It Doesn’t Take A CPA To See The Bubble In Oregon
The Mail Tribune has an update from Oregon. “‘For Sale’ signs are getting thick in west Medford. A dip-stick check into the Southern Oregon MLS single-family residence inventory earlier this week showed 315 houses on the market. That’s up 453 percent from the 57 that were available through the system a year ago. Overall, there are nearly 1,750 houses available via SOMLS, not to mention sellers outside the system.”
“‘There were people who saw the market was up a year ago who weren’t prepared to sell, and now they are prepared and willing to put their house on market,’ says Rick Chezik, an agent in Medford. ‘They just didn’t choose the optimum time.’”
“Unlike the past few summers, patience appears to be a virtue for buyers. West Medford mirrors much of what is going on throughout the county. West Medford eked out a 1 percent gain of $1,500 for a median price of $207,000. East Medford’s median sales price dropped 2 percent to $280,000 on 73 sales, the most transactions since September.”
“‘When the sales volume consistently drops for 14 months, eventually prices have to react to that,’ said appraiser Roy Wright. ‘When the sales volume is down, I don’t get too excited about that, it’s just a cycle. But I’d be concerned if there were three months of decreased prices, that would be an identifiable trend, especially when considering we’re going into the best sales months of the year. If that were the case, I’d say things are going south.’”
“Chezik believes Ashland and Jacksonville are candidates for a change of pace. ‘I think both areas are terribly inflated,’ Chezik says. ‘It doesn’t take a CPA to see what you’re paying in Ashland and Jacksonville and that you could buy an equal property for less than 13 miles away. You are paying more per square foot and what are you gaining? Probably a higher tax base and an older structure.’”
“The Phoenix-Talent area saw a 12 percent uptick in median price even though the number of transactions dwindled 45 percent. In Central Point, there were just 18 sales, a 61 percent drop from May 2005. Eagle Point, perhaps the most erratic of the county’s urban real estate areas, saw a 13 percent decline in its median price to $250,000 on 11 sales.”
“New home sales, representing 23 percent of the total deals in the county, are nearly 40 percent off from last year. Rural home sales fell 34 percent.”
Thanks to the reader who sent in this link.
This CPA sees a Housing Bubble in 90% of the USA!
You can include all of Canada also.
Disgusting real estate bubble. Disgusting bankers.
And in Europe it’s even worst.
In Paris the average price is 6000 euros for a square metre. That is 7,800$ US per square meter. (3×3 approx. feet)
That is around $900 per square foot which is very high, but similar in magnitude to hot US bubble areas and not quite as bad as some of the worst bubble properties in places like NYC and SF. Valuations like that are over double real value and closing in on triple.
DinOR’s gonna LOVE this thread!
Medford used to be in my sales territory.
It is funny to hear about Talent or Jacksonville.
These are absolutely nothing towns with maybe a gas station and an elementary school.
There are only so many California retirees. With the way prices have been spiking in every suspected retiree destination (AZ, NV, ID, MT, UT, OR, not to mention the vast uninhabited spaces of CA), you’d think that the entire western third of the US was going to suddenly fill up with California oldsters. But wait — I thought that these CA boomers were already living in paradise. If CA is so desirable a place to live that people will sacrifice a kidney and eat dogfood through their retirement years to live in a 1200sf shack in San Mateo, why would we expect that at the moment people finally get to stop working and appreciate the California nirvana that surrounds them, they’re going to pack up and flee for the flatlands of Idaho?
I have a friend who bought a 5 acre place on Lower River Road in Grants Pass last Sept. He Thought it was a great deal at $385,000.Does anyone know this area and where are prices going?
South. Along with the equity locust that fluffed them up in the first place.
Anyone who bought 30 years ago has no need to leave, their taxes are essentially nothing thanks to prop 13 and they now have on average $800K to over a million in equity to borrow against if needed. Since freinds and family are usually close by there is no strong drive to leave for retirement areas. There is no weather to flee from either.
There are, indeed, only so many CA retirees…and only so many trustafarians, and only so many wealthy consultants/execs who have carved out a cushy WAH niche enabling them to live anywhere. Which leaves the rest of us, the vast majority who have to live where we work and aren’t going to retire with millions.
And of these wealthy retirees, many don’t want to leave family, friends and community. The largest trend in retiring is “aging in place.” My parents, for instance, still live in the house they bought some 30 years ago. Yes, they could cash out and retire anywhere, but according to Mom they will have to carry her dead body out. I’m sure more retirees are like them than the “whoopee, let’s sell and move to Ashland or Flagstaff or wherever!” crowd.
Bottom line: Very few places are purty enough to rely on retirees, trustafarians and consultants as their taxpayer and housing market base.
My parents did the same thing, and that was 30 years ago. When my father retired they hit the road and drove west from Chicago, through California, Arizona, the usual retiree destinations. They ended up back in Chicago, winter weather and all, and downsized into a condo in the western burbs.
My dad talked for years about retiring in Phoenix. Today he’s 65 and he’s been retired for five years. And still in the same NJ house he and my mom have been in since 1978. They don’t want to leave my sisters and their kids, who live nearby.
I agree, not everbody who retires moves to another state. I bet most people stay. My Grandfather moved to LA in 1932 and never left, with the exception to visit the old country.
OT, but my wife and I are seriously considering moving to Atlanta. I can’t stand NoVA’s $700K townhouses and sardine-packed vinyl McMansions for another year. Can someone give me some perspective on the Atlanta market and whether it’s in a bubble? Prices there look very reasonable, but of course it’s all relative. Compared to NoVA, a lot of places look reasonable.
John,
Sorry that I can’t give you any info on Atlanta, but just curious about why you would choose that particular city. Do you have jobs lined up/friends/family, or?
Just curious because we are considering a move as well, if the bubble doesn’t burst. I hear No Carolina is nice, and a leading destination for the speculators at the moment (might not be driven up just yet). Have you thought about going there?
I manage sales for the Southeast for a software company. I can pretty much live wherever I want to within the region. I have 4 reps in Atlanta and only 2 in NoVA. I like Atlanta and housing prices are roughly half of what they are in NoVA. $450K buys a big SFH on a good-sized lot in ATL. In NoVA it buys a smallish townhouse.
I’ve thought about NC, but I travel a lot and flying in/out of Charlotte is very expensive.
OT: I just ran some quick numbers for Sacramento County Pending vs. Active listings, and I’m stunned. On April 9, there were 8101 active listings with 1416 pending. Now, there’s 10142 active listings and only 1156 pending. The buyers are running for the exits, and fast! Check my latest post:
http://sacrealstats.blogspot.com/
Weekly Bakersfield Inventory Update:
WOW!!!
Listings up 6.63% x 52weeks = 344.67%!!
Crispy - think I will be able to sell my POS in Park Stockdale for some number in 1 1/2 years ( by October ‘07).
If you are lucky! LOL
Re: Atlanta, John in VA
My son lives in Atlanta and I have been looking for a small multi-family properties there since 1998 and nothing ever will cash flow. Although the economy seems strong, there are a lot of Beazer townhomes for sale in his neighborhood in Smyrna. 4-5 of the 2 br plan and 4-5 of the 1 br plans, priced slightly over what he paid last year. Builder is out of the neighborhood, but there is so much new construction. I expect you will be able to find a good deal renting first, and foreclosures with a little more patience. Would be great if there was someone from Atlanta on this blog.
Thanks, easthawaii!
The Areas mentioned in this article are more closely related to California than they are to Oregon, Ashland has always been a town for people retiring from San Fransisco. The surrounding area is Very different and more conservative/ hick. I cant believe that prices have risen so high there. It is definitely similar to what is happening to areas in the Central Valley of CA. However this area is far removed from the rest of Oregon and not reallly comparable, except maybe Ashland/Bend. Other parts of Oregon especially the nicest areas of the Coast and Valley are still doing very well. The Inventory in the town I am invested in is still very low. Any good property that hits the market at anything close to a reasonable price is quickly snapped up, and by reasonable I mean anything less than double the prices of 2002/2003. These ares may see some price reductions in the future, but they will be mostly spaculative investment properties bought by californians who Do not understand the value dynamics of the local community and have consequently bought the “wrong” properties for too much money during this recent run up.
Not to interject politics, but the only place GWB campaigned in OR was Medford.
I know I had guys I worked with in security systems get reviewed by Secret Service.
Metro OR is very liberal.
What makes you so sure you have “invested” “correctly” in Oregon.
And who’s snapping up those properties?
I’d like to know this, too. I don’t believe there are places in OR that pencil out without including a “speculation factor” of what the property will be worth in X years.
It’s not really an investment, it’s a house we love and can’t commit to seling even though we don’t live there anymore. It would not pencil out for a buyer at the current prices. we get 1800 for a 4+ bd. with a stunning ocean view in the nicest neighborhood in the center of what I think is the nicest community on the OR coast. It is in a neighborhood of residences- no vacation homes. the house is probably worth a little over 500K, which is almost double what it was in 2002. I certainly think it could go much higher - In CA we rent a nice 1BR for the same price and if it were a condo it would probably sell for over 800K. I do think vacation homes and poorly located homes in Oregon will take a hit when the bubble bursts in CA, but the nice places will hold their value, and probably start rising again sooner than most. If things go really bad down in CA I will be moving back there, If not I may buy here after prices drop by over 30%.
I agree with you, Mateo.
In Eureka, CA, just south of the Oregon border, homes that are priced even slightly below comps sell very quickly. There really seems to be little worry here of an impending housing crash.
Interestingly, most of the people showing up here are still speculators from the Bay Area and retirees from that area as well. I’m always dumbfounded seeing some 70 year old who can barely walk deciding to buy a 3000 square foot $800,000 home in McKinleyville, where there are no hospitals, little entertainment, etc.
When will it all end up here? Why can’t this place take a lesson from the Central Valley and just crash!!!
I think SeattleMoose or one of the other Puget Sound dudes predicted that PNW bubbles will follow California by a year or so. Sounds reasonable. In this neck of the woods, we seem to be somewhat in between Phoenix, AZ and the Central Valley and retirement meccas like Jackson Hole and Sun Valley. ??????
I’d say that’s probably accurate. Every agent I’ve spoken to in the past 2 months has told me that the market is “off” this year and they are struggling a little, but that the market is “healthy”.
We do still have new license plates coming everyday and “investors” are still paying top dollar (top dollar for me) and flipping for profit.
Former New Yorkers and Californians still loving the condo scene, too.
While inventory has been increasing somewhat this summer, doesn’t seem out of character for this time of year.
We’ll see in about 6-9 months.