The lack of new home building starts, a recessionary economy and a high inventory of homes for sale are pulling at Oregon's housing markets, and the weight is sending home values lower at nearly unprecedented rates. But the hurting market is experiencing more home sales that should act to give markets a lift eventually.
The Oregon real estate market didn't get into the trouble it's in overnight and it's taking plenty of time to pull out of its slump.
Most of the rise in home sales is attributed to first time buyers taking advantage of the federal government's first time buyer's incentive, and that isn't going away any time soon. The tax credit has been extended through the end of April and expanded to move-up buyers.
Portland has had the highest number of sales since August, 2007 about the time the market hit its peak. But nagging job lay-offs in businesses in and around Portland are hurting the local economy and sending more homeowners into foreclosure. The upshot could come as soon as the third quarter of the year, but the surplus of properties on the market will have to be sold off before a balance in Portland's market can be found. Portland home prices are forecast to deflate 10.4% on average in 2010.
Foreclosures have been higher in states surrounding Oregon, which has given the state at least some commodity of grace in the current crisis. But a high percentage of foreclosures in Oregon have been properties owned by out of state owners, adding to the troublesome economy.
| City |
Forecast |
| Portland |
− 10.4% |
| Eugene |
− 10.3% |
| Salem |
− 11.8% |
| Medford |
− 11.8% |
| Corvallis |
− 8.6% |
| Bend |
− 12.0% |
In Corvallis a second wave of foreclosures is expected in the early part of 2010 to compound damage in its market. Investors who purchased homes in rising numbers during the boom are walking away increasingly from mortgages that have become too much to afford. Even a strong base of college renters has left the market in a bind in Corvallis, which is forecast to see average housing prices decline 8.6% for the year.
High unemployment and job cuts in the logging business and technology have hurt home values in Eugene, which became Oregon's second most populated city during the boom. The over-building of new homes has sent thousands of properties into foreclosure with defaults projected to increase in 2010 as more employers shed jobs. Eugene will see average home prices deflate a forecast 10.3% in 2010.
The long lasting boom in Salem sent home prices to record highs, which are now falling at near record rates. The foreclosure epidemic is hurting Salem and is projected to send housing prices lower in the coming year as bankers slash prices on homes to rid themselves of the surplus inventory. Average home values in Salem are forecast to fall 11.8%.
The hurting economy in southern Oregon has made the area symbolic of all the trials and tribulations of the national financial crisis. Unemployment has topped 14% as logging companies laid-off workers when home building came to an abrupt slowdown. As a result, foreclosures are piling up and many residents are looking for a way out of their economic straits. Medford is forecast to suffer through 2010 with average housing deflation of 11.8%.
The second home market in Bend, which attracted national attention for having one of the boom's high-flying markets that appreciated for five years, is plummeting. Home prices are projected to be cut in half before the housing mess is over and some sort of stability returns to the marketplace. Average housing deflation will hit 12% in Bend in 2010.
