Feeding frenzy for hot mid-Willamette Valley real estate market | Local


A  cacophony of construction continued, much like nearly every day for months, in the Reserve at Sommerset, a new neighborhood in Albany near Clover Ridge Road. Hammers banged, hoses sprayed, power saws whined, machinery rumbled and workers yelled at each other simply to communicate over the noise.

More than 140 houses are part of the subdivision, and they’re moving fast. “Some are sold before the ground’s even broken,” said Cody Wills, superintendent with Chad E. Davis Construction, which is building the neighborhood.

Some people are moving to the subdivision from out of state, as evidenced by license plates in driveways of houses completed just weeks ago. Others are upgrading from smaller, older houses in the mid-Willamette Valley, Wills said.

But pandemic or not, the real estate market is still rolling red hot.

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Seller’s market, soaring prices

Home prices continued to soar to all-time highs in the mid-Willamette Valley in 2020, with many houses receiving multiple bids well above asking price within days of being listed, real estate experts said. That’s great news if you’re selling a house, but problematic for first-time home buyers.

Inventory is at an all-time low and low interest rates also are helping drive the seller’s market, real estate experts said. But other factors, such as the ability to work from home during the pandemic and likely beyond, are making the mid-valley a more attractive place to live.

“People are looking to get away from the big cities. There are a lot of people moving up from California,” said Kyler Gulaskey, a broker with Keller Williams Mid-Willamette.

Barbara Hartz, principal broker and owner of Landmark Realty in Philomath, called the situation a “feeding frenzy,” with residents competing against each other and driving prices higher.

“You have this rush of people who have lost out repeatedly on homes,” Hartz said. Residents are stretching their finances not for a dream mansion, but to simply afford a house that meets their needs.

“It’s emotionally devastating to these people to make a really solid offer and have it go nowhere,” she added.

Some young families are being forced to stay in rentals due to the hot market because they simply can’t afford to buy in this climate, Hartz said.

Wendi Melcher, a broker with Heritage NW Real Estate in Sweet Home, said that there have been couples looking for houses for six months, making every bid above asking price, and still striking out. “It’s tough,” she said.

Gulaskey estimated that there are about 10 offers for nearly every property listed under $350,000 houses in the area. “I just wrote an offer for $30,000 over asking price and didn’t get it. That’s not at all odd,” he said.

And there often are plenty of offers on houses above the $350,000 range, too, Gulaskey said.

Realtors said that as a general rule, if your existing house doesn’t sell in a week in the current market, you’re overpriced.

To avoid bidding wars, buyers with more means are seeking out new construction so they can lock in a deal on a first come-first served basis, said Jason Cadwell, owner of Cadwell Realty Group, which is the brokerage handling the Reserve at Sommerset.

But prices for new homes also have been rising steadily due to increased costs due to COVID-19, including everything from appliances to building materials such as lumber, he said.

The main overarching trend remains a shortage of houses and buildable land, Cadwell added.

Average home sales

The average price of a home in Corvallis reached $436,000 for the 12-month span ending in November 2020, the latest data available from the Willamette Valley Multiple Listing Service.

Albany’s average home sale hit $362,000 (and $431,000 in North Albany alone), while Lebanon’s climbed to $307,000. Even Sweet Home, historically considered a deal because of its somewhat remote location, had an average home sale of $281,000, according to WVMLS data.

From the end of 2019 to November 2020, the average residential real estate prices grew in almost every community in the mid-Willamette Valley, ranging from 4% in Brownsville to 17.6% in Sweet Home.

Philomath was the only community listed by the WVMLS where the average sale price dropped in the last year, dipping from $385,000 to $375,000. But Hartz called that situation slightly misleading, as more large homes sold in 2019 in Philomath. The average price per square foot continued to increase, she said, and the market in general for Philomath, like the rest of the mid-Willamette Valley, continued to increase.

The average home sale has grown by leaps and bounds since the real estate market hit its last low point in 2011 in Linn and Benton counties.

But even in the last five years, the cost to buy a house has surged by more than $100,000 in most areas of the mid-valley, and by far more than that in some markets.

Since 2015, the price tag of a house has grown by 39% in Corvallis, by 62% in Albany, by 60% in Lebanon and by a whopping 77% in Sweet Home, WVMLS figures show. Places that have been seen as bedroom communities or more frugal options have become far less affordable.

Melcher stressed that Sweet Home’s recent meteoric rise isn’t simply due to brand new construction. Houses in town built near the airport five years ago initially sold for $175,000. They’re now on the market for more than $300,000, and they’re moving, she added.

And that isn’t unusual. Many existing homes in east Linn County have nearly doubled in price in just a handful of years, Melcher said.

Hartz described how Corvallis and Benton County’s high prices have created a ripple that spread throughout the mid-valley. “As we count meet the needs here, people are going further and further away. But that’s not necessarily in their best interests,” she said.

For example, someone who works in Corvallis but lives in Lebanon or even further east has to spend more time on the road, and gas prices are going up. Plus, at some point, schools will return somewhat to normal, and commuting makes it more difficult to take part in children’s activities, Hartz said.

Smaller communities tend to be more excited about new growth however, and are easier to deal with, leading to lower costs for new homes, said Cadwell, who also is working on subdivisions in Adair Village, Philomath and Brownsville.

Overall, Linn County’s average home sale price grew by 61% between the end of 2015 and November 2020, while Benton County’s grew by 38%, according to WVMLS data.

Realtors didn’t expect the housing market to cool down anytime soon, unless interest rates are ratcheted up significantly.

Inventory can’t catch up, and with low rates, there will be an abundance of buyers, Gulaskey said.

“At some point, there has to be a threshold that we cross,” Hartz said. “Do I see it? I don’t see it yet.”

Kyle Odegard can be contacted at 541-812-6077 or kyle.odegard@lee.net. Follow him on Twitter via @KyleOdegard.

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