Local Market Trends

Home prices in the foothills region continued to rise with the start of 2006, but market statistics showed signs that the market may be easing off its fever pitch of 2005. The number of sales declined, while prices grew only modestly.

Total sales of residential property throughout the southern Clackamas County region declined in the first calendar quarter of 2006 compared both to the previous quarter and to the first quarter of 2005. Sales fell from 432 in the October-December period of 2005 to 360 in the January-March period this year, a drop of 16.7 percent. Sales were down 10.9 percent compared to the January-March period last year, when 404 homes were sold.

Prices in the first quarter this year barely climbed compared to the previous quarter, with the median price rising only 0.4 percent to $290,500. Yet, the median price, the price at which half of the homes sold were priced higher and half were priced lower, rose by 21.1 percent compared to the first quarter of last year. Whether the slight change from the fourth quarter last year portends some overall relaxation in the rate of price growth or just a seasonal slowdown is yet to be seen.

Mortgage interest rates will be important to watch in the coming months as a possible predicting factor to future real estate activity in our area. According to the Federal Home Loan Mortgage Corporation, more commonly known as "Freddie Mac," the national average interest rate for a 30-year fixed rate mortgage was 6.51 percent in April. This contrasts with 6.27 percent in December 2005.

Increasing gasoline prices may also be a dampening factor on the real estate market in the longer term. If the trend in gasoline prices continues to be upward, local consumers are likely to take on more credit card debt in order to be able to meet their monthly household budgets. This is likely to affect debt-to-income ratios, which are a factor in how much money mortgage lenders are willing to lend.

Increasing credit card debt is also likely to lead to an increase in real estate foreclosures in the foothills area. Foreclosure activity has already started increasing in some other markets around the nation.

If mortgage rates continue to rise, total sales in the foothills region should continue to be below sales for 2005, though home prices are not expected to fall. Instead, the increase in price appreciation may slow somewhat by the end of the year.

Despite the drop in total sales in the first quarter, strong competition for available properties continued to keep marketing times short. Although somewhat longer than for the previous quarter, average marketing time was down from just over two months in the first quarter of 2005 to about 1.5 months in the same period this year.

At the current rate of sales, and with roughly 235 home listings being added to the market each month, all homes would be sold in a little less than 3 months if no new listings were added. This, economists say, continues to show a slight shortage in housing inventory.

The region covered by The Foothills Report includes both incorporated and unincorporated areas of the communities of Oregon City, Molalla, Canby, Barlow, Wilsonville, Beavercreek, Mulino and Colton, as well as small portions of unincorporated communities near Aurora, Hubbard, Woodburn and Mt. Angel. Summaries of first-quarter real estate activity are given below for some of these communities.

With average market time just under two months, Molalla's first-quarter average price was $247,914 with total sales of 41 residential properties. The lowest-priced home was a 2-bedroom, 864-square-foot manufactured home on a non-leased lot, which sold for $116,200. The highest-priced property sold for $537,000. It was a 2,696-square foot, 2-bedroom home on 26.3 acres.  Molalla's median home price was $220,000, up 17.6 percent compared to the same period a year earlier.

Mulino had 10 residential sales in the first quarter, with the lowest-priced home being a "fixer" manufactured home on 0.4 acres, selling for $90,000. The highest-priced home was a 4,126-square-foot home on 90 acres that sold for $1,893,000. This unusually high price led to an average price for Mulino that was nearly 70 percent higher than the same period a year earlier. However, because of the small number of sales common to the area, this average price is not a good predictor of value for other properties in Mulino, nor for overall price appreciation. Mulino's median price was $332,500, an increase of 21.7 percent compared to the first quarter of 2005. Average market time was about two and half months.

Beavercreek also had 10 properties sold in the first quarter, with the lowest-priced property having 3 bedrooms and 1,288 square feet on a suburban-style lot, selling for $212,000. The highest-priced property had 4 bedrooms and 4,300 square feet on 9.48 acres. It sold for $880,000. The average price was $461,975 with average market time of about two and a half months. The median price rose by 22.2 percent, compared to the first quarter of 2005, to $462,000.

In Colton, only seven homes were sold, with the lowest-priced being a single-wide manufactured home on 1.38 acres for $137,000. The highest-priced home was a 3-bedroom, 1,180-square-foot home on 0.89 acres, which sold for $281,000. The median price was $222,500, only 1.6 percent higher than the same period a year earlier. Average market time was just under two months.

In Oregon City, 150 homes were sold, with the lowest-priced having 2 bedrooms and 746 square feet on a city lot for $155,200. The highest-priced home had 4 bedrooms and 5,426 square feet on a 3.98-acre lot in a gated community for $1,100,000. The average price was $319,974 with market time of about two months. The median price was $284,750, up 17.4 percent from the first quarter of 2005.

Canby had 89 sales in the first quarter, with the lowest-priced being a 2-bedroom, 919-square-foot, "fixer" cottage on a city lot for $115,000. The highest-priced home was a 5-bedroom, 4,327-square-foot home on an oversize city lot, which sold for $695,000. The average price was $304,963, with market time of about a month and a half. The median price was $287,000, an increase of 22.7 percent over the first quarter last year.

Wilsonville had 62 sales, with the lowest-priced being a 966-square-foot, 2-bedroom manufactured home on a non-leased lot, which sold for $197,500. The highest priced home was a 1,296-square-foot, 2-bedroom manufactured home on 40.1 acres, which sold for $975,000. Average market time was about a month and a half at an average price of $400,307. The median price was $389,900, a staggering 36.6-percent increase over last year's first quarter.