Not close to the bottom of the residential RE market decline yet.

Implications: We continue to see a large drop in transaction volume. We have no data that shows a return to a sellers market. Bend is one of the top RE markets in the entire U.S., so the data here is significant. A prolonged downturn is likely.

Analysis:

As a RE broker for 30 years, and having seen earlier market slowdowns, I feel that this has the makings of a prolonged downturn, at least into 2009.  Inventories are actually increasing, as transaction volumes lessen dramatically.  Forecasts by builders are rather dismal, and resellers are relatively stuck in their properties.  I predict that small regional homebuilders in some cases will go bankrupt, unemployment of real estate agents and construction-related jobs will begin to increase, and things are going to get a lot worse.  Here in Bend, we are seeing subdivisions now being sold as lots only(with no buyers), or in the case of partially developed subdivisions, huge incentives being offered(with few takers).  Many developers are holding several, or several dozen, unsold properties in their portfolio. When the value of the outstanding interim financing is considered, it is easy to see that we will have more downward pressure on prices.  We could easily see 30% reductions in 2008, and more further on, into 2009.