An over-supply of homes and other residential properties are creating doubts among home buyers accompanied by a weak economy in Oregon, sending home values lower and into what appears to be the initial steps of a double-dip in housing. Growing unemployment in manufacturing, professional services and finance are hurting the economy.
A Brookings Institution study found that Portland is one of the hardest hit cities. The study based its findings on annualized employment and income growth. Foreclosures are one of the prime drivers behind the troubled Oregon economy. The state ranks in the top 15 worst affected by foreclosures monthly on a regular basis.
The rise in foreclosures, however, was slowed by lender moratoriums that may provide relief in the foreclosure crisis even though Oregon was not directly affected by the alleged improprieties. Attorney Generals in all 50 states are pressuring mortgage lenders to investigate legal improprieties and may lead to an agreement that could provide more mortgage modifications.
Home sales tumbled in Portland after the federal tax credit for home buyers expired and prices declined. As workers lose jobs in rising numbers more are unable to make mortgage payments leading to a vicious cycle of climbing foreclosures. Home prices will be pressured as a result and are forecast to drop an average of 9.4% in 2011.
Lay-offs in financial services, the lumber industry and technology are driving a downturn in the Eugene housing market. The troubled economy led to a slowdown in home sales similar to most other areas of the country after the federal tax credit expired, which is the downside of the incentive. Tight mortgage lending guidelines are suppressing the market, despite near record low mortgage rates offered by lenders.
Employment is the key driver of the home market and with lingering doubts about employment families don’t feel confident enough to make decisions to purchase a home. Home sales are projected to remain sluggish through the year and prices are forecast to decline an average of 8.7% in Eugene for the year.
Thoughts of a historically booming market are long gone in Salem, which is suffering from high unemployment in the housing mess as foreclosures pile up to send home prices lower. Sales are expected to remain slow and pick-up during the spring to energize the market’s recovery, but home prices are still forecast to decline 8.5% for the year.
Historically Medford had a troubled economy until the real estate boom, but in the fallout of the foreclosure crisis the area has suffered through a series of job cuts and financial hardships. Foreclosures pain the market and are driving home values to the lowest levels in years, and even many of those who can buy a home are reluctant to do so, waiting for the economy to improve leading to a slowdown in home sales. Average prices are forecast to drop an additional 10.5% in 2011.
The vacation home market in Bend soared with the Eagles in the real estate boom only to crash. The exaggerated impact on the housing downturn has hurt the economy at one of Oregon’s finest ski resorts. The second home market has been seriously fractured by the foreclosure crisis as vacation homeowners walk away from properties in rising numbers. Bend is forecast to experience average home deflation of 11.5% for the year.