NEW YORK (CNNMoney) — Ten hard-hit housing markets will record double-digit price increases through 2013, according to a report Wednesday.

And with mortgage rates low, many house hunters have already started to pounce on bargains, said David Stiff, chief economist at Fiserv, a financial analytics company that prepared the forecast.

“Some markets may have overshot to the downside, and people are jumping in to try to catch the bottom,” Stiff said.

Nationwide, home prices will start rebounding late this year and gain an average of 4% a year over the next five years, Fiserv projects.

In a separate report released Wednesday by the National Association of Realtors, the national median home price declined by just 0.4% in the three months ended March 31 compared with the same period in 2011.

About half of the 146 metro-area markets surveyed by NAR showed a price increase, as buyers make inroads into the supply of homes for sale all across the country. National inventory has dropped by 22% compared to a year earlier.

“Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future,” said Lawrence Yun, NAR’s chief economist.

Home prices will also be driven higher as banks opt for short sales instead of repossessions. Repossessed homes sell for between 25% and 50% less than comparable homes sold by conventional sellers, according to Daren Blomquist, a spokesman for RealtyTrac, which markets foreclosed properties.

Bank repossessions often go through lengthy foreclosure processes and long periods of vacancy, during which they may deteriorate and lose value.

Mortgage payments at lowest level in decades

Fiserv’s Stiff forecasts that Madera, Calif., will produce the largest home price gain over the next two years. This market bubbled during the housing boom, with the median home price jumping above $300,000, according to the National Association of Home Builders.

Prices have since tumbled 53% off their peak, to about $125,000. Fiserv is projecting a price jump of 21.5% by the end of 2013 with 16.5% of that increase coming next year.

Other double-digit gainers will include Medford, Ore., with a 20.1% rise, Yuma, Ariz., with 16.7%, and Corvallis, Ore., with 11.4%.

First Published: May 9, 2012: 12:15 PM ET

40 Feet of Snow Video

The competition for Central Oregon rental properties is getting fiercer, as available properties dwindle and homes on the rental market consistently see multiple applicants.

That competition means many rental homes cost 20 percent more today than just a year ago.

Former homeowners who lost their properties through foreclosure or short sale are adding to the region’s tenant pool, driving inventory down and prices up, local property management officials say.

The Central Oregon Rental Owners Association last week released its 2012 rental survey. Its findings, compiled over the first quarter of 2012, showed that just 4.4 percent of the more than 5,700 rental units surveyed were vacant over that time, the lowest rate since the real estate market crashed in 2008.

In addition to low vacancy rates, the 2012 survey showed price increases in rental homes over the last year, and slight jumps in apartment rents.

Of the 940 three-bedroom houses surveyed in Bend, for instance, rent averaged $1,231 so far this year. In 2011, rent on a three-bedroom home was $1,012. For a four-bedroom house, average rent jumped from $1,255 in 2011 to $1,489 this year.

Those increases can be attributed to a growing demand for rental houses — a demand that is outpacing apartments for the time being, said Kevin Restine, president of the rental association and general manager of Plus Property Management in Bend.

As foreclosures and short sales push more families out of their homes, many are looking to move into rental houses instead of apartments, because a house is what they’re used to, Restine said.

As a result, demand for rental houses has shot up each of the last few years, and prices have followed.
The rental market “will continue to be driven primarily by the foreclosures” that are still taking their toll on the for-sale market, Restine said. Though the number of default notices in Central Oregon is down notably from 2009 and 2010, “I think we’re going to continue to see people lose their homes, and continue to see people that used to be homeowners become tenants.”

The annual survey covers prices and vacancy rates for apartments, duplexes, triplexes and homes in Bend and other Central Oregon communities.

• The whole region’s 4.4 percent vacancy rate is down from 5.2 percent last year.
• As recently as 2009, more than 12 percent of Central Oregon’s rental properties were vacant.

West-Side Most Popular Rental Area

Today, rental companies like Austin Property Management say up to twice as many prospective renters are coming through the door than in the years leading up to, and immediately after, the 2008 real estate crash.
Particularly on Bend’s west side, competition for apartments and rental houses is driving prices up, said Stephanie Kramer, co-owner of Austin Property Management.

“It’s area-specific,” Kramer said of price increases. West Bend rentals “are higher in demand than the east side, which is why we haven’t been able to raise (prices) as much on east-side properties.”

Across the board, most types of apartments have gotten a bit more expensive over the past year. A one-bedroom apartment in Bend averaged $549 in the first quarter of 2012, up from $521 last year.
Other units saw increases in the $10- to $30-a-month range.

Competition for apartments is just as tough as for rental homes, said Andee Jessee, co-owner of A Superior Property Management Co. in Bend.

“I would say there’s just more people moving to the area,” despite the recession, Jessee said. Her company is seeing multiple applicants for most of its rental units. When demand is as high as it is, she said, companies can get away with price increases.

In-migration

Kramer with Austin Property Management guessed that 50 percent of the prospective tenants coming through her company’s doors are people considering moving into the area — most of them from California.
A lot of those new residents seem to be looking at rentals instead of purchase properties, she said, adding that the trend could be a case of housing market jitters keeping them from jumping into an investment like buying a home.

“A lot of people who have the money (to buy) are just renting, because they maybe want to check the area out for a year or so,” Kramer said.

Restine with Plus Property Management pointed to a 6 percent vacancy rate as healthy for the local market. Anything significantly higher means property owners aren’t finding qualified applicants.

But when it’s lower, like the current vacancy rate at 4.4 percent, renters can hit the point where they’ll need to rely on new construction to replenish supply.

The low vacancy rate “could motivate people to build,” spurring demand for new construction, he said.

Rental properties are getting harder to find in Central Oregon.

At the start of 2009, 12.4 percent of the region’s rental properties were vacant, available immediately for prospective renters, according to an annual survey by the Central Oregon Rental Owners Association of roughly 4,000 rentals in the area.

At the start of 2011 — two years and more than 1,500 Central Oregon foreclosures later — rental vacancy rates were down to 5.2 percent, the most recent survey showed. For renters looking to get into a property, a lower supply is driving prices up, some property management officials say.

Linda Frost bought a 40-unit apartment complex in west Bend before the previous major housing bust, in the early 1980s. In the years after that crash, she saw many community members suddenly turning to buy up foreclosed properties as investments.

Despite the depth of the current housing slump, “investors are looking for rentals” today, Frost said. But as foreclosures continue to pile up, and unemployment remains above 10 percent in Deschutes County, some investors are finding that there aren’t enough financially stable renters to make buying a
property cost-effective.

Frost uses a simple method when it comes to deciding whether or not to buy into a property: Can she make 1 percent of the purchase pricein rent charged to tenants each month? If so, it’s worth buying a property and turning it into a rental.

But “if you look at the bottom end of the purchasing market, which is about $150,000” in Bend, Frost said, the question becomes “can you … (find someone that can pay) $1,500 a month in rent for that? Probably not.”

That’s a different story than in the first two years of the crash, said Kevin Restine, president of the Central Oregon Rental Owners Association and general manager of Plus Property Rental Management in Bend.

Several thousand regional foreclosures in 2009 and 2010 flooded the homebuying market with excess supply. A lot of those properties were bought up by investors and converted to rentals, Restine said, driving the supply up. In many cases, owners who lost their homes still had the financial means to afford monthly rental payments, he said.

But today, with much of the active rental inventory filling up and most of the formerly distressed home- owners now in rentals, getting the bang for an investment buck isn’t adding up with some of today’s prospective renters, which include the long-term unemployed, said Frost.

Supply Shrinks, Prices Rise

But demand for property is still high. The region is still attracting new families with its high overall quality of life, said Lynnea Miller, principal broker with Bend Premier Real Estate.

And as demand stays high, prices are going up.

Rent on a two-bedroom Bend home rose from an average of $770 in 2008, to $867 in 2011, according to annual surveys compiled by the Central Oregon Rental Owners’ Association and Housing Works, which survey the owners of more than 4,000 rental units across Central Oregon each year. Apartments and duplexes, which are included in the survey, have also seen prices go up, though not at the same rate.

As more homeowners lose their properties to short sale and foreclosure, long-time owners are becoming renters, increasing demand, Miller said. And in some cases, banks are holding off on reselling some of the foreclosed properties, amid heightened scrutiny from the government over whether distressed home- owners are getting a chance to weigh all their options before foreclosure.

At the same time, Miller said, families are continuing to move into the area, which also keeps demand for housing high. New home and apartment construction isn’t keeping pace, she said.

In Deschutes County, roughly 25,000 new homes were built between 2000 and 2010, according to U.S. Census Bureau figures, as the county’s population exploded from 115,000 to 158,000, a 37 percent increase.

Four years ago, homes, apartments and duplexes couldn’t be built fast enough to satisfy Central Oregon’s appetite for new housing. Back then, the region had a two-year inventory of residential properties, according to market data from the Central Oregon Association of Realtors, meaning real estate officials could accommodate the area’s growing population for two years uninterrupted, based on the value of homes for sale and the average time they sat on the market.

Even in 2009 and 2010, “we had an oversupply,” said Terry Denoux, principal broker with GoBend Realty. Investment purchasers had their choice of a variety of apartment complexes and homes to buy into, due to the volume of properties banks were trying to get off of their books.

But with banks today holding back some foreclosures, and with distressed homeowners rushing into rentals, inventory has shrunk to 3.3 months.

“For the last three and a half years, the rate has steadily gone down,” Denoux said.

The rental market is moving on a similar track, said Restine, with the rental owners association. The low-vacancy rate is a dramatic reversal for a rental market that’s typically buffered by a 12-to-15-month supply.

“Vacancy is probably historically low, and it has been for the last year or so,” Restine said. The result is that, while prices for investors are as low as they’ve ever been, rental prices are higher because supply is so scarce.

And the vacancy rate is still going down, Restine said.

More Renters Looking

The rental owners association is preparing to release its next round of rental price and vacancy surveys. Those numbers are expected in April.

Restine said they will likely show a 10- to 12-percent increase in prices, with vacancy rates in the 3 to 4 percent range.

“I don’t think we’re going to run into a situation where we run out of rental housing for this huge demand,” he said. “But obviously the pie is shrinking.”

The long-term solution, Restine said, is to spur new home construction.

Until that happens in large-scale numbers, however, rental agencies will see more and more customers while the number of properties to offer them diminishes.

At Deschutes Property Management, property managers have fielded more calls in late 2011 and the first two months of 2012 than in recent memory.

“Normally, this time of year we are very slow,” said manager Allison Rambel with the rental company. But “for the entire winter, we’ve been extremely busy.”

From the wave of long-time homeowners Rambel is seeing come through the company’s doors, the housing crisis seems nowhere near its end.

“I think a lot of it has to do with the foreclosures,” she said of the higher number of interested renters she’s seeing. “Properties are renting so quickly.”

REPRINT
By Elon Glucklich / The Bulletin
Published: March 18. 2012 4:00AM PST

TRANSCRIPT:

MR. BUFFETT:  I would say that single family homes are cheap now, too.

CNBC: You would?

MR. BUFFETT: If I had a way of buying a couple hundred thousand single family homes and had a way of managing them … I would load up on them and I would take mortgages out at very low rates. If anybody is thinking about buying homes, five years ago they couldn’t buy them fast enough. Interest rates are far lower. It’s a way, in effect, to shorten the dollar. You can take a 30-year mortgage. You can refinance lower. If it’s too low the other guy is stuck with it for 30 years. It’s a very attractive asset class now.

CNBC: If you are a young individual investor at home and have your choice between buying your first home or investing in stocks, where would you tell someone is the better bet?

MR. BUFFETT: If I thought I was going to live — if I knew where I wanted to live the next five or ten years — I would buy a home and I would finance it with a 30-year mortgage. It’s a terrific deal. And if I, literally, was an investor that was a handy type, which I’m not, and I could buy a couple of them at distressed prices and find renters, I think that’s — and, again, take a 30-year mortgage — it’s a leveraged way of owning a very cheap asset now. I think that’s probably as an attractive investment as you can make.

The New Normal

A long-awaited real estate recovery in Bend, Oregon may already be under way. But the boom times of 2005-’07 may never come this way again.

Ron Ross, principal broker at Compass Commercial Real Estate Services, and John Mitchell, a national economist with M&H Economic Consultants, discussed the local housing market on February 24, 2012, expressing hope that tepid market conditions would gradually improve this year — but cautioning that homeowners, brokers and investors would have to brace for a “new normal” in the market.

“We’re on the verge of a recovery,” Ron Ross told a crowd of about 200 business, real estate and financial officials. But “we can’t wait for the economy to get back to where it was in 2005. That’s not going to happen any time soon.”

Both Ross and Mitchell offered arguments that, in Bend, increasing home values between 2005 and ’07 were an aberration, a departure from healthy market conditions that proved to be anything but stable.

The Boom From 2004 to 2007

Between 1986 and 2004, median home prices in Bend increased at an average yearly rate of 6.1 percent, Ross said, a healthy rate of growth that slightly outpaced national growth.

But as the economy sped up in the years that followed, growth took off. Six percent increases soon blossomed into 16 percent value gains on average, between 2004 and 2007.

Spurred by population growth and a rise in demand, home prices rocketed upward. In 2006, median home prices in Bend crept toward $400,000, according to Central Oregon Association of Realtors data, up about 30 percent from 2005.

The Bust of 2008

By the end of 2009, Bend prices had dropped 68 percent from their 2007 value. By the fall of 2011, median home prices in the city were at $212,000.

But Ross said that’s not necessarily a bad place to be. If the 6.1 percent growth stretched out from 1986 to 2011, prices would be at exactly the level they are today. Based on that, “I would make the case we’re exactly where we should be right now,” Ross said.

Mitchell shared several data points showing just how far the market has fallen from its highs.
About 22 percent of the nation’s homeowners are underwater, owing more on their mortgages than their homes are worth, he said.Since the market tanked in 2008, $7 trillion in home equity has vanished.

“The American dream, for most people meant having their kids be better off than them,” Mitchell said. “Now, that’s not so sure. Kids are still living it home.”

Signs of Recovery

But there are signs of recovery. Nationwide employment picked up in the second half of 2011 — Oregon added 20,000 jobs last year, after losing more than 100,000 in 2009. In December, the statewide seasonally adjusted unemployment rate dropped to 8.9 percent, the first time it had fallen below 9 percent in three years, according to the Oregon Employment Department.

Interest rates near 4 percent are enticing first-time buyers to make offers on homes that are cheaper than they’ve been in nine years.

“Housing affordability is at record levels,” Mitchell said. At the start of 2012, median families have almost twice as much income to buy the median house, says Mitchell

Ross compared this recent market crash with the recession of the early 1980s, his first years working in real estate in Bend, when the town’s population was about 18,000. Interest rates then were in the 16 to 18 percent range. Lending had virtually ceased. But the recovery came, and it led to an unprecedented boom period, for Bend and for the country.

While the bubble years of 2005 and 2006 may not come back, that may actually be better for the long-term health of the market, when recovery does come, Ross said.

“I’m going to say that winter of 2011 and 2012 marked the beginning of the housing recovery in Bend,” Ross said. “There may not be a better time to buy a home in my lifetime than right now.”

Property Details

We're sorry, but we couldn't find MLS # 201201117 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

Property Details

2856 NE Rainier Dr, Bend, OR 97701 (MLS # 201200799)

Classic Craftsman Bungalow Architecture and immaculately maintained. Great location in the Oakview addition and close to schools, medical facilities and shopping. Upgraded features including hardwood floors, stainless appliances, gas fireplace, slate entry, large recreation/media/game room, covered front porch and a great backyard deck for BBQ's and family gatherings. Extra storage under back deck.

Property Type(s): Residential

Last Updated	4/21/2012	Tract	Oakview
Year Built	2004	Community	Bend/Tumalo/Alfalfa
Garage Spaces	2.0	County	Deschutes
Total Parking	2	Walk Score ®	31

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Bend Premier Real Estate LLC

(view all details for MLS #201200799)

Property Details

625 NW Stonepine Dr, Bend, OR 97701 (MLS # 201200479)

An authentic Country French design with attention to every detail. Montana Moss stone exterior with some stucco, slate roof, master on main, office, open kitchen & gathering room, Butler's pantry, 3 indoor fireplaces & 2 outside, brick patios & desk, motor court for guest parking, all on a private double lot with magnificent southern views of the buttes & scenic downtown Bend.

Property Type(s): Residential

Last Updated	4/11/2012	Tract	Hillside Park
Year Built	2006	Community	Bend/Tumalo/Alfalfa
Garage Spaces	3.0	County	Deschutes
Total Parking	3	Walk Score ®	34

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Bend Premier Real Estate LLC

(view all details for MLS #201200479)

Villa Rosso is a masterpiece of Tuscan architecture and the finest quality construction and materials. Superior interior finishes include slab limestone counter tops, distressed hickory flooring, timber framed ceilings, designer fixtures & chandeliers, hand textured walls. The Cascade Mountains shield the Ranch from the rains of Western Oregon, providing nearly 300 days of sunshine a year while creating a temperate climate that enables flowers, orchards and vineyards to grow – all tended by a dedicated staff.

Property Details

10436 NE Sage Lane, Terrebonne, OR 97760 (MLS # 201102660)

Villa Rosso at Ranch at the Canyons is a luxurious residence, a masterpiece of Tuscan architecture and the finest quality construction and materials. Superior interior finishes include slab limestone counter tops, distressed hickory flooring, timber framed ceilings, designer fixtures & chandeliers, hand textured walls. A tranquil lake setting complimented by stunning canyon & Cascade views. Amenities offered: gated entry, The Old Winery Clubhouse, Tuscan Stables, trails, tennis. Future equestrian center.

Property Type(s): Residential

Last Updated	4/11/2012	Tract	Ranch at the Canyons
Year Built	2004	Community	Redmond/Terrebonne
Garage Spaces	2.0	County	Deschutes
Total Parking	2	Walk Score ®	0

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Bend Premier Real Estate LLC

(view all details for MLS #201102660)