Medford tops Business Insider growth list

Medford tops Business Insider growth list

Jackson County's real estate rally has picked up steam the past three years, driven by attractive interest rates and dwindling inventory.

That's repeatedly put Medford atop the market growth lists, like it was 2004 all over again.

The latest Business Insider list released earlier this week projects Medford's residential real estate prices will grow at a 9.5 percent rate through the end of 2017.

While that's great news for people trying to sell their homes, the very thought that people may have forgotten the recent bubble, precipitous decline and accompanying financial pain is downright scary to some.

"It came up more than once last week when were in (the District of Columbia) working with the National Association of Realtors leadership," said Colin Mullane, a member of the Southern Oregon delegation attending a semiannual conference.

"The perception is that if the buyer wants the house, they are competing with others, and they are willing to go outside of their comfort zone. The seller will always go with the highest and best offer."

Jackson County median residential prices plunged by more than a third — in some cases more than 40 percent — from their height in early 2006 before bottoming out in 2009.

At a 9.5 percent trajectory, it wouldn't take long for values to return to high-water marks. "I don't see the heat contributing to that now, lasting for five years," said Mullane, an agent at Full Circle Real Estate in Ashland.

Home values steadily grew in a sustainable fashion in the 1990s, said Ron Galbreath of Coldwell Banker Real Estate in Medford. "Between when I started in real estate in 1992 and 2000, property was rising 6 to 8 percent per year," Galbreath said. "Then we saw large jumps and even deeper cuts."

Studies such as the one conducted by Business Insider quickly fan out in the real estate world and take on a life of their own. But even if caution is thrown to the wind, Mullane argued, regulatory changes have a mitigating effect. "If the marketplace consisted of only buyers and sellers, the decision would be made on what the buyer feels the property is worth," he said.

But transactions involve real estate agents, lenders, appraisers and underwriters. "We've seen two fundamental shifts since the last bubble — and they are massive changes," Mullane said.

Loans involving Fannie Mae, Freddie Mac and the Federal Housing Administration require an appraisal management company to secure a neutral third party. "You can no longer cherry pick your appraisers," Mullane said. "The other change involves underwriters — who analyze how well the buyer and home qualify. That's the standard that really fell through the cracks between 2003 and 2006. The desire to buy and flip based on phony loans is gone. The people buying multiple properties now are doing it with their own cash, and it's their risk."

The biggest difference, he said, between now and when the bubble burst is that buyers tend to borrow less than the maximum for which they qualify. "They don't want to borrow that much," he said.

Shrinking inventories have pitted first-time buyers against investors as they combine to gobble up nearly everything on the lower end of the spectrum within hours of it hitting the market. That has steadily pushed the median price for existing homes here to $190,000.

Moderating the upward push, however, is a relatively sluggish high-end market, Galbreath said. "I don't see as many buyers being able to afford higher-end homes unless it's perceived as a great value," he said. "The threshold of pain is about $300,000, above that it remains a buyer's market. Buyers are aware of what happened in the past, and they are going forward more cautiously than ever. They don't want to overspend or buy overpriced property."

Reach reporter Greg Stiles at 541-776-4463 or Follow him on Twitter @GregMTBusiness, and read his blog at Edge.

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