In a perfect world with diligent oversight of fair lending regulations and practices, it's all about supply and demand.
The Bush Administration neglected their duty to protect the public and now there are lots more billionaires and lots more destitute people, and fewer in between.
But to address the question my take in Beautiful Central Oregon (Real Estate markets are very local) is the prices are now about where they were in 2004, and still falling. As a Realtor I go by selling price. Many properties are still listed for sale at prices much, much higher, but nobody is even looking at those and as a Realtor i have stopped taking listings for clients who refuse to be realistic price-wise.
There are several markets here.
Bare land is not selling. Banks are refusing to finance it so unless the owner will carry the contract, or the buyer has cash, you can't even give it away at bargain prices. Which is sweet if you want to pick up an acre on a river, or 5-40 acres aways out of town. If all you want is a spot to park your RV and vacation you can get a non-buildable acre on the Little Deschutes for 15-30K.
Commercial properties are not selling. Again, banks are refusing to make available the tax dollars they have been gifted with, but in this case they have reason to be cautious, since businesses here keep going under and our real unemployment numbers are in the high teens still.
Residential properties are now widely divided in categories.
Bank-owned foreclosures make up over half of all residential home sales here now. They typically sell for less than it would cost to build the house, with the land thrown in free. Many need some TLC, some need major repair, some never got finished by the builder before he lost it. Some have frightening mold issues because they weren't winterized by the banks and the pipes burst during the winter due to no heat. I cannot stress enough the need to have a home inspected before you buy it. It's unimaginable what has happened to some of these homes either through neglect or through retribution by the person who lost it. A homeowner is required by law to disclose anything he knows about the home. Banks are excepted/protected from this law, and I have already seen one sell a home that had maybe $50,000 damage to it that I informed them of and gave them the 40 page inspection report and they did not disclose it to the buyer.
But there are some fantastic deals being made on undamaged homes if you can act immediately, i.e. 1-5 days after it is listed for sale. After that the good ones usually sell.
Short Sale properties in the process of being foreclosed (up to a few months away) are listed at prices lower than the bank is owed. In a normal market the banks would negotiate a fair price with the seller and accept a loss. Unfortunately there are write-off provisions now that make it more profitable for the bank to follow through with the foreclosure and take a huge loss rather than take a small loss and let the seller avoid a foreclosure. It takes an experienced Realtor to negotiate a short sale successfully right now. I usually track the short sales so I'm familiar with them, line up a buyer for it if I can, then pounce when the bank puts it back on the market at bargain price.
2nd homes/vacation homes.Strangely enough, loans have started becoming available again for these lately, and you would not believe the deals available on some awesome properties. Riverfront homes starting around $150K.
Manufactured homes. With strict building codes for these in recent years, many are better built and much nicer than your typical stickbuilt ranch home, and it was no problem a few years ago to get a loan on one. Currently I know one lender who will finance them because they specialize only in that. No other bank will usually touch them now. Because of this, they are mostly ignored by buyers and I am able to negotiate a selling price maybe 60-70% of the listing price.
Owner-owned homes. Homes that
are not in foreclosure or nearing it are for the most part the nicest, best cared for, and priced so high nobody looks at them. I have had luck getting buyers to view them and then negotiating a selling price more in line with reality. It takes time, patience, and tactful communication on my part with the seller through their Realtor.
The bigger picture.
With a huge inventory already and a bigger block of foreclosures coming up this winter, I don't see prices rising here for at least 1-2 years, maybe more. That said, the bottom of the market has reached land value and can't drop much lower.
If you want a nice basic starter home or 2nd home, now is the time. There is no way to communicate the breadth of selection and desperation of seller right now. If you want a riverfront estate or a home at Crosswater Golf Course, I'd wait till next fall at least.
Other areas.
We recently sold a home in probate on a double lot in the First Addition Neighborhood in Lake Oswego, and the hardest part was getting the Realtor to accept the falling market. Being that it was in probate, we had no control over her actions. She kept the price too high and did minimal marketing, and we probably lost at least $200,000 over the year it took her to sell it. I've been following the Portland area regularly (shopping for friends there) and they seem to be slow in facing reality. You may see some crazy deals there eventually, but so far it seems way too high to me still.
I recently vacationed near Coos Bay and the prices there were still silly high, but nothing at all seemed to be selling.
Wow, got a bit carried away, but you know me.
) is the first time buyer tax credit of $8,000 if you haven't owned a home in the last 3 years. It is set to expire next month but will probably be extended and maybe enlarged or made available to all buyers. Call your Congressman!
...there's a job here for you. I expect in Portland it's mainly tied to jobs, and I don't think it's been as big a hit there yet. It probably won't be as bad in the long run. The next rebound will be much more gradual at first I think, because the government will try to put controls on it, but overall I expect it to be bigger and longer lasting. People want property more than ever now that it's been taken away from so many.
