A longtime friend from our river
guide days in Jackson Hole recently wrote that his wife was ready to leave the far northern California town that has been their home for decades.
Seeking a new location, she turned
to cruising Zillow for listings in Bend and Central Oregon, trusting that a new
home could be on the horizon.
“She was aghast at the real estate prices,”
the friend wrote. “She was fantasizing about a small amount of acreage within
shouting distance of Bend...," he added
“She asked me to ask you (to)...
deliver the bad news and revel in the fact you were smart enough to find Bend
before the world found Bend.”
Unfortunately, I could only reply to
the friends--she a professional social services director and he an attorney--that
many of us who have been in Central Oregon for some time are also perplexed at
the “sticker shock” facing potential newcomers.
“Expatriate Californians,
Portlanders and Seattleites are driving prices to new levels. Many are able to
work remotely, or they are taking advantage of good stock portfolio performances
to retire. Or a combination of both,” I offered.
| The friends are only one snapshot of
a growing album of Bend wannabes. They soon realize that an outdoor-friendly lifestyle, generally
temperate weather, and other attractions that are magnets for newcomers have a
companion effect—a pricey real estate market. Some soon realize that yet
another “last best place,” as various locations around the country have also
been called, is more out of reach.
A casual look at housing reports
from other locations confirms the trend. Bozeman, Livingston and Whitefish in
Montana, and Prescott, AZ; Sandpoint, ID; Walla Walla, WA; and Austin, TX are just
a few places where “discovery” has long passed the cachet of finding a hidden
gem.
A Significant Jump in Million Dollar Sales
One measure of Bend housing cost
escalation, albeit a narrow one, is the past three years of in-city sales that
closed above $1 million. In 2018 there were 100 sales above $1 million and none
above $1.8 million. The figures come from the Beacon Report of Beacon Appraisal
Group, based on the Central Oregon MLS database.
In 2020 the number had leapfrogged
to 231, with 35 sales crossing the $1.8 million mark, as framed in Beacon’s graph
of sales by segmented price ranges. And, already in 2021 there were 15 closing
in January, double the six during the same month of 2020.
Another broader look at price ranges
below the “million dollar club” also shows the upwardly migrating price points
in Bend.
In 2018 most single family homes in
Bend sold in the range of $300,000 to $350,000, with the second highest
category from $350,000 to $400,000. In
2020 the largest price range was $350,000 to $400,000, and in second, $400,000
to $450,000.
An illustration of the sizzling Bend
housing market is captured in the history and recent sales in the popular, mater planned Northwest Crossing
neighborhood.
The developer is Brooks Resources, a
highly-respected company that evolved from the timber industry that once led
the region’s economy. Brooks launched Northwest Crossing in the late 1990s with
a mix of smaller city lots and craftsman-style homes and townhomes.
An elementary school and pocket
parks around a grid of legacy Ponderosa pines meshed with new landscaping make
it one of the most attractive urban neighborhoods, with a feeling of suburbia.
Initial sales of new homes were
brisk, with prices generally in the higher $300,000s to upper $400,000s, with a
few in the $500,000 and greater range. But, as throughout Bend and the rest of
the country, the “Great Recession” fueled by easy lending standards followed by
an economic crisis with mortgage defaults hit hard.
Bend, center of a larger three
county statistical area, went from the top of home price appreciation tracked
by a federal housing monitor to nearly last on a list of 300.
At one point, in the depth of the
housing downturn, more than two dozen developer controlled lots in Northwest
Crossing were put on the open market in the $50,000s. Prices edged higher as
the recession faded with a recovery noticeable by 2013 and later. Builders
returned to absorb lot inventory and begin new construction.
Multiple Offers Before Buyers Visit
A recent pending sale in the
neighborhood is a watermark for the current market trajectory beginning with a
local builder seeing the opportunity as lots were available. He bought the lot
for $84,000 in January of 2010, then built a 2,100 square foot, 3 bedroom, 3
bath home, selling it for $434,782 six months later.
In late February 2021, after 11 years
the owner listed the home for $969,000. A person familiar with the transaction noted
the home was on the market for barely a week, before going into a sales
contract. There were 20 showings, many of them local agents videoing the home
for out of state buyers, seven offers over the listing price and three of more
than $1 million, all but one of them cash with no financing contingency.
The prospective buyers are both
medical professionals, one a doctor the other a Phd in nursing, who lost two
homes to fires in California within the past four years. They had not visited
the home until after their offer was accepted by the seller.
As of the first week of March there were seven other pending sales in Northwest Crossing, at the lowest listed price of $725,000 for an attached townhome to $1.3 million for a 3 bedroom, 3 bath home of nearly 3,000 square feet.
Although Northwest Crossing is hardly the most expensive neighborhood of Bend, pricing in other less pricey and formerly “more affordable” sections of the city have also experienced dramatic price increases—driven by a chronic lack of inventory for sale that has hovered under a two-month supply for the past few years. In January of this year was a scant 0.30 months based on the average of the previous 12 months sales.
With a median household income of $65,662, according to US Census figures for 2015-2019. Many jobs have been slashed during the pandemic and days or hours reduced for others, moving the cost for entry level home buyers further out of reach.
The squeeze of fewer homes and rising prices has resulted in the city and community groups pushing for more mixed use development within the current city limits. One target area is immediately east of the downtown core extending to the main north-south arterial of old US Highway 97/3rd Street with its mostly commercial businesses including auto dealerships, motels and shopping centers.
A Trend to Density Over Traditional Larger Lots
This movement is contradictory to
what many residents – and some builders – maintain is what made Bend attractive
in past decades. From a traditional residential core of older stately homes and
smaller cottages, residential development had extended outward with larger
homes on larger lots, some a half to one acre in neighborhoods such as Awbrey
Butte on the city’s west side.
Brooks Resources also developed
Awbrey Butte before downsizing the lots year later at Northwest Crossing. And
perhaps a sign of the future, the company is also eyeing construction of a mixed
use retail and condo or apartment project on a former commercial site east of
downtown.
The trend to mixed use projects and considerable
new apartment construction is partially the result of Bend’s urban growth plan
as approved by the Oregon Department of Land Conservation and Development,
which implements the state’s 1970s era growth management statute, SB 100. The
law requires municipalities to project land needed for development 20 years
into the future to identify land for an urban area reserve that could be
brought within the urban growth boundary, or UGB.
With the approval of its growth plan
in 2016, after several unsuccessful plans were rejected by the state over a
decade, Bend agreed to focus on “infill” development of existing land within city
limits. Further development extending outward within the UGB footprint is for
communities that include higher density, such as multi-family housing, along
with single family residences, and land for business to create jobs.
Altogether the state approval allows
Bend to expand its urban growth boundary by approximately 2,400 acres. There
could be more than 17,000 homes on half the acreage, with 800 acres for development
related to employment facilities.
But the future of Bend growth is
vastly more complicated now as substantial population growth has already compressed
the time needed for another look at potential expansion.
In the nine years since 2010 the
city has grown nearly 25% from about 85,000 in 2010 to 106,000 as estimated by
the Bureau of Census. The Population Research Center of Portland State
University estimates the 2020 population of Deschutes County at 197,000.
One of the largest tracts of land in
decades to be brought within the city would be what has been called the Stevens
tract on Bend’s southeast boundary. The formerly state-owned land of 382 acres south
of Reed Market Road and east of 27th Street was bought in 2020 for $22
million by Lands Bend Corp., whose officials include former California
Republican Rep. Gary Miller.
The purchase has initiated
discussion of how the property, now called Stevens Ranch, will be developed and
the process to bring 370 of the acres into the city through annexation in
compliance with the urban growth plan. Another 12 acres already lie within city
limits.
The number of residences including
single family homes, affordable housing and multi-family residences, business
sites and parks will be initially defined in a master plan submitted by the
development group for public comment and city review.
A bill proposed in the 2021 state legislature would facilitate the city's effort to include the Stevens tract within current boundaries. Some city councilors are pushing for a significant part of the development to include affordable housing.
Miller and other investors have in
recent years been involved in new Bend subdivisions, mostly in east and
southeast areas of the city.
