OR mad dash over

Statesman Journal



In a year's time, the mad dash to buy houses is over.

The Mid-Willamette Valley's residential real estate market has cooled. Real estate agents say it's still good times for the industry, but the numbers show the area is not immune from the national housing slump:

# Sales have dropped 12 percent this year, according to June statistics from the Willamette Valley Multiple Listing Service.

# Home prices are rising but not nearly as fast as a year ago. The total average price for the area, including Marion, Polk, Linn and Benton counties, has risen about 6 percent this year. That compares to more than 16 percent from 2005 to 2006.

"The market has been so hot over the last few years, at some point it had to cool off," said Mike Erdman, executive vice president of the Home Builders Association of Marion and Polk Counties.

"A lot of people rushed into the market and bought, and that's an extraordinary event," said Peter Rogers, the president of Coldwell Banker Mountain West Real Estate, of 2005 and 2006.

Conditions today are similar to 2004, Rogers said, and it's a return to a "good old-fashioned market."

Booming sales had become almost routine for real estate agents and home builders. The area's real estate industry hasn't experienced a down year since 2000, when the number of sales fell by more than 4 percent.

Jay Gordon, executive vice president of the Willamette Valley Multiple Listing Service, said the statistics need to be put into perspective. For the year-to-date, about 4,710 houses have been sold, and that's above average.

Byron Hendricks, the president of Prudential Real Estate Professionals in Salem, said 2007 is shaping-up to be a "normal market." The Prudential office is enjoying its third-best year on record, he said.

So far, the slowdown in home sales has had no measurable effect on construction employment in Oregon.

Art Ayre, a state employment economist, cautions that a more serious downturn on the national level could mean job losses in Oregon.

Real estate industry observers say it's shifted from a seller's to a buyer's market. For June, about 6,325 houses were for sale in the Mid-Willamette Valley -- or about 1,960 more than in June 2006.

"The buyer has a big choice, and it's taking a bit longer to get sales," said Gladys Blum, a real estate agent with Gladys Blum Group Real Estate Services in Salem.

The conditions aren't entirely bad for real estate agents. For one, home sellers might feel an increasing need to hire a professional instead of going the for-sale-by-owner route.

"Last year, they could toss out a sign and it would sell," Blum said.

Despite the large inventory, those shopping for a modestly priced house might be disappointed. The average sale price of a three-bedroom home in the Mid-Willamette Valley is about $228,000.

Alan Jeffers, a first-time buyer who is in the midst of closing his purchase of a house in Southeast Salem, said most of the houses he looked at were either too expensive or needed major repairs.

"For the price range I was going to pay, the quality of the homes was pretty ratty," said Jeffers, 43, who serves in the military. He has made an offer on a home -- a newly remodeled three-bedroom built in the 1940s -- that was close to his $170,000 comfort zone.

Prices above $300,000 are common in new subdivisions. Some buyers, however, are willing to pay top-dollar to get their dream house.

Pam and Bob Martocci, retirees from Arizona, recently paid about $489,000 for their house in West Salem. The couple chose Salem primarily for its lifestyle, not its real estate prices. They wanted to live in a small city and be within easy driving distance of Portland, the beach and the mountains.

"I think we got a great deal," Pam Martocci said.

Eric Larson, a real estate agent with Coldwell Banker Mountain West Real Estate in Salem, said a slowing market usually gives buyers more leverage in negotiations with sellers. Up-and-down cycles are part of the real estate business, he said, and what's happening now amounts to a correction.

Home builders have taken note and revised their strategy.

Dave Glocar, a Salem-area builder with three decades in the business, doesn't think the market has hit bottom. His Dave Glocar Custom Homes began scaling-back its projects a couple years ago.

"Most people thought I was a little premature, and maybe I was, but Oregon tends to go into things later and come out later," Glocar said.

At present, he isn't building any houses.

The Portland metropolitan area is seeing a similar softening of the real estate market. Closed sales for June were down by more than 18 percent from a year ago, according to the RMLS multiple listing service.

Fewer speculators buying houses for investments, and lenders requiring more stringent standards for "subprime" borrowers, often are blamed for the real estate slump.

"It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market," said Lawrence Yun, a senior economist with the National Association of Realtors.

When economic growth and low mortgage interest rates are taken into account, the national housing market is under-performing, Yun said. The national real estate group's latest forecast indicates that home prices will recover in 2008. It maintains that existing home sales should pick up by late this year, and new home sales are expected to rise by early next year.

mrose@StatesmanJournal.com or (503) 399-6657