Thursday, May 13, 2010

Housing woes not ending

Building permits are up from a year ago in Bend, but the median price of a home falls again to about $180,000. It was nearly $400,000 just three years ago. The median price in Redmond fell to $122,000 in April.

While the locals aren't singing happy times are here again, they are optimistic that this summer should bring more buyers to new homes.

That's going to be tough since defaults are at record highs and good buys abound around town and throughout Central Oregon. There are no compelling reasons to buy a new home when a nearly new home can be had for less than half of what it was going for just a couple of years ago.

The daily paper's classified section still lists pages of defaults and foreclosures almost every day.

And, according to knowledgeable financial forecaster Dean Baker, the housing comeback is premature and that the housing bulls aren't looking at the facts. Check out his story. He makes the case that it was incentives that goosed the market, and those enticements are ending.

The latest flyer from Windermere Real Estate makes similar points, but sees silver linings, as always, in the dark clouds ahead. Windermere sees more stable home prices, but the median price is 7.7 percent lower than it was last April.

Baker, who correctly predicted the housing crash, forecasts a "big fall-off in purchases for the rest of the 2010 and even into 2011."

If he's right, and there is good reason to believe that he is, home prices should continue to fall and next February could be the optimum time to buy.

The time to sell looks like it won't arrive for at least another year.

The Great Recession marches on.

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