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The slowdown in the local housing market in recent months has left many builders, sellers and even home buyers scrambling for solid ground.

With sales down by about a third in September compared with a year ago, and an eight-month supply of homes on the market — compared with 3.5 months a year ago — builders in Lane County not only face stiffer competition for customers but looming payoffs of construction loans on unsold new homes.

Nor is it a happy time for sellers of existing homes, with houses sitting on the market an average of 70 days — 32 percent longer than a year ago — unless sellers cut their price sub­stantially in hopes of a quick sale. Many are doing so, said Kathie Robidou, a broker with Coldwell Banker.

Even some buyers, eager to capitalize on the increased choice and better prices, are facing challenges — namely getting a mortgage as credit standards have tightened.

Heidi and Michael Kitt, both brokers with Re/Max Integrity, work closely with Heidi Kitt’s father, longtime home builder Tom Wirfs of Cozy Homes. As sales slowed, Heidi Kitt said, they tried typical incentives to help sell Wirfs’ houses, such as subsidizing closing costs, making the buyer’s first three monthly mortgage payments or boosting commissions for buyers’ agents. None met with much success, she said.

The Kitts decided to look to the East Coast, where the housing market has been far harder-hit than here, for inspiration. “We found out about a company back there that started offering 72-hour sales on their homes — that’s the sort of thing you usually think about doing with washing machines, not houses,” Michael Kitt said. “But they did it and said it was enormously successful, and I guess it’s caught on in California, too. So we decided to try it.”

Three weeks ago, they ran their first 72-hour sale complete with lenders on hand, in the Cottage Heights subdivision in Cottage Grove. “We got two offers, and one of them resulted in a sale,” Heidi Kitt said. “Out of seven homes, that’s a good sale in this market.”

The pair said they’ll run a similar sale soon at Hazelwood Terrace in north Creswell, where Cozy Homes has a half-dozen just-completed houses. The homes, designed for the entry or move-up market, will be priced about $250,000, and will have four bedrooms, two bathrooms, granite countertops, underground sprinklers and Energy Star certification that qualifies homeowners for income tax credits.

“It’s a lot of house for the money,” Heidi Kitt said. “What it amounts to is a break-even price, but that’s what builders have to do in a market like this.”

Wirfs said that, like many builders, he needs to move his inventory of unsold houses “because the lenders get on your back about the time the (construction) loans come due. All you can do is sell at cost until the inventory in the area comes down. A lot of builders are trying to sell off lots at discounts, too. Most builders have pretty much come to a stop — nothing much is going to happen until some of the inventory goes away.”

Eugene builder Tom Walter said he, too, is looking at selling lots he would have developed himself a year ago.

“We just brought a 13-lot subdivision, Alder Creek Estates, on the market off North Gilham Road,” Walter said. “Those are some of the only large lots left in that area, and originally I planned to build them all myself.”

But he now expects to sell at least five of the lots “to selected builders I trust to build in that neighborhood,” he said. “I’ve downsized my company as the market has slowed down — I don’t have the capital to build a half-dozen million-dollar homes at a time right now.”

His business is about one-third of the size it was two years ago, but Walter said he’s still not complaining.

“We just had home sales (in this area) that were only half of what they were in the best September on record, but there were still about 250 homes sold, and that’s a lot of houses,” he said. “All the builders are backing off a little now — it’s the prudent thing to do — but we don’t have a huge oversupply problem, and I think things are going to improve.”

The current plight of builders obviously has an impact on the market for preowned homes, Robidou said, “and I don’t think a lot of sellers realize they’re part of the program, that they might have to make adjustments too, to get the inventory down. A lot of sellers say, ‘I’m not giving my house away,’ and we have to tell them, ‘This is what it’s going to take to sell your home.’

“When builders have a huge inventory of unsold housing, it doesn’t just affect them, it affects everybody in the market,” Robidou said. “It also affects suppliers and contractors and lenders and title companies — it goes on and on through the whole industry.”

Lori Daleesa Weary and her husband, Cedric, have reduced the price on their Ferry Street Bridge home twice, after relocating to New Jersey in July.

“We did about $25,000 in remodeling — new carpeting, tiled counters, wood laminate flooring, new shower, paint inside and out, a new patio cover — and the house is just sitting there,” she said. “The market analysis said it was worth $365,000. We’ve lowered the price twice, and now it’s down to $299,900.”

At that price, they won’t make any money from the sale, so they won’t be able to purchase a condominium in New Jersey, where they pay $3,000 per month in rent, she said.

“And we’re still stuck with our mortgage, keeping up the yard and paying the electric bill to keep the lights and furnace going to show the house,” Weary said. “The house is in a great location, with great neighbors and a park across the street, but the market is just so slow — this has been very stressful.”

Carolyn Drake has a similar problem with her 1926 bungalow on Jefferson Street, near downtown Eugene, which became too large for an elderly couple when their son’s plans to move in with them and run a home-based business didn’t pan out.

But for a first-time home buyer, the slower market can be a boon.

Dave Bartlett, who works for a local publishing company, said he started looking at houses in June.

“I’m a one-income, single guy, so I’m looking in a price range of $170,000 to $180,000, and up to now there hasn’t been much of anything at that price,” Bartlett said. “But just recently, I’ve stumbled onto a nice little collection of homes in that range — I actually found one I really like.” Similar homes were going for $210,000 when he started looking, which put them well beyond his means, Bartlett said.

Copyright © 2007 — The Register-Guard, Eugene, Oregon, USA
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