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Real estate picture here better than elsewhere

by: Sam Bennett, 
These First Addition homes, each selling for about $1.1 million, came on the market in early January. Realtors say houses are sitting on the market longer now than in recent years.

Recent real estate reports show that Lake Oswego and West Linn are not immune to market pressures, but the story is not as grim as in many other regions around the country.

The Regional Multiple Listing Service, an organization based in Portland that tracks local and state-wide market action, reports that Lake Oswego and West Linn have seen a year-over-year jump in the number of active listings.

However, February 2008, compared with February 2007, shows an 8.5 percent increase in the average sales price for homes sold in Lake Oswego/West Linn.

Local Realtors and mortgage experts agree that the inventory of homes is high.

'The buyers are being very careful because of all of the negative news coming from Wall Street,' said John DeCosta, a Realtor with Hasson Company Realtors. 'The (lending) environment now is very rigid and down payments are more in the 25 to 30 percent range.

He said the number of closed sales this quarter is almost half of that from the first quarter of 2007.

'Builders are being squeezed to sell their inventory before the construction loans expire,' said DeCosta. 'Builders are leading the sellers in dropping prices and putting deals together.'

But, he said, some used home sellers are not priced at the market levels.

'They do not have to sell, and thus they feel unmotivated to get the price down to the current market level. This overpriced group of listings is just not selling at all at this time.'

The number of active listings in February 2008 was 893 compared to 641 in February 2007. In February 2006, the number was 354.

The average sales price for a Lake Oswego/West Linn home in February 2008 was $568,000, as opposed to $497,000 a year ago. In 2000, it was $325,000.

The average days a home was on the market in February was 80, compared with 67 a year earlier and 48 in 2006.

Although inventories are up and the length of time to sell a home has increased, some Realtors say that interest rates are giving buyers an incentive to buy.

In a white paper prepared earlier this year by John L. Scott Real Estate, CEO J. Lennox Scott wrote that historically low interest rates are offsetting higher prices in homes.

'Real estate is localized and the Northwest is one of the strongest housing markets in the United States,' said Scott. 'Homeowners in it for the long term nearly always come out ahead in building wealth.'

Clayton Scott, a senior mortgage consultant with Windemere Mortgage Services, said he has been busy of late.

'Rates are good and inventory is good,' said Scott.

The 30-year fixed rate on a conventional mortgage was around 5.8 percent on March 28 and 5.25 percent for a 15-year, with a 1 percent loan fee. Jumbo loans, those more than $418,750, were 7 ¼ for a 30-year fixed on March 28 and 6.6 percent for a 15 year.

As part of an economic stimulus package passed by Congress in January, the threshold for jumbo loans was lifted from $417,000. Locally, however, that amount only went up to $418,750, according to Scott.

However, he said the Federal Home Administration has lifted its loan limit from about $300,000 to $418,750, which could help first-time home buyers.

Dale Kuhn, a principal broker with John L. Scott Real Estate, said she has seen an increase in inventory for higher-end homes.

'I think we're seeing people come down in price and being a little more realistic in pricing,' Kuhn said. 'People realize we no longer are having 15 to 16 percent appreciation rates.'

She said she is seeing Realtors offer more incentives to buyers, such as offering 'assist money' for buy-down points on interest rates or closing costs.

She said the national media has portrayed a gloom-and-doom housing crisis in the United States.

'But one-third of all homeowners own their homes free-and-clear,' she said.

In addition, she said the Lake Oswego and the Portland area did not partake to the degree that cities like Miami in the speculative boom.

'I don't think Portland and Oregon struggle. Florida and California have gorgeous weather,' she said. 'People don't move here for the speculative market. People come here to live and stay here.'