By Lucia Mutikani
Reuters

WASHINGTON (Reuters) – U.S. construction spending edged up in May despite the Middle East conflict constraining homebuilding.

The Commerce Department’s Census Bureau reported that construction spending rose 0.1% after a downwardly revised 0.3 percent increase in April. Economists polled by Reuters had forecast construction spending gaining 0.1 percent after a previously reported 0.4% increase in April.

Construction spending fell 1.5 percent on a year-over-year basis in May. Spending on private construction projects was unchanged after rising 0.3% in the prior month. Investment in residential construction increased 0.3 percent, reflecting renovations.

Spending on new single-family housing projects dropped 0.1 percent. It tumbled 4.0 percent year-on-year in May.

The U.S.-Israeli war with Iran boosted oil prices, driving up inflation and mortgage rates. The average rate on the popular 30-year fixed-rate mortgage has increased by about 50 basis points since the conflict started at the end of February, data from mortgage finance agency Freddie Mac showed.

Spending on multi-family housing units, which account for a small share of the housing market, dipped 0.1 percent in May.

Investment in private nonresidential structures such as power plants and factories declined 0.3 percent in May. Spending on factory construction dropped 1.3 percent, while outlays on power plants eased 0.1 percent, despite a surge in the construction of data centers to support artificial intelligence.

Investment in public construction projects increased 0.5 percent after a similar gain in April. State and local government construction spending rose 0.4 percent in May while outlays on federal government projects jumped 1.3 percent, likely boosted by the building of detention centers as part of an immigration crackdown.

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By Matt Ott

The Associated Press

SILVER SPRING, Md. – U.S. home construction fell 1.6 percent in September as builders continued to be tripped up by supply chain bottlenecks.

The Commerce Department reported Tuesday that the decline left home construction at a seasonally adjusted annual rate of 1.56 million units – 7.4 percent above the rate from 12 months previous. August’s number was revised upward to 1.72 million from 1.62 million.

Applications for building permits, a barometer of future activity, declined 7.7 percent from August to 1.59 million. But that number was virtually unchanged from September 2020.

Low interest rates and a desire for more space have lured buyers into the market, but rising costs for materials and a yearslong shortage of supply have pushed prices up. Economists and builders say demand remains strong, even as the median price for a new home is about 20 percent higher than a year ago.

“Momentum in demand still appears to be positive,” said economist Rubeela Farooqi of High Frequency Economics. “But supply is struggling to catch up given higher input costs and shortages that remain headwinds for builders.”

Apartment construction fell 5.1 percent from August to September, while single-family home construction was flat from the previous month at 1.1 million units.

Construction activity by region saw declines of 27.3 percent in the Northeast and 6.3 percent in the South. The West made the biggest gain, with starts up 19.3 percent from August, while the Midwest came in 6.9 percent higher.

“The story has been unchanged this year from one month to the next,” said Stephen Stanley, an economist with Amherst Pierpont. “Builders are doing all that they can, but it is not enough to keep up with the burst in demand created by the pandemic.”

A monthly survey of builder sentiment by the National Association of Home Builders and Wells Fargo showed sentiment improved to 80 in October from a reading of 76 in September. The index hit a record reading of 90 in November 2020.

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Homebuilding giant Taylor Morrison Home Corp. plans to expand aggressively in Oregon following its acquisition of William Lyon Homes, an executive said.

Taylor Morrison will become the fifth-largest homebuilder after the $2.4 billion purchase closes, according to the company, with $6.7 billion in annual revenue and a portfolio of 83,000 lots.

The company’s largest assets in Oregon are single-family lots in Bethany and Villebois in Wilsonville.

The deal adds three major markets for Taylor Morrison in Portland, Seattle and Las Vegas, CEO Sheryl Palmer said.

“The West Coast markets were a key part of the strategic rationale for this transaction,” she said.

Portland scores well on a number of economic indicators, Palmer said.

Taylor Morrison also has experience in highly regulated markets like Oregon cities, with their urban growth boundaries, Palmer said.

“When you look at a supply-constrained market, it is very difficult, and we work in a number of markets where I would say that,” she said.

Townhomes in Bethany or Villebois may be available for less than $300,000. Prices for single-family homes range from the $300,000s to $600,000s.

Taylor Morrison is based in Scottsdale, Arizona.

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McMinnville-based contractor Winsome Construction announced Tuesday it will work with Woodhouse, one of the leading timber-frame manufacturers in the United States, to build timber-frame homes in Oregon.

Winsome handles both residential and commercial construction, including custom designs. For its part, Woodhouse has provided timber-frame packages and design services for homes since 1979.

Now, the two companies are joining forces to meld the old with the new. It’s a big expansion for Winsome, which will now be building custom homes using Woodhouse designs and technology.

“We found a real alignment with the two companies,” said Wendy Stassens, one of three Winsome Construction partners and co-owners. “There just seemed to be a real match there.”

Woodhouse has a track record of working with other contractors through its independent selling partner program. In this way, the firm is able to offer its designs, prefabricated frames and more through a nationwide network of partners.

“Woodhouse has always had a strong belief and vision to partner with successful custom homebuilders,” said Craig Johnson, the firm’s vice president of sales and marketing. “Not only is Oregon one of the top markets for timber-frame homes, but (partner Shan Stassens) and the team at Winsome Construction are one of the top builders in the area.”

Timber-frame construction is a traditional method featuring heavy wood beams and intricate joinery rather than slender lumber.ĚýWalls are almost always positioned outside of timber frames, leaving large support timbers exposed for a striking visual effect.

“It’s an ancient form of carpentry that they’ve basically been able to modernize,” said Shan Stassens, who has worked as a licensed commercial and residential contractor in Oregon since 1990.

The joinery also is different. Instead of closely spaced lumber that is butt-joined and nailed together, the custom timber frame uses large timbers that are squared off and spaced farther apart. These heavy timbers are carefully fitted and joined together with mortises and tenons, and then secured with wooden pegs.

Because of heavy timbers’ supporting strength, timber-framed homes don’t require interior load-bearing walls.ĚýThis creates design opportunities and durability not possible with other construction methods.

One of those opportunities is an expanded use of prefabrication.

“Packages are designed through CAD systems,” Shan Stassens said. “The machine does the vast majority of the milling. You do need craftsmen to clean it up with chisels and do the finishes on it, but the majority of it is done with a machine now.”

Woodhouse has decades of experience building this way, he added. Further, the company’s headquarters in Mansfield, Pennsylvania, is located adjacent to a manufacturer of polyurethane structural insulating panels (SIP). The technology is used in conjunction with timber-framed buildings.

“They’ve been working hand in hand for 40 years on a system where the timber frames are built and (contractors follow) with the structural panels,” he said.

The time savings are notable. Installation of framing and insulating panels on a new home built this way can take as little as two weeks for smaller designs.

“We’re a general contractor, we build homes, and the timber-frame component is just one part of the house,” Shan Stassens said. “But we’re integrating everything into this assembly, from structural to mechanical and aesthetics, and I feel that’s something that’s unique.”

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For future electric car owners, a suburban home might just have the answer for a convenient overnight recharge.

Developer Vic Remmers is incorporating electric-car charging stations into two suburban Portland subdivisions where he’s building homes. His company, West Hills Homes NW, recently broke ground at Pioneer Highlands in Happy Valley, where he plans to build 65 homes. Remmers plans to begin building 118 homes in August at Thompson Woods in the Bonny Slope-Bethany area of Washington County.

All 183 homes will feature electric-car charging stations in their garages. The homes also have WiFi-capable thermostats and garage doors, and WiFi boosters to eliminate dead spots of wireless coverage in homes.

Remmers’ homes show home builders continuing to adjust to and stay in front of buyers’ expectations.

“One thing we’re really focused on here in 2017 is the technology in the homes and pushing forward with what we can do,” Remmers said.

In higher-income portions of the Portland metro area, Teslas seemingly have become as common as Hondas. As Teslas and other electric cars become more common, in-home charging stations begin to become a sensible amenity for developers to consider.

Remmers first tested the reception for in-home car charging stations at homes in Portland. “It’s been really well received,” he said. “It gets your homes ready for the future.”

While many homeowners have installed electric car chargers on their own, Remmers may be the first developer to do so in new homes on a wide scale in Oregon.

“It’s not common at all,” said Terry Bernhardt, an appraiser in Southwest Portland who tracks green home technologies. “Normally you have to have it installed at considerable expense.”

He estimates adding a charging station adds about $4,000 to the cost of building a home.

Paul Grove of the Home Builders Association of Portland said he was not aware of any other housing developments with charging stations installed in each home. But he said he’s noticed more public charging stations, even in rural areas.

Some downtown Portland parking garages include electric charging stations.

“You can definitely see a trend as more and more people choose to drive electric vehicles,” Grove said.

While Tesla vehicles can be plugged in directly to a wall outlet, it can take about eight hours to fully charge when connected to a 110-volt outlet. Dedicated chargers are much faster.

Bernhardt sees more residential developers adopting charging stations as electric vehicles and plug-in hybrids become more common. “The market’s going to catch up,” he said. “I think it’s a technology which has arrived now.”

Homes that include useful technology like electric car chargers both set housing apart and increase its resale value, Bernhardt said.

Electric cars can be charged in the home or at public charging stations. But most vehicle owners prefer the convenience of charging their vehicles at home, typically overnight, said Beau Snyder, an owner advisor at the Tesla dealership on Macadam Avenue, one of two in the Portland area (Tesla also has a dealership at Washington Square).

Tesla operates public charging stations that are free for Tesla owners to use. The Portland area has two so-called Superchargers, one in Woodburn and another in Sandy. There are also charging stations run by various private vendors that use differing technologies.

Some government agencies are working to expand charging stations, too. Seattle City Light, a publicly owned utility, announced plans to install 10 charging stations for drivers.

Oregon’s Building Codes Division also has discussed how to make sure new homes are electric-vehicle ready, said Jon Chandler, chief executive of the Oregon Home Builders Association.

A new era for electric cars appears to be dawning as automakers race to meet emissions mandates. Tesla is the current market leader in electric vehicles, with plans to produce 500,000 fully electric cars in 2018. But other automakers are following close behind. Volvo on July 5 announced plans to offer every vehicle with an electric motor beginning in 2019. Volvo will launch five fully electric models between 2019 and 2021, supplemented by plug-in hybrids and vehicles with so-called “mild hybrid” engines that automatically shut off when a car comes to a stop. Mercedes is also heavily investing in a new line of electric vehicles.

As electric cars become more popular, developers of single–family homes are facing fast-changing demands to respond.

“It’s something that we’re doing across the board right now,” Remmers said. “We think it’s the right thing to do, and we think it’s a feature buyers are going to appreciate in their new homes.”

Remmers uses electrical contractors Three Phase Electric, based in Canby, and Garner Electric, in Portland and Hillsboro.

West Hills Homes NW is developing Pioneer Highlands first, having garnered building permits from the city of Happy Valley. Remmers purchased the unbuilt lots in Pioneer Highlands from Holt Group, another residential developer.

“Over the years we’ve been watching Happy Valley, and it’s been growing tremendously,” Remmers said. “The demographics are excellent.”

Remmers said new Fred Meyer and New Seasons grocery stores have increased interest in the area.

The Pioneer Highlands homes are 2,500 square feet to 4,000 square feet, and are designed by an in-house architect, Brad Hosmar. Some of the homes will be one level, which is in demand for older buyers, Remmers said. Other homes will also have the master bedroom on the ground floor.

The single-family housing market has suffered from a lack of inventory. The Portland metro area had only 1.6 months of inventory in June, according to RMLS, a listing service. Total time on market for sold homes averaged 38 days.

“It’s a lot like the inner city where there really is a lack of inventory,” Remmers said. “It’s definitely a strong demand right now.”

Remmers had focused on the urban infill market before last year, when he began to build in Findley Heights, a subdivision in the Bethany-Bonny Slope area of Washington County.Ěý A 40-lot buildout there is almost complete.

“That was tremendously received,” Remmers said. “We have a handful of homes left there that we’re building. Those have all sold well.”

Remmers is still building apartments and some condos in urban Portland, but has sought suburban developments to diversify and grow his business.

“We’re still doing a tremendous amount of homes in the infill market, just like we’ve been doing,” he said.Ěý “This is another avenue for us to add some volume. That’s what families are looking for.”

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Pacific Lifestyle Homes, a homebuilder based in Vancouver, Washington, recently completed a new Community Giving House to benefit four local children’s charities.

The Community Giving House program is the brainchild of Kevin and Nikki Wann, who opened Pacific Lifestyles Homes in 1996. The couple has been active in children’s charities for more than a decade, but sought to take on some atypical fundraising. The Wanns last year decided to start something tied to its homebuilding.

By working with its vendors and trade partners, Pacific Lifestyle Homes started the Community Giving House program with the goal of using proceeds from houses built through the program to benefit local children’s charities.

The latest Community Giving House, the fourth built through the program, recently sold for $615,900. Since program inception, more than $100,000 has been donated to groups that include the Children’s Justice Center in Clark County, Washington; Innovative Services NW in Vancouver, Washington; and Transitional Youth in Beaverton.

Ěý

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Multifamily units account for more than half of Wilsonville’s existing housing stock – including senior housing, according to city Planning Director Chris Neamtzu.

But change is coming to the Portland suburb.

The build-out of Villebois, 2,600 homes on 500 acres west of Interstate 5, is about 60 percent complete, Neamtzu said. Next, Wilsonville is planning for construction of 610 market-rate, single-family homes on the 173-acre western portion of an area named Frog Pond. No apartments are planned.

“This neighborhood is going to help us provide some balance in our housing portfolio,” Neamtzu said.

The city of Wilsonville is at work on a master planning process for Frog Pond, north of City Hall. City officials are moving forward, and the project is on track to be ready for developer proposals next year, Neamtzu said.

The Planning Commission will hold work sessions on Frog Pond in October and November, with a public hearing tentatively planned for December. The City Council would then consider the master plan in January.

Lots in Frog Pond’s western portion will vary in size from 5,000 square feet to more than 10,000 square feet. If the eastern and southern portions were pulled inside the urban growth boundary, the anticipated build-out would have 1,935 homes.

Frog Pond will offer “a lot of opportunity for some nice, high-end homes,” Neamtzu said.

A commercial center is also envisioned. An analysis found that the area could support 38,000 square feet of commercial development.

All of the residential construction in Wilsonville is following substantial commercial and civic projects. Wilsonville Old Town Square, developed by Gramor Development along with Retail Opportunity Investments Corp., which later acquired the property, is anchored by a 145,000-square-foot Fred Meyer store, with an additional 50,000 square feet of other retail space. McMenamins opened a pub in a former church dating back to 1911.

In 2006, Wilsonville built a 30,000-square-foot City Hall. The $11.5 million project was developed by Specht Development.

Schools are going up too. Construction has started on a new middle school, Meridian Creek, on the northeastern edge of town. It will be the city’s third middle school. Wilsonville didn’t have its own high school until 1995. A school site has also been identified as part of Frog Pond.

At Frog Pond, developers are beginning to investigate the possibilities ahead of proposals next year.

“There’s great potential,” said Don Hanson, director of planning, architecture and design at Portland-based Otak. “It’s not constrained. It’s fairly level land. Obviously, it’s well located, close to the downtown core and to schools. People can walk. And Wilsonville is always good to work with.”

Hanson said he was looking into Frog Pond for Arbor Custom Homes, a Beaverton-based developer.

Wilsonville, population 22,729, sits at the southern edge of the metro area’s urban growth boundary. The city has seen 16.5 percent population growth since 2010, according to Census Bureau data.

Frog Pond is coming on the heels of Villebois. Last year, Wilsonville gained upwards of 350 new homes – a record, Neamtzu said.

“It ebbs and flows, but Wilsonville has a long legacy of relatively consistent growth,” he said.

Villebois has a range of homes with current prices of $256,990 to $659,900. Developers including Polygon, West Hills/Arbor Custom Homes and Lennar Corp. have been building there.

Polygon managers were out of the office and could not be reached for comment. Efforts to reach a Lennar Corp. spokesman were not successful.

Construction at Villebois has slowed as developers pursue higher-end homes, Neamtzu said.

“In Villebois, the homes that are being built are at a higher price point; I’m sensing less velocity because of that,” he said. “We’ve moved into new areas where the homes are upwards of $600,000, and the market is not deep at that price point.”

Meanwhile, as plans for Frog Pond advance, planners are grappling with how to structure infrastructure charges.

“That’s always the hardest part of these master-planned communities,” Neamtzu said. “How do you pay for the infrastructure that’s needed to serve the new urban area?”

Frog Pond was once literally that – a wetland known for its croaking frogs. A grange hall and later a road, Southwest Frog Pond Lane, cemented the name.

While city officials say Frog Pond development is needed, not everyone in the suburban community is thrilled.

Under current plans, a road would impact the property of Don and Debra Ross. The Rosses moved to Wilsonville from Medford in 2012 after eminent domain was exercised to extend Crater Lake Highway (Oregon Route 62) through their property.

At their Wilsonville property, the Rosses entertain their grandkids and raise cattle and chickens. Debra’s elderly mother lives with them.

“I don’t really want to move,” Debra Ross said. “This is dĂ©jĂ  vu.”

Wilsonville grapples with UGB

The fate of Frog Pond’s remaining tracts will depend on how Metro handles the southern fringe of the Portland area’s urban growth boundary.

Frog Pond is divided by the metro-area’s UGB. The western portion is in; the east and south are out.

Wilsonville officials are planning for development of west Frog Pond while pushing for the two remaining tracts to be included in the UGB when Metro reconsiders it in 2018.

Wilsonville officials have tried during the past two UGB cycles to persuade Metro, the regional planning agency, to include all of Frog Pond within the UGB. Both times, in 2010 and 2015, Metro rejected the efforts. Officials have cited undeveloped land within the UGB as well as a checkered history of development in areas brought within the UGB.

The western portion of Frog Pond was added in 2002. Wilsonville and Metro continue to discuss the other tracts.

“It’s really important to have the larger geography and be able to rely on more dwelling units being constructed to help offset the costs,” Planning Director Chris Neamtzu said.

Metro is pursuing another solution: asking the Oregon Legislature for new authority to consider exceptions to UGBs outside the usual review cycles. The goal, agency spokesman Jim Middaugh said, is to give Metro a tool to consider “small, strategic exceptions.”

A Metro task force is considering recommendations for the Metro Council to review.

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When Mike Harn, the owner of Portland homebuilding company Anlon Construction, was first approached about taking over a 20-unit townhome development, he wasn’t interested.

Before opening shop in 2009, the custom homebuilder had worked for a Portland production builder that closed its doors during the recession. He had witnessed firsthand the risk of putting too many resources in one place. However, when the broker told him where the new development would be located, he changed his tune.

“He said, ‘How about if they’re in Sellwood?’ and I said, ‘Yes,’ ” Harn recalled. “We wrote up an offer a few days later.”

In October, Harn closed on a deal to buy the 31,000-square-foot lot for $2.06 million and revive the approximately $6.5 million Claybourne Commons project on Southeast Claybourne Street and 16th Avenue. The project has evolved, and so has neighborhood sentiment.

Surrounded by old Portland homes, neighbors disliked Claybourne Commons when it was presented previously as a modern, 20-unit condominium complex. Developers Drew Prell and James Morton started planning years ago, but the project was sidelined during the recession. In 2011, they reformatted it as a townhome development; however, ground was never broken.

Online comments in the 91ĘÓƵ’s archives from 2011 are varied. Some offered support while others condemned the project.

“What an incredibly stupid place for 20 units!!” wrote one reader. “It’s already way overcrowded in that area and we don’t want it.”

Much has since changed. Near the corner of Southeast 17th Avenue and Tacoma Street (less than a mile south of the Claybourne Commons site), developer Wally Remmers is building a four-story, 46-unit apartment complex. Also, just east of that site, Urban Evolution Inc. is planning to build a 68-unit apartment complex on Southeast 23rd Avenue. Neighbors have adamantly opposed that project’s size, and have appealed to the Oregon Court of Appeals to try and stop it.

Ellen Burr, land-use chairwoman of the Sellwood-Moreland Improvement League, said Remmers had previously considered buying the Claybourne Commons site for an apartment project with up to 100 units and no parking. Suddenly, Harn’s project seemed smaller by comparison.

“I think it will be an interesting project to have in the neighborhood – something refreshing,” Burr said.

Anlon has already completed demolition of two existing houses, and plans to begin underground work soon. Harn said he has a construction loan from Community Financial Co. Work has already drawn curious neighbors.

“As soon as we put our fences up and started doing some demo, I was down there five to six hours a day talking to the neighbors as they came by,” Harn said. “I think that probably it’s been a much different experience for us than it was for Drew and Jim at the beginning … The neighbors have been great. I was nervous for all intents and purposes, but they’ve been great. We just communicate.”

Harn, a former U.S. Army Ranger, knows what it’s like to be barked at. Now 39 years old, he started building at 21 and prefers a more collaborative approach in his business. Neighbors originally took issue with a planned lack of parking at Claybourne Commons, so the revised plan includes a one-car garage for each townhome.

The development will be composed of four buildings with a common space between them. The average unit size will be approximately 1,500 square feet. Vallaster Corl Architects designed Claybourne Commons originally, though Harn has brought on Benjamin Waechter, Architect to update the drawings.

Those drawings are still being finalized, but Harn is putting a lot of emphasis on the windows, which unlike standard systems will be seated inside the framing members to make them appear more dominant. He said too much gingerbread on the exterior can sometimes make a building appear crowded, so he’s taking a minimalistic approach and using the windows as a centerpiece.

“The goal is we get to decide where your eyes are going to be drawn,” he said.

For Harn, it’s an opportunity to step into what he considers one of the most desirable submarkets in the city. Eric Post, principal broker at Better Homes and Gardens Real Estate, would agree. He’s listing the units.

“The location is just second to none in terms of a new project down there,” Post said. “The demand for ownership in an urban setting is still very high. There are lots of multifamily units, but these types of units give someone the benefits of homeownership without the maintenance, and without the inconvenience of the suburbs.”

Indeed, the Sellwood-Moreland neighborhood has seen some of the hottest real estate activity in recent years, with the median home sales price reaching $360,000 in November – a 23.3 percent increase year over year, according to the Regional Multiple Listings Service. However, homes in Sellwood routinely are listed for between $400,000 and $500,000. For instance, Everett Custom Homes recently bought a house in the southern part of the neighborhood, tore it down and built two homes in its place; the company then planned to market them for as much as $700,000.

Harn said his townhomes will likely sell in the mid-$300,000 range. He doesn’t anticipate any trouble selling them.

“It’s an area where you can walk through and experience Portland at every level,” he said. “There are small shops, thriving businesses, and some of my – dare I say – favorite trendy restaurants. It’s just a heck of a place … And if you need to be downtown, you’re there in 10 minutes.”

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The Portland housing market is bubbling with activity.

Last month, fueled by rising home prices and the threat of increasing interest rates, the number of buyers flocking to the market reached its highest point in eight years. Homebuilders are taking advantage en masse by buying, demolishing and subdividing single-family lots.

Meanwhile, the specter of the housing crisis continued to haunt many homeowners as foreclosure activity increased.

In July, the number of closed home sales increased 10.2 percent from June to 2,766 – the most in a single month since 2005. Pending sales, meanwhile, dropped slightly but were still up 15.5 percent from a year ago at 2,738.

New listings, at 3,877, were up 3.4 percent from June but that still wasn’t enough to raise the inventory, which fell slightly to 2.8 months. A supply of six months is generally considered a balanced market between buyer and seller; anything less favors sellers.

That’s spurred bidding wars among buyers, which in turn is driving prices – the median has increased 13.7 percent from a year ago to $261,000, according to new data from the Regional Multiple Listings Service. That’s been a source of motivation for buyers on the fence, as have been interest rates, which began to tick up from historically low levels following Federal Reserve Chairman Ben Bernanke’s announcement in May that he would begin tapering his strategy of quantitative easing.

Builders have taken notice. While permits overall have not yet reached pre-recessionary levels, construction activity has equaled or surpassed those levels in some inner-city neighborhoods.

In the Belmont-Hawthorne-Division neighborhood, for example, there were 480 new dwelling units planned in 2012 compared to 244 in 2007, according to data from the Bureau of Development Services and the Bureau of Planning and Sustainability. The same trend was true for the Hollywood, Sellwood-Moreland-Brooklyn, Gateway, Centennial-Glenfair-Wilkes, Northwest Portland, and Hillsdale-Multnomah-Barbur neighborhoods, among others.

In the Martin Luther King Jr.-Alberta neighborhood, there were 233 units planned in 2012 compared to 98 in 2007. Some of that activity comes from large multifamily projects along North Williams and Vancouver avenues, but a lot of it comes from smaller infill projects like one by Lisac Brothers Construction.

In June, the company purchased a 2,640-square-foot home at 106 N. Wygant St. for $550,000. It recently applied for a 12-lot subdivision, and plans to build four row-homes with three-attached residences in each. Mark Lisac, one of the company’s owners, said those units will each likely sell somewhere in the low $300,000s.

“I think (the market) is pretty good right now,” he said. “It went from about 0 to 100 (miles per hour) in just a few months.”

Across the nation, economists have high hopes that will support further economic growth. Foreclosure filings nationally have decreased 32 percent from a year ago. But in Portland, and throughout Oregon, foreclosure activity actually increased.

Last month, there were 909 notices of judicial foreclosure across the state. Daren Blomquist, vice president of RealtyTrac, a national provider of foreclosure data, said that’s the highest level in a single month so far.

Last year, lenders began switching from a predominantly nonjudicial process to a judicial one following a court ruling that challenged the legality of the Mortgage Electronic Registration System (MERS), a digital filing system used almost ubiquitously by lenders. In June, the Oregon Supreme Court offered some clarity on the subject, but Blomquist said banks have since accepted the judicial process and won’t be quick to change.

“So there is this backlog of delayed foreclosures that they’re catching up with, and that’s where we see this big increase,” Blomquist said. “It’s like turning a cruise ship. Once they start down a path they get their systems in place to start foreclosing in that way, and so it may take them some time to switch back, even if they did make that decision to do so.”

Foreclosure starts in Oregon increased 137 percent in July, while the total number of homes in some process of foreclosure increased nearly 70 percent. In the Portland-Vancouver-Beaverton metropolitan statistical area, foreclosure activity increased approximately 55 percent from June, and 116 percent from a year ago.

One development that could slow filings is recent changes to the Oregon Foreclosure Avoidance Program. The law requires banks to meet face-to-face with borrowers to discuss alternatives before foreclosing, but previously only applied to non-judicial foreclosures.

Adam Starr, an attorney at Markowitz, Herbold, Glade & Mehlhaf PC, said that created a significant incentive for banks to avoid the non-judicial system. On Aug. 4, the law was amended to apply to the judicial process as well.

“I think the implementation of the mediation requirement for judicial foreclosures will take away some incentive to avoid the non-judicial foreclosures, which had that requirement implemented already,” Starr said. “… The new mediation requirement will probably not change the overall number of foreclosures, but could start shifting the balance back to non-judicial eventually.”

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Mike Erdmann said it is wonderful that Salem has made the National Association of Home Builders‘ list of recovering markets for May.

Erdmann, chief executive officer of the Home Builders Association of Marion and Polk Counties, said he just wishes that the listing impressed bankers.

“This is the sort of thing we’d like to show to lenders,” Erdmann said. “It’s still hard getting the banks to back new construction.”

While the homebuilding market in Salem is improving, Erdmann and other observers at street level said a full recovery from the recession is still slow and fitful.

He added that he is not sure bankers will be too impressed with the fresh report. However, he said, they should definitely take notice.

Bend, Corvallis, Eugene, Medford and Portland have been on the list for some time. Salem is a newcomer – permits are up 5.8 percent, prices are up 4.1 percent and overall housing construction is up 1.4 percent.

“It tells us what we’re already seeing,” Erdmann said. “With prices, in particular, we’re seeing some definite signs of growth.”

Jon Chandler, CEO of the Oregon Home Builders Association, said he sees the same thing.

“We’re still handicapped by not getting funding from lenders,” Chandler said. “We’re still at half of what we should be for a healthy economy. Much of what is being built is with private money. The good news is that private money is cheaper than it has been in the past.”

The NAHB released its list of 258 improving markets on Monday. The only other newcomers to the monthly list were Dothan, Ala.; Elizabethtown, Ky.; and Salisbury, Md.

The boom market, according to the report, is Odessa, Texas, with an almost 30 percent spike in jobs and a 20 percent jump in permits.

NAHB Chairman Rick Judson said the report tracks cities’ improvements (compared with their low points) over the past six months. The report dropped 19 cities from the list this month.

“The fact that more than 70 percent of all U.S. metros are holding onto their spots on the improving list is definitely good news,” said Judson, a homebuilder from Charlotte, N.C. “That said, our industry’s progress on the road to recovery is being slowed by rising challenges related to the availability of credit, building materials, labor and lots for development.”

The report is at least a morale booster, Chandler said.

“The notion has been to show that not all markets are tanking,” he said. “It’s finally turning around.”

Although the report may boost local confidence, it has little practical impact in terms of fueling the recovery, he added.

“At the macro level, they’re looking at Europe and the big picture,” Chandler said.

Connie Bresee, an agent with Coldwell Banker in Salem, said she can see the effects of the rebound in Salem’s home market. However, she said, it is still sluggish.

“It’s a very bizarre phenomenon,” Bresee said. “We are seeing multiple offers on properties, which is usually a sign that prices are going up, but the offers are usually on properties where the price has been reduced several times. It remains a very soft market.”

Bresee said she can nonetheless see some times of change, especially for new construction. Most people with money to spend seem to be going after brand-new homes, she added.

Unfortunately, Erdmann said, new construction poses a problem for homebuilders. As homes are built, he said, the city is running out of available land.

“Going into spring, we have about five months’ worth of inventory,” Erdmann said. “Still, it sure beats having 22 months’ worth of inventory on the market. Our biggest challenge right now is finding building property.”

According to the national association, seasonal trends in home prices resulted in an overall decline in the Improving Market Index this month. However, the index remains at a strong level, NAHB economist David Crowe said in the report.

“Some metropolitan areas that had previously charted marginal home-price gains dropped off the list this time as a result of typically softer prices seen in the winter months, which is similar to what the index showed in this same period last year,” he noted.

Erdmann said Salem homebuilders were hit pretty hard by the recession, so recovery is just going to take time.

“Salem was a little early getting into the recession, so it’s only natural it will be a little late climbing out,” he said.

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