Local market resisting decline.

Byline: Randi Bjornstad The Register-Guard

The president of the Eugene Association of Realtors says Lane County home sellers and buyers should be careful - but not fearful - when entering into real estate transactions, despite burgeoning foreclosure rates among subprime mortgage holders and resulting plunges on worldwide stock exchanges.

"In my opinion, what's happening nationally is much worse than what's happening here," said John Hoops, principal broker with Windermere Real Estate Lane County and this year's leader of the realtors' group.

"In Oregon, only 10 to 12 percent of the market has been involved with subprime lending, so we don't have the same problem as a lot of other places in the country."

Americans for Fairness in Lending, a coalition of nonprofit organizations, estimates that nationally, subprime mortgage lending jumped from 5 percent in 1994 to 20 percent in 2005.

As a result, tighter lending practices will make it tougher for some local buyers to nail down mortgages, especially people who have rough spots on their credit history or who seek "jumbo" mortgages above $417,000, he said.

"I think we're going to start seeing more traditional loans, with fixed rates and 20 percent down," Hoops said. "A couple of years ago, there were loans made that shouldn't have been - like people getting loans for 125 percent of the value of their homes - and that's helped create these problems."

In some cases, people who want to buy houses but don't have great credit scores or histories "may have to take six months or a year to work on their credit," he said. "They may have to pay down some debt; they may have to sell some `toys' before they can qualify for a loan."

But for those who are prepared with loan pre-approval, a down payment and a realistic budget, the local real estate market should perform quite nicely, Hoops said.

Figures compiled by the Regional Multiple Listing Service in Portland show that would-be home buyers continue to have more choice of houses than they have for the past several years as the market slows.

New listings continue to come on the market in modestly increasing numbers - 2.1 percent more in July 2007 compared with the same month a year ago - while the number of properties going under sale agreements dropped 13.6 percent during the same period, and closed sales dipped 5.6 percent.

At the same time, home prices continue to rise, but much more gradually than two or three years ago.

During the 12 months that ended in July, the median sale price - the point at which half of the sales were higher and half lower - increased 10.3 percent, to just under $235,000, compared with the previous 12 months.

For the single month of July this year, the median sale price nearly reached $242,000, up 6.6 percent from July 2006, when it was about $227,000.

But stiffer lending policies, upward-creeping interest rates and continued increases in sale prices also conspire to keep "for sale" signs sitting in front yards longer.

Houses that were sold last month had been on the market an average of 61 days, compared with 70 for the year so far. That's significantly higher than a year ago, when the average market time in July was only 46 days, and the year-to-date average was 51 days.

The 2,215 houses on the market in July would be enough to meet demand for six months. A year ago, the inventory would have lasted just under four months; in July 2005, it would have been exhausted in just over two months.

Although he doesn't miss the selling frenzy of two years ago, Hoops admits he'd "love to see a little more activity than we've got now - we got pretty spoiled by the way things were a couple of years ago."

However, he doesn't want to see some of the results of 2005's superheated market, with its bidding wars and easy lending.

Right now, a lot of adjustable rate mortgages that were made a year or two ago are rolling to new, higher rates, and people who borrowed beyond comfortable levels will be feeling the pinch of much higher monthly mortgage payments.

"I think we'll see a spike in foreclosures in this area next year, unfortunately," Hoops said.

"The higher rates are going to be hard on some folks."