The run-up in single-family residential real estate prices in December capped a heady year for Jackson County home sellers.
The cumulative effect of low interest rates, a depleted inventory, fewer distressed sales and pent-up demand turned 2012 into a bull market with the median price — half selling for more and half for less — hitting $169,900 — a 12.5 percent gain. The statistics came from figures compiled by Roy Wright, a local appraiser, based on reports from the Southern Oregon Multiple Listing Service.
Through November, the federal government reported 342 single-family residence permits in Jackson County, compared with 253 for all of last year.
Bret Moore of W.L. Moore Construction said his company — historically one of the largest builders in the Rogue Valley — had scaled back to a couple houses here and there for several years. But the company picked up the pace last year and even tried something totally different, building a 2,100-square-foot, four-bedroom houses on a zero lot line parcel at 1110 N. Haskell St., Central Point, made completely of domestic materials.
"I had seen a couple of things online like it, including a guy in Montana who built a house completely made of materials from the USA," Moore said. "I thought we ought to try to do that; people in the U.S. need jobs, too. A lot of products had been outsourced, so some of products were a challenge to find.
Instead of using oriented strand board panels produced in Canada, the builders used plywood for the floor, sidewall sheeting and roof sheeting. When it came to plumbing, it required a reorder to obtain a U.S. product and it required changing brands for kitchen appliances.
The house is priced at $244,900 — about $20,000 more than it would have cost two years ago, Moore said.
"We haven't analyzed the cost per square foot, but a few things cost more money. Overall, though, it wasn't significant."
December's gain was even higher and showed a market heating up. The median for December's 188 single family residential sales within incorporated areas and White City, was $188,000 — 36.3 percent above the $137,950 level for the last month of 2011.
For all of 2010, the county's average selling price was $174,485. In 2011, it jumped to $181,294 and pushed to $217,209 during the past 12 months.
Average sales prices tend to be higher than median prices because expensive homes exert a greater effect on averages.
As 2012 came to a close, the soaring year-over-year price gains evoked a different kind of response from Wright than the cautiously optimistic thoughts that have accompanied the past two years.
Wright, backed by charts detailing bubbles that have burst since he began tracking local real estate in the 1970s, expressed concern that the 11.7 percent annual increase over the past two years could lead to another bubble.
"That's a hefty increase on average, it's not realistic to expect in the future and is just way too high," he said. "If it were to continue, we'd just be inflating into a another bubble."
Wright said demand for both new and existing homes pushed the average urban home price up 19 percent during 2012.
The decline in existing homes coming on the market spurred higher prices and new construction.
The number of houses listed for sale has decreased 51 percent over the past year and has declined 64 percent since 2001, Wright said.
From 1977 to 1980, average prices gained nearly 20 percent per year, cresting at nearly $74,000 before declining for years to less than $62,000 in 1986. The market heated up again in the early 2000s, surpassing 20 percent gains until 2005 when the average topped $320,000. A 46 percent drop in the average sales price ensued.
If home prices continued increasing at the current rate — which isn't likely, Wright said — within four years the peak 2005 price of $320,000 would be regained.
"If you look at the last 35 years," Wright said. "Real estate prices have gone up 4.7 percent per year, going up more or less at different times. Between 1985 and 2005 it was 8.7 percent per year. If we could hold to 6 or 7 percent, that's sustainable."
While distressed sales depressed the market for several years, causing lenders to decline loans at times even when buyers and sellers agreed on a price, traditional sales now account for close to two in three transactions.
"Appraisers are to the point where they don't have to look at foreclosures and short sales now because there are enough of what real estate agents call happy sales," Wright said. "A couple of years ago, those distressed sales were in the majority, but with only 3 in 10 sales being distressed now, you can ignore them."
The Southern Oregon Multiple Listing Service is scheduled to give its annual report on sales figures in a Wednesday press conference.
Reach reporter Greg Stiles at 541-776-4463 or email email@example.com.