we could have!
well of course it is, if you’re the realtor…
Central Point, Oregon, which is where the Boy Scout flop lies, has (I just checked) a SFH inventory of 357 houses, excluding townhouses. Last month, 12 houses sold in Central Point.
If I’m not mistaken, that would suggest something like 2.5 years of inventory…
Unless somebody bails the Boy Scouts out, which appears to be their hope with this article, they’re in deep doo-doo indeed.
I have no idea what they were thinking. $499,000 for any house without acreage in Central Point is completely nuts, and apparently they listed it for even more when it first came on the market a year ago.
“The city’s recent housing slide includes a 38 percent drop in sales of single-family homes for the month of April compared with the same month in 2006…
“‘Right now, there’s a bit of a pullback, …,’ said Bruce Kemp, Redmond’s real estate agent of record.”
Just a “bit” of an understatement.
Sorry, didn’t mean to add this as a reply to Ashland renter.
Can we officially say that we’ve heard it all now? Every week another trump card (pun intended) gets thrown for best story. Where does it end?
$140k for the lot!
Jackson county seems to have come to a complete stop. Pretty soon we’re going to be dividing by zero!
I found their assesor’s web tool a bit clumsy, but it has some good info, especially if you have a particular property in mind:
http://www.co.jackson.or.us/Page.asp?NavID=1184
I found out that a property I liked was indeed WAY OVERPRICED and had a huge run-up from 2001. It had a failed purchase in April, and is back on the market. The internet will crush this bubble.
Thanks, Incessant Din!
That’s just the tool I’ve been looking for. Awesome!
Glad to help.
Must make note:
Shoe Shine boys give stock tips = SELL !!!!
Boy Scouts go into House Flipping = SELL !!!!
Girls Scouts start offering buying Foreclosures Seminars = SELL !!!!!
I enjoy reading this blog, and the wisdom that comes from the many who contribute. I have followed the housing market for four years, and I have been blessed by the many comments and insights shared here. However, I also grew up on the edge of the Alaskan frontier, and I was blessed greatly by my involvement in Boy Scout organizations. Pedophilia has been a problem in isolated cases and is dispicable. However the reality (the one that I witnessed as a casually participant and observer) is that many, many young men have been helped and uplifted by BSA. BSA is no more responsible for pedophilia than parents are for incest; both are evil and prey on the young and innocent. However, we do not condemn all parenting because of incest, and I resent the common condemnation of the BSA because of a few, evil scout leaders. I also find that many people who condemn Scouting have very little exposure or understanding of BSA. Please limit your comments to the things that you really understand; and, yes, it was foolish for the BSA, in Jackson County, to use the housing bubble as a fundraising tool. On that point we can agree!
My boy scout troop was essentially funded by RE. A past troop leader donated land to the troop that was later sold as a park to the county… with the stipulation that we would always have the right to camp there. We didn’t actively do RE at all, but profit from it underwrote all of our supply needs (tents, pot and pans, and such). Interestingly, I have been a cub scout, boy scout, and sort of girl scout as my mother was a girl scout troop leader and it was easier for me to tag along with my mother and sisters at girl scout day camp (in summer) than to find a babysitter. As a whole, I think the girl scouts had more fun… more about enjoyment than competition… but boy scouts got to do far more adventurous things (although I can think of a few girl scouts who would have loved caving, etc.)
“I have been a cub scout, boy scout, and sort of girl scout”
LOL - my daughter was a girl scout and it taught her a lot about getting along with people she didn’t agree with or even necessarily like. She had some great times (most of which I learned about much later). They rafted the Colorado in Glenwood Canyon a lot and mooned Amtrack when it came by (totally OT, sorry, Ben).
I’m sure that people in the Alaska Frontier are way more down to earth than the lower 48. Hell, to live in most of Alaska you gotta know survival! Or Northern Canada for that matter.
Ya, I know….it is “despicable”!
I wonder who really made money on this deal. As for the scouts and the local councils- what’s next, playing the ponies on behalf of the troop? Vegas junkets to raise money for Jamboree?
Shame on those people in a position of trust.
Did the article say whose name is on the loan? I bet it isn’t BSA.
No one wants to acknowledge that illegal immigration plaguing southern California is dragging down the housing market. Who has or wants to pay half-milion dollars for a house when the state is being trashed. It’s clear to the blind that house prices will fall and fall hard because the illegal problems California faces. Lawmakers of course never want address that.