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1. National City still has us as the 2nd most overpriced town in the US.

2. The Wells Fargo report that came out last week has our affordability index at 30, meaning only 30% of the people in town can afford a median priced house. Supply and demand says that there is way more demand that ability to buy. An index of 30 ranks us 211th of 222 markets.

3. Taking a look of any graphs of the Median price in Bend - at National City, Zillow, or anywhere else - It appears that we are on the same trajectory as other cities, but a year behind. Overlay the graphs and shift the peaks and you can see this. No other location that had a major bubble has started their recovery yet, even though in some locations they are down to 4 months inventory (Sacramento) which in a normal real estate market would mean price increases. The massive foreclosures are keeping prices down, causing more foreclosures.

4. Speaking of inventory, 6 months is a balanced market. Typically when you have less than 6 months inventory prices will go up, more than 6 and they will go down. We have been between 15-20 months inventory this year. That’s unstable. While Bend may be nice, and Bend may be different, there has been no market I have ever seen that has had prices not go down when inventory is still that high.

5. Notices of Default (start of the foreclosure process) have been higher than sales in Deschutes county for 3 of the last 4 months, including November. Yesterday morning there had been 91 sales and 140 NODs. While not all of those NODs will foreclose, many will. We will be putting almost as many houses back on the market as NODs next spring as we took off this month. The NODs have been fairly stable the last few months at around 180-200 a month and show no sign of slowing down, especially as more mortgages reset and prices continue to drop.

6. The historic Price to Rent ratio is completely out of whack. The house I am renting costs me $1250 to rent, with $200 going to HOA. My rent to the owner is then 1050. Using historic P/R the house should be worth around $189k. The person across the street with the exact same floor plan has theirs currently listed at $389k, and it could probably sell in today’s market for about $299k. Prices will go back to to historic P/E levels. During the depression it was actually significantly cheaper to own than rent.

7. It costs significantly less to rent, and I wouldn’t be making money owning. From 2002 until 2007 in Bend it may have been cheaper monthly to rent, but the house was appreciating and you could subtract that money from what you were paying, so it made sense. We are depreciating now, so it needs to be close monthly. If I were to buy the place across the street for $300k (still waaaay less than asking) and put 20% down (which I have), PI would be $1420, Taxes $220, Insurance $75, HOA $200 making my monthly bill $1915 to own an asset that is depreciating. Any tax benefits are canceled by not gaining interest on the money I have in the bank. If I were to pay their pie in the sky price it would cost me $2300, when I could rent for $1250 - and not have to pay to fix the heater when it goes. At $189 with 20% down it would be around $1415, which may make sense with the tax benefits. If interest rates go up between now and then the prices will be depressed more, as has been shown in the past. And remember, you can always refinance a high rate when they come down, but you can’t re-negotiate a buy price.

8. When bubbles burst there is an over correction. When I say that prices should be down 30% from now, that’s where it make sense to buy. I do think that prices will over correct below that, but I may feel comfortable buying.

However, the sliver of optimism that was created today by Congress, could be wiped away in an instant if we see additional large scale Bank and Corporate failures and bankruptcies. This will only continue to add fuel to the fear epidemic that has stopped everyone dead in their tracks at the moment.

You have to realize that there is a tremendous amount of money sitting on the sidelines right now in search of a market bottom. When that time will come, nobody knows for certain, but when it does, you will see another Bull market emerge and Home Buyers will once again emerge from the trenches ready to secure their slice of America at perceived sale-prices.

I’ll wait.