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No Housing Bubble Says Local Economist

by Mark Rieger, Mark Rieger Realty

Below is an article written by economist Joseph Ditzler regarding the housing market in the Bend/Central Oregon area. Enjoy reading it. The information makes sense.

No housing bubble ahead, economist says

Growth in Bend home values to slow, incomes to rise, expert says

By Joseph Ditzler / The Bulletin / @josefditzler

The first question, and greatest fear, that economist Matthew Gardner said he hears most often is: Are we getting into another housing bubble?

“Absolutely not,” Gardner said Tuesday in a telephone interview. He spent the weekend and Monday at Brasada Ranch, in Powell Butte, talking to Windermere Real Estate franchise owners gathered for their annual retreat. “We are in a pretty good place.”

The ghosts of the Great Recession — when ballooning home prices collapsed and fell to lows beneath loan values, putting many homeowners in foreclosure — still haunt the Central Oregon housing market.

That was then, Gardner said, the chief economist for Seattle-based Windermere since June. Conditions today weigh against a housing bubble, he said. Lenders typically look for better credit scores and larger down payments.

“Folks getting a home today are responsibly taking on debt,” Gardner said.

Gardner also predicted continued growth in employment, wages and housing inventory and a slowdown of the blistering climb in Bend home prices since fall 2011.

“We’ll start to see a slowing down in housing price appreciation,” he said Tuesday.

“It’s not sustainable, 10 (percent), 15 percent increases a year. Homebuyers are not making enough income to service that debt.”

Gardner forecast a more modest rise in Central Oregon home prices of 7.5 percent in the coming year. He also said he expects a rise of about 1 percent in mortgage interest rates to about 5 percent on a fixed, 30-year mortgage.

He also expects an average 5.4 percent increase next year in income in Oregon and a drop in the state unemployment rate to 5.1 percent. As people grow more confident in the recovery, they’ll expect more than being able to keep their jobs. They’ll exert more pressure on employers for pay raises, Gardner said. That should translate to more activity in the housing market.

“We’re going to see a lot more move-up buyers buying from people wanting to downsize,” Gardner said. “And, for the first time (since the recession), first-time homebuyers will be able to come back into the market.”

He also expects builders to take up slack in demand with a modest surge in housing starts next year that grows in 2017.

Also, high rents will give rise to a new generation of homebuyers, he said. Millennials, the generation born between approximately 1980 and 2000, will start raising families and rethinking their housing options.

They may be happier in something smaller than their parents owned, at a lower price point, Gardner said.

“This generation doesn’t necessarily want 3,500 square feet with a white picket fence, 2.5 children and a dog,” he said.

So You Want To Buy A House...

by Mark Rieger, Mark Rieger Realty

Buying a house means buying the foundation, walls, roof, pipes, wires, doors, windows, furnace, fireplaces, appliances, sinks, toilets, bathtubs, showers, faucets, cabinets, door other words the whole shabang!

What buyers see when they fall in love with a house is the tip of the iceberg in terms of the actual condition of these parts and systems. That's why homebuyers and sellers rely on these steps to evaluate the condition of the parts and systems of the house that are above and below surface level.

The sellers’ disclosures: Sellers are required in Oregon to complete a property disclosure form which requires them to reveal the current and past condition of their house.

They have to check off the parts and systems that their house contains (such as a range, oven, garbage disposal, central air conditioning, siding, roof, and the list goes on) and to indicate which, if any, of these is not operating correctly or have known problems.

The seller answers five pages of questions that ask “Are you aware of” certain things about the house that a new buyer would want to know about before making the purchase.

The seller is also asked about insurance claims, and any material facts or defects not otherwise disclosed to the buyer. These forms have gotten longer and more specific over the years to make the condition of the home, as known by the seller, as clear as possible.

The home inspection report: Most brokers buyers get a home inspection.

The home inspector will look at each of the parts and systems of the house and document and usually photograph the operation and condition of each.

While the format of the reports and the specificity of their finding vary from person to person and company to company, their report will be the most detailed and inclusive.

It is crucial to read the contents of this report to understand what’s going on with the house they’re buying.

In addition to these disclosures, you’ll also have the appraisal report (if the buyer is getting a home loan to purchase the house), the pest inspection report if needed for a government backed loan such as FHA or VA, and the title report.

If you have any specific questions about this process, please don't hesitate to give me a call. I am happy to help you any way that I can with your real estate needs.

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