New construction prices jump 18.2 percent
New construction is shouldering a greater role in the Jackson County real estate market than it has for years.
Following the real estate bubble, credit squeeze, years of foreclosures and plodding recovery in the existing-houses market, new construction is regaining a foothold. Although that segment made up only 6.6 percent of total home sales between Dec. 1 and Feb. 28 — well off the 18 percent figure prior to the real estate crash — the signs are good.
"People are paying cash for new construction, and it's influencing the market in a way we haven't seen since the boom," said Gail Schoeneberg of Re/MAX Platinum in Medford. "Normally, there is not that big of a gap between existing homes and new construction, but there are large gaps in certain areas. In places like east Medford, you definitely see big gaps."
Southern Oregon Multiple Listing Service reported new construction prices jumped 18.2 percent between Dec. 1 and Feb. 28, to $274,266 from $232,000. In February alone, the median sales figure soared to $303,000.
The countywide median price for existing homes during the three months ending Feb. 28 rose 13 percent, to $209,000 from $185,000. When coupled with the new homes, however, the median price was $219,900.
A considerable number of new homes are not sold through the SOMLS system, which indicated 62 sales during the three-month period. During 2014, 578 single-family residence permits were issued in Jackson County, including 291 in the final six months. In 2013, 556 permits were issued after just 316 in 2012.
"New construction is certainly a sign of growth in any market," said Terry Rasmussen of John L. Scott Real Estate in Medford. "Not only is it providing homes for people to live in, the job creation is tremendous."
In locations such as Mahar Homes' Summerfield development in southeast Medford, residences are "flying off the shelf," Schoeneberg said. "You can hardly build them fast enough."
Those homes have fetched higher prices than nearby existing residences, causing a perceived value shift.
"There are huge disparities with new construction versus existing," she said. "There are cash buyers coming in without appraisals, but there are enough of them that they are actually influencing the market, because they are using those for comps to justify surrounding prices. Normally, there is not that kind of gap between new construction and existing homes; but there are large gaps now in certain areas."
With homes going up in several locales, it reflects confidence in the market.
"Those are not entry-level homes," Rasmussen said. "It's a seller's market right now. You're seeing homes on the market 24 to 48 hours before they sell. The lower end of the market is $150,000 and above now. If you're finding a home for less than $150,000 now, generally speaking it's because it's laden with problems."
Between new construction and rising median prices, odds are activity will pick up once potential buyers check out things during spring break.
"The inventory has dropped during the winter, but buyer activity has been stable," said Adam Bogle of TEN Realty Group in Ashland. "Springtime is when new listings start coming on the market. On the MLS tour (Thursday) morning, the board was filled up with new listings."
In neighboring Josephine County, the median price for existing single-family residences rose 14.7 percent, to $183,500 from $159,950 a year ago.
Reach reporter Greg Stiles at 541-776-4463 or email@example.com. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at https://www.facebook.com/greg.stiles.31, and read his blog at www.mailtribune.com/Economic Edge.