New year bringing "change we need." 

No, I’m not talking about the election of Barak Obama. Whether electing Obama as president is “change we need” depends on what kind of change a person wants and, of course, what political party a person belongs to.

Whether fluctuations in the economy and real estate market are “change we need” also depends on a person’s perspective. Without a doubt, many home owners will look on the declining real estate market as something we don’t need.

On the other hand, potential buyers—especially those in their 20s—already see a soft market and declining real estate prices as a great prospect for the chance of a lifetime: the chance to buy a home at a reasonable price.

The last major decline in real estate prices in NW Oregon occurred in the 1980s. Given the length of time that has elapsed since then, it should be easy to understand why many young people have developed a sense of hopelessness about buying a home. Most can’t remember a time when home prices didn’t keep going up.

Until recently, prices rose so much that many potential buyers were priced out of the market—even with historically low mortgage interest rates. But for trainloads of investors tossing out cheap money with little or no strings attached, many more people would not have been able to buy.

Real estate industry data show that the median home price in the Portland metropolitan area was $97,000 in 1992. By 2007, that price had nearly tripled to $290,000. During that period, home prices outpaced incomes by nearly four to one.

While home prices were rising by more than 198 percent, figures from the U.S. Census Bureau show that median household income for Oregonians rose by just 57 percent. The median income was $31,927 in 1992 and was $50,236 in 2007.

Enter the private investor. Encouraged by the federal government, and attracted by the prospect of seemingly limitless gains in home prices, investors big and small tried to dream up ways to make money available to people who otherwise couldn’t afford a mortgage.

The Federal Housing Administration insured loans to people who were investing not even a dollar of their own money in the homes they were buying. Mortgage companies re-financed loans for as much as 25 percent above what properties were worth. Banks were making loans based on little more than a phone call and proof of identity.

As prices rose higher, other lenders made loans that didn’t require enough of a payment to even cover the monthly interest. Buyers who couldn’t afford the monthly payments on loans with fixed interest rates took out adjustable-rate mortgages that offered lower payments “right now.”

As with any party, however, all good things must come to an end. And beginning around 2007, investors started getting a little too drunk on the elixir of the booming market to be able to find their wallets.

The turmoil in the local real estate market can be blamed on other conditions, as well. But, like it or not, the primary factor has been that incomes have not kept pace with rising prices.

Although things may appear gloomy now, history shows that basic economics will, with time, force prices to rebound. That change may be many months away, however.

Another change has already happened.

Regular readers of The Foothills Report may have noticed something different: new logos and new contact information.

It’s taken a great deal of reflection and planning, but the beginning of a new year has brought the beginning of a new brand in the real estate business: Bryson Realty.

This change has been designed with home buyers and sellers in mind. The focus of this new brand is to provide excellent service at the lowest possible price.

Home owners have lost enough value in the current market. They need to know that they have a friend who will do everything to maximize their value and ask nothing more than the lowest possible price. That friend is Bryson Realty.