High-end homebuilder Renaissance Homes plans to file for bankruptcy protection Thursday. The company says it will use the legal filing not to go out of business, but to partially wait out the slow housing market.
To some, the bankruptcy signals the overall health of Oregon real estate. Central Oregon correspondent Ethan Lindsey reports.
As housing prices across the U.S. crumbled, earlier in the year some researchers identified Portland as one of the most stable markets.
On the other hand, in once-booming cities like Bend and Medford, sales dropped precipitously.
And over the past few months, Portland’s home prices have finally caught up to the overall trend.
Last month, sales dropped about 30 percent from the year before – and prices slipped by about 10 percent.
Many economists expect further slides, at least for a while.
Kim Whitman is the vice president of sales for Renaissance Homes, which is filing for bankruptcy protection.
Kim Whitman: “We’re trying to do business as usual. We’ve had buyers that are trying to close and they get nervous and they overreacted. As soon as we were able to sit down with them and explain, I would say at this point we haven’t lost any.”
Whitman notes even with the dark clouds, his company sold seven homes last month, which he says isn’t that low a number.
According to the latest statistics from the Multiple Listing Service, 1770 homes sold in August in the Portland metro area.
Who are these people? Are they dummies who aren’t reading the newspaper?
Patrick Emerson: “I’m Patrick Emerson, I’m an associate professor at Oregon State University in the department of Economics. And I’m a new homeowner yes, I am the proud owner of a 1908 home in Portland, let’s just say the previous owners were into very bright colors, and so its painted quite vividly inside and out, which is great, I am all for people following their inner muse. I’m an economist however, so my tastes tend to be more in the mundane shades of grey.”
Patrick Emerson is no dummy. He gave me a tour of his new home in southeast Portland.
Patrick Emerson: “I would have much more hesitation buying right now in one of the far-out Portland suburbs, where there are a lot more speculative houses. Because that’s the type of property that might take a while to start appreciating again. But, a house for most people is a long-term investment, and its not just an investment in money terms, but its also someplace to live and an investment emotionally as well.”
Five hundred homes sold in Bend in the first half of the year. That’s even though the city keeps popping up on those ‘most overvalued market lists’.
465 homes sold in Medford and Jackson County.
That’s a huge drop from where the those markets were at their peak, about two years ago. And home prices are finally starting to reflect that.
Realtors say lower prices have encouraged some people to dip into the market, like new families and first-time homebuyers.
And government intervention has sent mortgage rates down in the past month — a further price reduction for homebuyers.
Patrick Emerson: “The day I closed on this house was the day that mortgage rates went down by about half-a-percent, so that was unfortunate – my timing. But right now, mortgage rates are pretty low, that aspect of the housing market or the overall economy is going quite well.”
Emerson says economists, like himself, would caution against reading too much into individual stories.
Foreclosures remain sky high in Bend and Medford. And Portland is starting to catch up in that, not-so-hot category too.
Kim Whitman, with Renaissance Homes, sees that.
But he says the whole reason his company is filing for bankruptcy protection is to keep running – and emerge from bankruptcy within a year.
Kim Whitman: “It, in essence, buys you time to reorganize, get your finances straightened out, based on the belief the market will return, will be strong again. We’re counting on that, we’ve been around for 24 years and we don’t intend to go away.”
Homesellers say we’ll have a better idea of where we are in Portland, in the state, and across the country, next week. That’s when new data comes out for the usually-hot summer market – and many expect it to be unusually cold.