FLORENCE - Looking for your dream home in a beach town? You might find more elbow room at open houses these days.
After five years in which median sale prices for homes in the Florence area surged more than 100 percent, to $243,000, buyers have backed off.
There were 320 homes sold in and around Florence in 2006, a steep drop from the 449 houses sold in 2005 and the 561 the year before that, said Tawfik Adhab, a Eugene appraiser who authored a 2006 review of the greater Florence market. "What we had is a huge withdrawal of buyers."
Florence home sales fell by 29 percent from 2005 to 2006, nearly triple the county average, a gap that shows just how unique the Florence market is in Lane County, Adhab said.
"In Lane County, most of the demand for housing comes from job creation, wage increases, new households. Those are the fundamental factors that affect housing in Lane County," Adhab said, referring to the Eugene/Springfield areas. "But in Florence, it's not jobs or wage increases. It's in-migration." Until recently, retirees from states such as California arrived on the Oregon Coast with fat wallets, thanks to their home equity. This in-migration was a big factor in driving up housing values with such severity that lower-income workers were priced right out of the market, Adhab said. But when the national housing boom slowed last year, it showed just how tied to the rest of the nation Florence is.
Unable to unload their properties in other areas, potential buyers who want to relocate to Florence can't afford to - at least not yet, stalling the local market.
For home buyers in and around Florence, that vulnerability to outside forces means there's a bevy of housing options to choose from and at least some reduced asking prices - although the median sale price of homes in Florence did continue to increase, albeit slowly, in 2006, up 6 percent from 2005.
"Prices are pretty well bottomed out," said Rob Shepherd, a Realtor with T.R. Hunter. "In a lot of cases, there's no more to give. I don't think things will drop any further."
Sellers were slow to react to the slowdown, spoiled by two years of median price increases of 26 percent and 30 percent, buyers were reluctant to drop their prices and some have decided to take their homes off the market.
"Some want to wait it out," Johnson said. "try things this spring and summer."
Meanwhile, there are plenty of options for buyers, especially those willing to fork over more than $300,000 and especially in the condominium market, where several projects approved during the boom haven't been built yet and may have to wait awhile to find owners once they're built.
Johnson's Stillwater Condominium project offers 11 waterfront units on the Siuslaw River priced at $289,000 to $419,000.
Six are reserved with $10,000 deposits right now, but those are nonbinding and there's no way to know yet if those buyers will stick around when the project is completed this fall.
Florence dentist Charles Korando is building a two-phase condominium project further down the river in Old Town that will have 59 units when it's completed. Only six are reserved at the moment, but Korando said he isn't worried.
"Are we really in a slowdown?" Korando said. "What you're seeing is just the tip of the iceberg, the quiet before the storm. You've got 80 million people retiring in the next 36 months. That's a huge amount of equity transversing through the economy."
Adhab agrees it's only a matter of time before the market heats up again. What's happening now is a return to equilibrium, he said.
"There's no doubt we went through the darkest phase in 2006," he said. "Now we're probably headed toward recovery, if we're not already there. We'll probably slowly see an increase in sales volume."
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