Friday, January 12, 2018

Greatest, Best Peforming etc. – the accolades roll in!



            For much of the past two decades Bend has had its share of kudos as the best of this and that from regional and national publications. By a variety of measures—best retirement, best outdoor city etc.—Bend and surroundings have rated highly by The New York Times, Washington Post, Outside, Sunset, Forbes and others.
            Many of these rankings are shallow on details and tend to make their points with a few brief highlights and a scenic photo or two.
            One of the more puffy pieces recently was Bend’s ranking as No. 21 on a list of “Great Places to Follow Your Passions in Retirement...” by a Forbes contributor.
            Now the Milken Institute think tank, founded by former high-risk bond magnate Michael Milken, has put Bend-Redmond at the top of its “best performing small cities” list for 2017, marking the second year in a row with the top spot.
            The Milken rankings dig considerably deeper into factors beyond those in fluffier lists, with an emphasis on economic criteria as a measure of “performance.”
            Among the criteria in which the area excelled, as measured from 2011-2016, are job and wage growth and the number of high-tech industries.

            Key points in the Institute’s analysis:
  • Health care, outdoor tourism and high-tech have “helped to create an economically diverse metro” (area). St. Charles Medical Center leads the sectors with nearly 2,500 employees, an esimated 15.1% of the workforce.
  • The technology industry will benefit from development of new talent through OSU-Cascades, now a 4-year university.
  • The “collaborative energy” of public and private agencies support economic development, citing Economic Development of Central Oregon’s role in bringing together regional businesses.
  • Population increases have added to diversity of the “traded goods industry,” noting such companies as Cairn, PIcky Bars and Hydro Flask.
  • Maintenance and expansion of the manufacturing base, including PCC Schlosser’s plans to expand its Redmond titanium operations and experimental aircraft companies based in the area.
  • The number of microbrewers, mentioning Deschutes Brewing, Goodlife and Crux among 26 in Bend. Notably Deschutes is said to have boosted employment by 21% in 2017.
             The Bend area, the Institute notes, has recovered, “faster than many of the metros in its Small Cities index since the Great Recession. The diversity of the economy and the type of industries all pay a role in this metro’s sustainable growth.”
            The downside, as the Institute as well as the other list makers, point out is Bend’s continuing rise in housing costs and lack of rental inventory.
            Although not mentioned in the Insitute report, the greater Bend area topped the national appreciation rate at one point before the housing crash, dropped to last among nearly 300 Metropolitcan Statistical Areas and recovered  the past few years to rank in the top 10.
            However, the Federal Housing Administration Administration housing price index through September of 2017 shows the Bend MSA slipped to no. 52 nationally, although recording a whopping 88.26% appreciation rate for the past five years.
            But you might say the big multi-year rise is relative, considering how far the Bend MSA dropped during the recession and concurrent housing crash.

Wednesday, January 10, 2018

Looking back at 2017 to connect with 2018



            At the inception of a new year there is a media tradition to select and distill in the rearview mirror of the past 12 months.
            But many trends and events of the past year remain points of focus for the New Year. With that in mind, here is a summary, albeit not inclusive, of some things to keep an eye on in 2018:
           
            The Bend Urban Growth Plan: The City of Bend faces the challenge of implementing a state-mandated growth plan that after several attempts this decade finally passed muster with the Oregon Land Conservation and Development Commission. The final plan cuts back to 2,300 acres the amount of land the LCDC would allow the city to add within the urban growth boundary, and points the way to higher density, infill and mixed use development within existing city lines.
            It’s in the water: With the central Cascades snowpack at near-record lows for January, irrigators, fishermen and others who rely on a stable stream runoff are notably anxious. The key will be whether the early winter lack of precipitation can be made up later in January and throughout late Winter and Spring. As of January 9, the Natural Resources and Conservation Service reported the snow water equivalent of the Deschutes-Crooked River basin was barely 40% of the median.
            Although Upper Deschutes Basin reservoir levels are reasonably healthy, there are questions as to rate of fill during Spring runoff to maintain releases for irrigation while balancing new requirements to address water for the endangered spotted frog.
            The Mirror Pond dilemma: For visitors and locals alike, few locations in historic Bend are as appreciated as Mirror Pond, a slack stretch of the Deschutes River, and neighboring Drake Park. But the scenic waterway has for decades faced the problem of silt buildup resulting from a Pacific Gas & Electric dam on its northern edge.
            Through several years of talks proposals included dredging, as previously done, letting the river return to a natural state by removing the dam or something in between. Bend Parks & Recreation is proposing work along the shore to create a more natural setting. PGE will not commit to a decision on dam removal, and who would pay is uncertain. And prominent Bend businessmen have purchased the land underlying the river with a preference to maintain the placid pond.
            OSU-Cascades Campus expansion: After completing the first construction phases of its new 4-Year campus, OSU-Cascades is working to secure more funding to proceed with additional phases and accommodate more students. With the first housing and food service facilities joining initial academic facilities in 2017, the university had asked for $69.5 million only to have that pared to $9.5 million in early 2017.
Aerial view of existing campus (lr) & expansion plans
            Now Gov. Kate Brown appears ready to support $39 million for funding in the state supplemental budget. In one report, House Speaker Tina Kotek, a Portland Democrat, was quoted as saying there was little support in the legislature for OSU-Cascades “out there.”
            Even so, the university has moved ahead with plans to acquire property adjacent to the existing 10-acre campus that would, as outlined in its master plan, create a nearly 130-acre campus. Included in the expansion land are a 72-acre landfill, which the university purchased for $1 from Deschutes County in October of 2017, and a 46-acre former pumice mine it acquiredfor $7.875 million in early 2016.
            Potential cleanup costs for the landfill could reach $42 million according to estimates by experts.
            The Vision Thing: Apart from the “vision” Bend’s Urban Growth Plan mandates it must follow for the next several decades, a coalition of public and private representatives have been working collectively with  nonprofit Bend 2030 to address such “livability” issues as transportation, affordable housing and city government structure.
            The organization’s function was in the spotlight in late 2017 when the executive director resigned, saying she didn’t support a new strategy to expand from primarily public engagement on issues to political activity, a decision made by the board in early December of 2017.
            Meanwhile Bend 2030 has asked the Bend Metropolitan Planning organization comprised of city, county and state transportation officials to approve a $20,000 grant request to pursue what a Bend Bulletin editorial called “augmented reality,” among other items. The Bulletin objected that the grant would amount to a “tax handout” and noted Bend 2030’s support of a failed 2016 tax measure as evidence of political activity by the nonprofit.
            Where to Juniper Ridge?: For the better part of the past 10 years the City of Bend has been struggling to get traction for development of its 1,500 acre Juniper Ridge project—once envisioned as potentially attracting business, industrial and research owners-tenants, and maybe home of the OSU-Cascades 4-year campus.
            OSU officials called the site, acquired for $1 from Deschutes County, too far on the city’s northern perimeter to attract students who would more likely favor Bend’s close-in amenities. Thus far only Les Schwab’s new corporate headquarters and a few other businesses have settled at Juniper Ridge. A major obstacle obstructing progress is how additional traffic will be managed at the already bustling Cooley Road and Highway 97 intersection, with some estimates of $40 million to address the problem.
            Still climbing the in-migration curve: In mid-2017 a Portland State University Population Research Center report said Deschutes County in-migration was more than double other state counties, attracting nearly 10% of all new arrivals or a total of nearly 6,300.
            In the 12-months prior to July 1, 2017 the report estimated the county grew by 3.6% to 182,930;  Bend  by 3.9% to nearly 87,000; and Redmond by 2.4% to 28,265. By percentage increases Sisters led the way in Central Oregon with an estimated 150 new residents, or 6.3%, boosting the population to 2,540.
            The continued growth of the region has further accentuated the focus on housing prices, rental supply, transportation and similar factors related to growth.
            Getting to and from by air: Another marker of  growth is the steadily upward passenger traffic at Redmond Municipal Airport, the regional air traffic center.  
            In November United Airlines announced it would begin daily direct flights to Los Angeles, joining American Airlines with existing service. Just before the year-end holidays Redmond airport officials announced it would start to update the facility’s master plan to accommodate regional growth. There are also daily direct flights to Seattle, Portland, the Bay Area, Salt Lake City and Denver.
            Already, the airport is the state’s third busiest with approximately 140,000 takeoff and landings each year. In 2016 the airport closed for 21 days to resurface its main runway, financed with $18 million in state transportation funds. In mid-2017 the airport announced plans to resurface its secondary runway with $11 million from a FAA grant that would be matched by $750,000 in local funds.          
           


Monday, January 8, 2018

Year-end 2017 Bend real estate-still tight inventory but slowing appreciation



            Parsing any significant changes in the regional real estate market for 2017 is more an exercise in probing nuances, and even then it motly distills to more of the same--tight inventory favoring sellers and a consistent but perhaps slowing appreciation rate.
            For all of 2017 the median price of a single family home sold in Bend was $396,000, up 5.6% from $375,000 at year-end 2016. On a monthly basis, The Beacon Report by Beacon Appraisal Group, notes that Bend prices reached $418,000 in September, ranging from $409,000 in August to $411,000 in October before falling back to $390,000 and $395,000 in November and December.
            For the previous years from 2014-2015 and 2015-2016 median prices rose 11.93% and 10.29% respectively.
            The closing median of $396,000 represented a near doubling of the $200,000 median price at the close of  2011, when the greater Bend area, including some outlying unincorporated areas, hit bottom during the recession after at one time leading the nation in appreciation, as reported by the Federal Housing Financing Administration.
            In Redmond, also including some outlying areas of the incorporated city, the median price for all of 2017 climbed to $286,000, 8.8% above the full year of 2016. Prices rose 12.19% and 14.30% in previous year-end periods.
            At year-end Bend had tallied 2,478 single family sales with only 430 listings on the MLS database. That translated to 2.08 months of inventory from which potential buyers could choose, confirming a consistently tight sellers’ market that for the past several years remained below 3.0 months.
            Top monthly sales of 246 each were recorded in June and August, slightly below the 259 sales in August of 2016. But unlike 2016 when the number of sales held between 190 and 195 for the final three months, sales fell off substantially from 228 in October of 2017 year to 189 in December.

            The days on market, or DOM, for Bend listings increased rose from a low of 63 in April and July to 90 for December, a number that was mostly level for the final three months.
            The drop came even with Fall of 2017 being especially snow-free and mild compared with the same season last year. The lackluster 2017 sales could resonably be pegged to substantial wildfire smoke in the area as Fall began, while some brokers observed that the highly-touted impact of eclipse visitors in mid-August might have kept buyers away or focused on the solar phenomenon rather than home shopping.
            
Redmond recorded 877 sales in 2017, and like Bend showed a tight market for home buyers with a scant 153 listings, or 2.09 months of available inventory. The most Redmond sales, 93, were in July and another 90 were closed in October before a significant drop to only 52 December. Factors similar to Bend’s late-year slowdown were likely a drag on Redmond sales.

            The number of days required to sell in Redmond also jumped dramatically, from 70 to 108, in the final three months of 2017, unlike Bend where DOMs were steady for the concluding quarter of the year.
            The greater Bend and Redmond markets account for more than 80% of the 4,231 sales in Central Oregon as reported by the Multiple Listing Service of Central Oregon, from which Beacon Appraisal creates its report. 
Central Oregon sub-markets in 2017
      In the Beacon Report for smaller sub-markets, Sunriver had the highest median price for 2017 at $454,500, with 177 sales inventory of three months through December. The Sunriver sub-market includes the Sunriver Resort, Crosswater private golf community and Caldera Springs, all part of the Sunriver Resort group.
            Median price, number of sales and year-end inventory for other sub-markets in 2017: (computed by median of 4 quarters)
            Sisters: $397,000; 169 sales; 4.68 months inventory.
            LaPine: $223,000;  106 sales 3.85 months inventory
            Jefferson Co/Crooked River Ranch: $175,000; 131 sales; 3.53 months inventory
            Crook County (including Prineville): $222,000; 293 sales; 2.34 months inventory

            Prineville has experienced significant job growth as Apple and Facebook continue to expand large data centers in the town.