Mortgage rates falling despite Fed’s increase

When the Federal Reserve Board raised its benchmark interest rate by a quarter of a point in mid-March, the consensus prediction was that mortgage rates would rise as well.

Instead, the interest rate on the popular 30-year mortgage last week fell for the fourth week in a row. It was 4.08 percent last week, Freddie Mac data showed, the lowest rate for this calendar year.

The Fed’s decision to raise its benchmark rate affects the price banks have to pay to borrow from one another. The decline in interest rates illustrates the importance to the housing market of the 10-year Treasury bond, whose ups and downs more closely prompt changes in mortgage interest rates.

Whereas the Fed’s decision to raise rates was regarded as a vote of confidence in the U.S. economy, the decline in the yield of the 10-year Treasury bond reflects an increased appetite for safety among investors.

The U.S.-backed Treasury note is viewed as among the safest investments in the world. In the face of recent international uncertainty, investors have ratcheted up their demand for these instruments. The higher demand has sent the interest rate, or yield, on these bonds lower, as the government doesn’t have to offer as attractive an interest rate to snag investors’ money.

In November, the rate on 10-year Treasury notes went from 1.77 percent before the election to 2.3%, an increase of a magnitude that had occurred only three times in the last decade. That rise was a reaction to projections about how the new president’s policies might affect the economy.

A few months after the inauguration, though, it’s clear that those policies might not be implemented as quickly or as easily as some imagined.

The 10-year Treasury yield is about 2.23 percent, Realtor Mag notes. It was about 2.62 percent a month ago.

The declining mortgage rates are a welcome development to potential home buyers. Lower rates translate to greater buying power — a point of interest in all markets, but especially one as robust as Bend’s.

If you’re in the market to buy a home, I can put you in touch with a lender who will prepare a package that’s right for you. If you already have financing — or if you’re considering putting your home on the market — I can also help ensure an optimal outcome. I will bring my knowledge of the Bend market to bear for your benefit.  To learn more about how I can assist you, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Sales prices approach highest on record

March homes sales in Bend, Oregon, picked up compared with the previous month and registered the second-highest median sales price in the last 10 years.

The median price climbed to $395,000 in March. The only month in our data set (dating to the start of 2007) that figure has been higher has been May 2007, when it was $396,250.

March’s median sales price was 11.3 percent higher than February’s mark of $354,853. Year over year, March’s median represented a 14.2 percent increase.

The 11.3 percent monthly increase in March was the largest in Bend since January 2015 had a 13.7 percent increase from the month prior.

Can anything be learned from January 2015 that can be applied to the future of the current Bend market?

That can’t be answered. But it is worth pointing out that January 2015’s median sales price of $329,700 turned out to be greater than the year-end median sales price for the entirety of 2015 ($327,500).

And January 2015 represented the fifth-highest month for sales price in that year, whereas January usually is among the lowest months for median sales price.

Returning to the present year, remember that typically, March’s median sales price represents a “support” level, or a springboard, for prices for the remainder of the calendar year. In each of the last six calendar years, the month with the highest median sales price has been September or August. So it would be unusual for March’s median sales prices not to be exceeded in the coming months.

Other information in the March sales data support the position that Bend remains strongly a seller’s market.

For one, the inventory of homes on the market was 2.0 months. Inventory represents the amount of time it would take for all homes on the market to sell, given the current pace of sales. There is some debate about the boundary between a buyer’s and a seller’s market (with figures ranging from three to six months), but there’s no debating that March’s inventory was the third-lowest for the time span the Skjersaa Group has data and the lowest for any March in that period.

The average days on the market in March was 112 days. That is 24 fewer days than in February (a halt to our record-breaking winter weather undoubtedly helped), and, perhaps more significant, 18 days fewer than in March 2016. The average days on market for the entirety of calendar year 2016 was 118 days.

We entered April with 273 pending sales, a number that promises another busy month.

As the real estate market gears up, it’s as important as ever to have a trusted, experienced Realtor on your side. Whether you’re looking to sell your home or considering buying, I can provide guidance and advice to ensure an optimal outcome for you.  To learn more about how I can assist you, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Housing market continues to rise from depths of foreclosure crisis

More than 7.75 million homes went through foreclosure in the 10 years ending with the close of 2016, but recent employment and economic trends in the United States show the potential to drive the future number of foreclosures to below the pre-housing crisis levels.

A report by CoreLogic, a California company that provides financial and consumer information, shows that in terms of the number of foreclosures, 2016 was the best year since the onset of the housing crisis in 2007. What’s more, CoreLogic’s report indicates we are likely to see foreclosure numbers fall further.

CoreLogic reports that there were 7,783,000 foreclosures from 2007 to the end of 2016. January 2011 was the worst month, with an inventory of 1,563,000 homes in foreclosure in the United States.

That high-volume mark corresponds with the low point for the median sales price for homes in Bend, Oregon, in the last 10 years. The median sales price in Bend in January 2011 was $170,000. One month earlier, it was $169,000, the lowest median sales price in the 10 years for which the Skjersaa Group has data.

Nationwide, the low point for home prices was March 2011, according to the CoreLogic report. Since then, we’ve seen mortgage interest rates fall to a record low of 3.31 percent in November 2012, a 10 percent year-over-year increase in home prices in March 2013 and what CoreLogic calls the serious delinquency rate decline in March 2015 to the lowest level since before the start of the housing crisis. All of those developments strengthened the housing market and made foreclosure less of a likelihood.

Also since the start of the housing crisis, lending regulations have stiffened. The employment picture has strengthened considerably across the United States, and consumer confidence surveys are firmly in positive territory.

The Bend market has been part of the changing tide since the worst of the housing crisis. The end-of-year median home sales price has risen for five years running, inventory of homes for sale remains low, and the city remains an attractive place to live.

Although fewer and fewer homes are moving into foreclosure, buying or selling a home remains a stressful, taxing process. I can put my knowledge and expertise to work for you, wherever you are in the real estate process. To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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How to find a lender that’s right for you

mortgage-lendersIf you’re in the market to buy a home, you’re probably in the market for a mortgage, as well. Here are some suggestions on choosing a lender.

Know your options for obtaining a mortgage. You’re not limited to a bank with nationwide branches or one of the big online lenders. Credit unions and regional banks offer home loans, as do mortgage brokers. Armed with connections to multiple lenders, mortgage brokers might offer a lower interest rate and better overall terms than banks and online lending institutions.

A borrower will be best-served by a lender who offers a product that aligns with the borrower’s needs — and those needs might not be apparent even to the borrower unless the lender asks the right questions. A first-time buyer might assume mortgages are one-size-fits-all and inquire about a 30-year fixed-rate loan because … because … because that’s what his or her parents had. Choose a lender who can identify a loan program that works for your budget, financial picture and objectives. Not all lenders provide this insight. Many just tell you what you qualify for and let you choose from a menu.

Understand the total costs of the mortgage each prospective lender is offering. Shopping lenders based upon an advertised interest rate is a fallacy. There’s a lot more than that rate that goes into the cost of a mortgage, and not all parts are equal from one lender to the next. Different lenders might have different names and charges for similar line items.

Choose a lender who “feels” right. Does the lender embrace your unique situation, or does he read off a script every time you have a question? If you’re a first-time borrower, is the lender willing to explain every line item on your paperwork? Conversely, if you’re an experienced borrower, does the lender realize he doesn’t need to tell you what points are?

“You want to sit down with two or three lenders to make sure you find one who’s a good fit, the right match for you as a borrower rather than a product pusher,” Michael Jablonski, executive vice president and retail production manager for BB&T Home Mortgage, said in a Bankrate.com article. “Mortgage lending should be a collaborative process.”

Ask prospective lenders to explain the timeline of a loan and what happens if speed bumps arise. Get an estimate for how long an appraisal, underwriting and closing will take. Ask what would happen if the appraised value doesn’t support the value of the loan, or if a family emergency before closing makes buying a home impossible. Ideally, surprises won’t arise, but it’s better to anticipate the unexpected than to be blindsided.

Choosing a lender is a crucial part of buying a home. It’s important to select a lender who can help the buyer understand the full matrix of elements that make up a loan program — someone with integrity and someone who has the ability to follow through on the representations that he or she makes. A lender local to the region you’re looking to buy in is important, too.

Integrity is vital in the Realtor you choose, also. Whether you’re buying a home or considering putting  your home on the market, I promise I will work in your best interests to obtain the best deal possible for you. To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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    ADJUSTABLE-RATE MORTGAGE (ARM) Interest rates on this type of mortgage are periodically adjusted up or down depending on a specified financial index. AMORTIZATION A method of equalizing the monthly mortgage payments over the life of the loan, even though the proportion of principal to interest changes over time. In the…
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4 tips to make sure you’re happy with home you buy

I love it when a client of mine buys a home. It is the culmination of a process that can be exciting but exasperating, rewarding and enriching — in ways even an appreciating asset like a home in Bend can’t touch.

Most important, though, I want all homebuyers — not just my clients — to be happy with the homes they buy. To try to produce that type of an outcome, I have these tips to consider before you decide you have found the perfect home:

  • Ask your best friend to look at the home. Sometimes, a buyer is dazzled by one or two features of a home and blind to its faults. Someone who knows you through and through will be able to tell if the house fits you. And by best friend, I don’t mean your spouse or partner (who might be tempted to be agreeable). I mean that someone who is your go-to person when you need honesty, that someone who isn’t afraid to say, “What the heck?” when something just feels wrong. Having a soulmate look at your prospective home with a critical eye will give you a valued third-party perspective about this huge step you’re considering.
  • Don’t make up your mind too soon. If you’re eager to buy a house, it’s easy to fall for one of the first properties you see and close your mind to anything that follows. Your desire to ditch apartment life or finally to have separate bedrooms for the kids can influence your decision-making in a negative way. If you have appointments to look at a certain number of homes, see them through — even if you are convinced the first or second of eight showings on a weekend was just made for you.
  • Understand a home’s hidden characteristics. It’s perfectly fine to want to buy a house with a fabulous bathroom. But be careful you’re not buying a home because of a fabulous bathroom. Just about anything about a home that you can see can be changed to fit your tastes. What you can’t see — the foundation, the plumbing and electrical systems — and what you can’t change — location, lot size, neighborhood traffic — are more difficult (or impossible) to alter and might have more effect on your long-term satisfaction with a home.
  • Ask your Realtor to offer reasons maybe you shouldn’t buy the house. Much like your best friend (see tip No. 1), your Realtor can see potential drawbacks about a house that you might miss. Your best friend will see how the house fits you; the Realtor will see how the house fits everyone. If you’re “eco-conscious,” you’ll want the Realtor to note how much water the huge lawn will require and the inefficiency of the aging furnace. Your Realtor will note that a home near a school means not only slow traffic in the area but also considerable congestion twice a day and on any nights school activities are scheduled. If the house is right for you, you’ll appreciate knowing about these caveats your Realtor throws at you.

As a Realtor, I don’t want to just complete a deal for my clients. I want to complete the right deal for my clients. For the best result in a real estate transaction, you’ll want a Realtor who puts your best interests first. If you list your home with me or you are buying with me as your Realtor, I will use my experience and knowledge to your benefit. To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Median price drops in February amid overall mixed data

UntitledLooking solely at February’s median sales price of a home in Bend, Oregon, one might be struck by the decline from the previous month. But other data from the real estate market indicate the demand for homes remains strong.

February’s median sales price was $354,853. That’s 4.3 percent lower than January 2017’s figure of $370,813. Compared with February 2016, however, median prices showed a 7.0 percent increase.

This was the sixth consecutive February in which there was a year-over-year increase in the median sales price. Last month’s 7.0 percent year-over-year rise was the second-lowest over this six-year span, not much more than the 6.8 percent increase from February 2014 to February 2015. In the other four years, the February year-over-year increase in the median sales price was more than 14 percent, and — looking at just one month earlier — the year-over-year increase from January 2016 to January 2017 was 16.8 percent.

Does February’s median sales price mean that the appetite for homes is grinding down? In considering this question, it’s worth looking at other information from last month.

The inventory of homes for sale decreased from 3.1 months in January to 2.7 months in February. In 2016, the February inventory of 4.9 months was a calendar-year high.

The average days on the market in February also reflected a more active than usual February market. In January, the average days on market was 141 days, and in February it fell to 136, within two days of the shortest time in any February in the 10 years for which the Skjersaa Group has data.

One hundred twenty-eight homes were sold in February. On a per-day basis, that’s a higher rate than the 130 sold in January. Comparing to February in previous years, the 128 is the second-most sold in the last 10 years, behind the 131 in 2014.

But there’s also this: Fifty-seven houses on the market in Bend reflected a reduced price. As a percentage of active listings (324 homes), that is 17.6 percent. Looking, again, to February in previous calendar years, that was the most since a 19.9 percent reduced rate in February 2011. In February 2012, the rate was 17.5 percent, essentially the same as in February of this year.

The percentage of homes priced at $625,100 or more continues to be the largest segment of homes on the market. Of the 324 active listings in February, 35 percent (114 homes) were in this price range after 36 percent of active listings were of this price in January. As the calendar turned to March, there were 326 active listings, and the percentage of homes priced $625,100 or more was higher: 38 percent.

Whatever the market is doing, you will benefit from having an experienced Realtor working for your best interests. I know the Bend market and will help you realize a worry-free outcome — whether you’re considering selling your home or you’re a buyer. To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Scarcity of inventory drives increase in home prices

Anyone who has followed the Bend, Oregon, real estate market coming out of the great recession has probably wondered: How long can prices keep rising?

After all, mortgage interest rates have moved off their historic lows and appear headed for further increases. Higher interest rates cut into consumers’ buying power, and homes that are out of reach for potential home buyers won’t change hands.

But rather than facing a ceiling imposed by higher borrowing costs, home prices instead appear driven by the scarcity of inventory. And given that relationship, anyone waiting for an end to the upward trend to housing costs might have to be exceedingly patient — whether they’re in Bend or elsewhere in the United States.

Mortage News Daily, reporting on national home prices in the fourth quarter of 2016, noted a greater year-over-year increase in prices in December than in November and October. That means that even during a holiday season that traditionally heralds a slowdown in real estate activity, home prices rose more compared with a year prior than in more active months for home buying.

Here are the numbers: The Federal Housing Finance Agency reported a 6.2 percent increase in home prices in December 2016 compared with December 2015. The year-over-year gain was 6.1 percent in November 2016 and 6.0 percent in October.

The agency’s Housing Price Index is based on the purchase prices of homes whose mortgages are backed by or sold to Fannie Mae and Freddie Mac. Those two agencies own or guarantee about 60 percent of the total U.S. mortgage market.

“In the years since the financial collapse, [Fannie Mae and Freddie Mac] have been the major source of credit for most people who got mortgages, and the only source of credit for less-than-pristine borrowers,” The Washington Post noted.

Andrew Leventis, FHFA’s deputy chief economist, told Mortgage News Daily: “Although interest rates rose sharply during the fourth quarter, our data show no signs of a home price slowdown. Although it will certainly take more time for the full effects of the elevated interest rates to be felt, there is no evidence of a normalization in the unusually low inventories of homes available for sale, which has been the primary force behind the extraordinary price gains.”

From the fourth quarter of 2015 to the fourth quarter of 2016, the largest gains in home prices were in Oregon, at 11 percent. Colorado was second, at 10.6 percent, and Washington was fourth, at 10.2 percent.

Bend trailed the state’s average as a whole. The median sales price in December 2016 in Bend was up “only” 9 percent from December of the previous year. The inventory of homes for sale in December 2016, though, was 2.3 months — which, before the 2016 calendar year — would have matched the lowest inventory during the 10 years for which the Skjersaa Group has data.

As an article in The Bulletin newspaper noted, the median price of homes in Bend is still less than for cities that have a similar appeal. In Boulder, Colorado, the median price for the first six months of 2016 rose almost 15 percent from $790,000 in 2015 to $905,000 in 2016. In Jackson, Wyoming, the median sales price in 2016 was up 2 percent from the year before, to $875,000.

“What is interesting is that Oregon in general, and in Bend, there is still arguably a cheap option relative to some of its comparators,” Duy told The Bulletin, adding that he sees no reason for home prices to stop climbing.

In an environment such as Bend’s, having a Realtor who knows the market is vital for your interests. My experience and knowledge will help you get your best deal, whether you’re a buyer or looking to sell your current home. Please contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

 

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Changes might bring banks back into the mortgage game

By Jason Boone

Even as the housing market rebounded from the depths of the recession, big banks largely stood on the sideline. They watched as nonbank institutions — companies that only make loans and don’t offer traditional banking services such as savings and checking accounts — gobbled up more and more of the mortgage market.

Deregulation that the Trump administration has pledged could alter the trend, however. Moreover, a predicted rise in interest rates should lure more banks back into the game with the prospect of higher profits. These factors should result in more competitive choices for home buyers.

As the United States clawed out of the recession, home loans were still dominated by mammoth banks. In 2010, nonbanks handled 10 percent of the mortgage origination market, according to Mortgage News Daily. Stated another way: “In 2011, 50 percent of all new mortgage money was loaned by the three biggest banks in the United States: JPMorgan Chase, Bank of America and Wells Fargo,” The Washington Post notes.

The consensus among mortgage experts is that big banks got gouged in the aftermath of the housing implosion and recession. Consumers walked away from their homes — perhaps an unprecedented development in the history of U.S. real estate — banks were fined and forced to rescind loans thought to be flawed, and new regulations and requirements tied their hands.

Non-banks faced a softer regulatory hand in immediate wake of the housing crisis.

The share of mortgage loans handled by the three biggest banks — Chase, BofA and Wells Fargo — had fallen to 21 percent by September 2016. The share handled by nonbanks — such as loanDepot and Quicken Loans — is up to 50 percent. “Banks that are still in the market are much less competitive in pricing,” Mortgage News Daily reports.

A J.D. Power on home borrowers’ satisfaction that was released in November showed that 27 percent of first-time buyers and 21 percent of all borrowers regret their choice of a lender. The study showed an even split between banks and nonbanks among the 10 most highly rated mortgage providers, so consumer satisfaction data doesn’t lean toward one type of institution over the other.

As part of an overall theme of a more laissez faire approach to administering the country, Trump has heralded a relaxed regulatory environment. Financial institutions assume that hands-off approach will seep into the home mortgage sphere, perhaps deeply enough to induce them to return to the mortgage business. If consumers are offered more competitive choices for their mortgage business — having more banking options as well as the surging nonbank companies — they should reap the benefits.

A common prediction among observers of the mortgage market is that the interest rates will rise from their historic lows of the last few years. We’d expect such an increase to continue to depress the refinance market and perhaps price some buyers out of housing market. But a relaxation of regulations could take some of the sting out of a rate increase.

As  Rick Sharga, chief marketing officer of Ten-X, an online real estate marketplace in Irvine, Calif., told The Washington Post: “That would be good for consumers and for the housing market, as long as it doesn’t lead to the laxity and craziness of the previous housing boom.”

Obtaining financing for your home purchase is an integral part of a deal, and my experience can help guide you through the mortgage process. If you’re in the market for a home — whatever your stage of financing — or considering putting your home up for sale, I can put my background and experience to work for you. Please contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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New development will retain an open feel while offering desired density

If there is a way to increase the density of housing in Bend without losing all of the appealing openness that the city offered, a development proposed for west of NorthWest Crossing might be a prototype.

A 245-acre area east of the Tree Farm subdivision was sold recently to the developers of NorthWest Crossing. The developers’ plan is to concentrate higher-density housing in the eastern portion of the parcel and reduce the density moving west.

According to The Bulletin, the property requires a minimum of 650 housing units, consisting of single-family, multifamily and duplex/triplex housing.

“This expansion of 650 units will decrease in density as it moves to the west,” Brooks Resources president Kirk Schueler told The Bulletin. “As you get to the western edge, the last 50 acres will have 50 lots on it.”

The preservation of open space was among the attributes of Bend’s urban growth boundary plan that drew praise from the state Department of Land Conservation and Development when it approved Bend’s proposal in November. Developments such as what’s envisioned for this piece of property — which is part of the enlarged urban growth boundary — retains a non-urban character while being faithful to the state’s dictate for Bend to build up as well as out.

“Our family considers this a legacy piece of property,” Charley Miller, co-manager of Miller Tree Farm, said, according to the Cascade Business News. “After the first UGB proposal in 2009, we decided we didn’t want to see a hard line of urban development right up against the forest. We felt that a less intensive pattern would be more appropriate.”

A master planning process, expected to last as long as eight months, will be required before development can begin.

I have lived in NorthWest Crossing for more than a dozen years. My firsthand experience in this neighborhood and my broader knowledge of the Bend market give me the background necessary to make sure you get the optimal outcome in your real estate transaction. Whether you’re looking to buy or considering selling your home, I can help. You can contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

 

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Median sales price up in January even as pace of sales slows

Median sales chart

By Jason Boone

The numbers of homes sold in Bend, Oregon, in January dropped compared with previous months — which probably shouldn’t be a surprise given our weather — but the median price of those homes that were bought was on the rise.

The median sales price in January 2017 was $370,813 — 4.6 percent higher than in December 2016 and 16.8 percent higher year-over-year.

If data from past years hold true this year, the January median sales price can be viewed as a floor of price support for the rest of the year. In four of the previous five years, the median sales price in January wound up no lower than the second-lowest median sales price for the entire calendar year.

In 2015, though, the year that was the exception, the end-of-year median sales price of $327,500 was lower than January’s median sales price of $329,700.

A total of 130 homes were sold in January 2017. That’s the fewest since 125 homes changed hands in February 2016. (On a per-day basis, though, the rate of sales last month was in fact quicker than in February 2016.) You’d have to go back another year, to January 2015 (when 120 homes were sold), to find a January with so few homes sold.

A drop in activity was also seen in the number of homes coming to market in January: 127, which is the fewest in any month in more than two years and the fewest in any January since 2012. Of course, Bend’s record-breaking snowfall could very well be responsible for at least some of the slowdown in real estate activity.

Other observations about January’s sales data:

  • The inventory of houses — the amount of time it would take for all homes on the market to sell, given the current pace of sales — was 3.1 months in January. That’s the lowest inventory for a January in the 10 years for which the Skjersaa Group has sales data and about 10 percent lower than the 3.4-month inventory of January 2016.
  • Sellers are pricing their homes appropriately. The average sales price to list price was back up to 99 percent from 98 percent in December 2016.
  • The percentage of active listings priced at $625,100 or more was 36 percent in January 2017. That’s the highest percentage of homes on the market in that price range since August 2016 (39 percent). There was 9.1 months of inventory of homes in that price range last month, the highest since February 2016.
  • Average days on the market rose from 121 days in December 141 in January. That is comparable to the previous January (138 days in January 2016). In the last five years, January’s average days on the market turned out to be the highest or second-highest figure for that calendar year.

After the snow clears, the pace of real estate activity in Bend is likely to pick up steam again. If you’re thinking about buying a home or considering selling, my knowledge of the market can be a considerable asset working in your favor. To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Jason Boone | Principal Broker, CRIS | Duke Warner Realty | Skjersaa Group
Oregon Real Estate Licensee | 1033 NW Newport Ave Bend, Oregon