2010 Oregon Housing Market

Portland Skyline at NightAs one of the hardest hit states in the country in terms of foreclosures, Oregon will receive $88-million to aid homeowners in the foreclosure crisis. However, slow federal government efforts to help troubled homeowners caught in the crisis will do little to help tens of thousands already losing their homes to bankers.

High unemployment, a recessionary economy and an abundance of homes and condos listed for sale in Oregon are hurting its housing markets, and values are plummeting at nearly unprecedented rates of deflation. However, lower home prices also triggered more sales in the early part of the year with the federal home buyers’ tax credit.

Portland experienced a spike in sales for the first time in nearly three years as buyers turned out to make purchases, despite high job lay-offs and record foreclosures. Lower priced bargain properties that banks were selling to get off the books stimulated the market for a time before the pipeline of REOs slowed. However, another wave of bank repossessed properties is expected to be released over the remainder of the year to provide a larger inventory of low priced homes on the market.

The increase in bank properties throws a proverbial wrench into the Portland market. While it’s good to see home sales expected to improve with the foreclosed homes, the prices they are projected to sell at will pull down the values of neighboring homes, and send more homeowners into negative equity. However, the inventory will need to be sold-off before Portland can reach a balance to move towards stabilization. Portland home prices are forecast to deflate an average of 10.9% in 2010, higher than first projected at the beginning of the year.

Lay-offs in the lumber industry and in finance have troubled Eugene, which exploded with new housing developments during the boom. Now foreclosures and bank assisted short sales are projected to account for nearly half of all sales in the latter part of the year. Eugene also developed as a technology hub to become the second most populous city in Oregon.

But the over-building of new homes has sent thousands of properties into default with adjustable rate mortgages. As mortgage holders are unable to refinance, more are falling into foreclosure, which are projected to rise. Eugene is forecast to experience a rough road through the remainder of the year on forecast deflation to average 10.5%.

In Corvallis job prospects seem bleak for many of the locals. A second wave of foreclosures is already gripping the market as investors move into pick-up bargain priced properties. A strong base of college tenants should bolster the market over time, but not before the inventory of troubled properties are cleared. Corvallis home prices are forecast to deflate an average of 9.1% in 2010.

Salem is reeling with the fallout of the housing crisis, sending home values down. The foreclosure crisis has had a major impact on the community, which will have to work through the inventory of troubled homes before conditions improve. Average home values in Salem are forecast to fall 10.7% for the year.

In southern Oregon the agony of the financial crisis is hitting home with high joblessness. As more workers go back to jobs things will improve, but the downturn has led to a foreclosure crisis that is being targeted by federal officials to help the unemployed with their mortgage payments. Medford is forecast to sustain average housing deflation of 11.8% in 2010.

No place else in Oregon represented a market that was booming at exaggerated housing inflation like Bend, which attracts visitors for its winter snow skiing resort. The vacation home market in Bend has been crippled by the housing crisis, and is forecast to deflate an average of 12.8% for the year.