The Bend and Central Oregon real estate markets surged again in the the last year. Across all genres of the market we saw lower days-on-market, higher price per square foot, and lower inventories for sale when compared to recent years. As real estate brokers, we spent a lot of time explaining to new buyers that those fantastic deals they hear their friends talk about, have largely become a relic of the past…for now.
Buyers have responded to the financial pressures to make their Central Oregon relocation now. Historically low-interest rates, we’ve all been told, will soon start slipping away. That escalation in monthly interest payment combined with the constant rise in Central Oregon real estate prices, put a time limit on most buyers.
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Bend led the charge with higher buyer demand than we’ve seen in many years. Neighborhoods like Tetherow and Northwest Crossing have only picked up momentum and builders are struggling to keep up with the buyer demand for new houses.
New home demand has put pressure on land prices as Bend starts to struggle against its own Urban Growth Boundary. Custom home builders have benefited from buyers picking up “in-fill” lots and building new homes in established neighborhoods.
Buyers continues to assign a large premium to locations west of the Deschutes River, and developers wanting to capture that premium are pushing for more westside development. Watch neighborhoods like The Tree Farm (outside of the City Limits), Discovery Park, the unpublished Northwest Crossing Phase II, and the new Three Pines Ridge (located between Three Pines and Shevlin Ridge).
The new Oregon State University campus, currently under construction, won’t do anything to slow this push of the city’s physical and financial epicenters to the west. For all of the complaints that have been lodged against its construction, the new four-year university will be a popular amenity for area developers to take advantage of.
In a pattern reminiscent of the last boom cycle in Central Oregon, the strong demand and higher prices started in Bend, and now radiate out to surrounding communities in a slow tsunami. The patterns of lower inventory, higher prices, and shorter market times are moving through Redmond, La Pine, Sisters, and Prineville.
Some buyers think that the best strategy right now is to wait. The assumption is that a major price correction like what we saw in 2008 is just around the corner, and will be a better time to pick up a property. But we don’t think history is on their side. For sure there is always a downturn in the market looming in the future, but to what extent that downturn drives down prices is very material. We have to remember that the collapse we saw in 2008 was an anomaly. Experts had to look back 80 years to find parallels in the Great Depression. And in the meantime, the costs of waiting, in form of mortgage interest rates and rental prices, continue to put pressure on the decision.
*The one exception the rising markets seems to be Sunriver. We may have to study this further, but Sunriver’s market charts largely seem flat. A confused seasonal surge every year, but not a real upward movement that you can readily discern.