The Bend, Oregon residential real estate market has been fast and furious over the past few months, as our population continues to grow rapidly. It’s no surprise. Central Oregon has it all – from beautiful scenery to virtually unlimited recreational opportunities and from cultural amenities to professional resources.
Coupled with rapid growth, outside pressures and issues have created some unique challenges in the space over the past few months. We sat down with Linda Schmitz, Brooks Resources Realty Principal Broker, to get her thoughts and perspective on what’s going on in the Bend, Oregon residential real estate market right now, and why, along with a few thoughts of what’s around the corner.
Tell us a little bit about what’s going on in the Bend Oregon residential real estate market right now.
Beginning in the summer of 2020, high demand combined with low inventory created a strong seller’s market in Bend. Through summer 2021, newly listed properties often went pending within days and many received multiple offers, frequently resulting in a sales price above the asking price.
Now, we are seeing a slight softening in the market, with fewer competing offers submitted and some price reductions, though it is still a strong seller’s market. Inventory is currently at a one-month supply (this is the time period it would take for all single family homes on the market to sell). A balanced market would be a six-month supply of inventory.
Bend is growing fast. Why is it so popular right now? What groups of people are coming here?
Bend continues to attract people because of the area’s natural beauty and quality of life found here. The myriad of opportunities for outdoor recreation and Bend’s smaller town feel has long attracted everyone from young families to retirees.
We also know that many professionals began working from home because of the pandemic— which meant they could live just about anywhere, including Bend. And, at least for the time being, this is still the case.
We’re seeing the majority of buyers who are relocating to Bend or buying second homes are from west coast urban areas, but people are moving here from many parts of the country. Although the price of a home in Bend has significantly trended upward when compared to the past several years, Bend is still considered a good value for buyers coming from even higher-end markets such as Portland, Seattle, the Bay Area, and San Diego.
How is the current market in Bend affecting home ownership for different populations?
We can’t talk about Bend without addressing one of the biggest challenges we are facing: the lack of affordable housing in Bend. As a result of high demand and limited inventory, rising home costs have priced some buyers out of the market and even made it challenging for buyers who make offers using traditional financing to compete against cash buyers or those with sizable down payments.
According to Beacon Appraisal Group, with information obtained from the MLS of Central Oregon, the bulk number of single family homes sold in Bend shifted from the $350k-$500k price range in 2020, to the $450k to $650k price range in 2021. The median sales price reached $650,000 in September of 2021. The segment of homes that have sold for over $1,000,000 this year, which accounts for 17% of sales year to date, has certainly influenced Bend’s median sales price; however, the number of homes sold in higher price categories under $1,000,000 have also increased across the board.
What challenges are arising for homebuyers due to the Bend, Oregon residential real estate situation?
Since the pandemic, buyers continue to look for homes that provide ample space for work, study, play – in short, multiple living areas to accommodate many needs. In a superheated market, where buyers offer more than list price and occasionally make offers on homes sight unseen, that frenzied process can lead to fatigue and disappointment.
A home purchase is very often the owner’s largest financial asset – and it can be an emotional purchase as well. The pressure of having to react quickly rather than taking the time to make an informed, well-considered decision is counter-intuitive. Some buyers are electing to take a breather and revisit the market after the holidays in the hope that home prices will stabilize and inventory levels will increase.
Building hard costs have risen, and labor is hard to come by. How is this affecting the real estate market?
Labor shortages are definitely having an impact and building costs are still up, despite the fact that lumber costs (at least) have come down from the record levels we saw in the spring. The biggest challenge currently facing new construction revolves around supply-chain disruption for nearly all goods, from building materials to appliances. Rising construction costs have not been a major deterrent to building, but if supply shortages continue this will directly impact availability in this segment of the market, which may also result in keeping resale inventory low.
What’s your perspective on how things will shake out in the future when it comes to Bend, Oregon residential real estate?
While it’s impossible to say when the market might stabilize, there are factors in play that may result in a more balanced market. The historic-low interest rates kept artificially low during most of the pandemic are now hovering around 3%, and the Federal Reserve has signaled that additional rate rises can be expected next year. Though fairly modest rate increases are anticipated, even small increases would reduce the buying power of some borrowers. Perhaps a more immediate concern is the supply-chain snarls and the resulting shortages may persist for several months. If shortages are prolonged, we can expect inflation will continue to rise and influence consumer spending.
Beyond the economics of the real estate space, one result of the pandemic is that many people have been reevaluating their priorities. This includes taking a closer look at how and where they want to live and work. The amenities and lifestyle that Bend offers makes it a highly desirable place to live, so it continues to be well positioned for more growth in the future.