Bend real estate changes: crash, correction or moderation?

 The changes have been slight, only one here and another there.
            But the mere sighting of a price reduction in Bend’s single family home listings is enough to get attention in  a protracted sellers market.
            Now, moving into the traditional “selling season” of late Spring and early Summer more and more listings are notable with those euphemistic broker talk phrases such as “price adjustment” and “new price,” or "improved price." And in some cases the straightforward, unambiguous, “price reduced.”
           Open houses hosted by brokers have also reemerged, after nearly disappearing in a heated market environment where multiple buyers would bid on properties before they hit the local multiple listing service.
            Another slight but potentially significant sign: Bend single family home inventory for May reached 1.3 months. Albeit not a monumental number of available homes--and well short of the 4-6 months considered a balanced market—this was still double the 0.5 months supply the same month last year.
            Prices also dipped since April, down from a median of $770,000 to $740.000. But that was 17.8% over the $628,000 median the same month of 2021.
            The statistics are gleaned from the Multiple Listing Service of Central Oregon database as reported by Beacon Appraisal Group.
            As a micro market Bend and Central Oregon may not fit neatly into the marcro national market. But it’s unlikely the region’s substantial recreation and lifestyle attractions will keep it insulated from some of the same emerging headwinds.

            This has happened before. Looking back, on the eve of the Great Recessoin, as it is now enshrined, a top producing Bend broker optimistically said, “we’re different, it won’t happen here.”
            In a local television interview, the broker confidently commented that Bend’s attractions would keep it from plummeting into the abyss as was occurring across the country. Leading up to that year Bend, including Deschutes and neighboring counties, had topped the federal Federal Financing Housing Agency’s list as the highest home appreciation metro statistical area.
            Barely a year later Bend had fallen to near the bottom in housing appreciation of the approximately 300 MSAs tracked by the federal agency.
            One factor now driving the national market is a dramatic increase in lending rates. As of June 16, the federal housing agency Freddie Mac reported that average 30-year mortgages had risen to 5.78%, a major jump from the approximately 3.5% in early March.        

            Even with downward “price adjustments” in Bend homes, the increase in mortgage payments of several hundred dollars will continue to challenge many younger Bend families struggling to buy a home.

            One variable that could prop up Bend’s market is the ratio of cash buyers, even as median prices ratchet upward. Beacon Appraisal’s analysis shows that 35% of Bend single family closings in May were all cash transactions, indicating those buyers are solvent enough to avoid financing and higher loan costs.
            Perhaps tamping down the Bend in-migration could be the cooling of what already has its own acronym,the WFH, or “work from home” movement. In turn that has spawned another acronym, BTO, or “back to the office” as some companies are requiring Covid distanced workers to get back to their desks.
            An interesting anecdote comes from a broker in one of Washington state’s premier remote working environments, where a remote working day could be prefaced with a quick ski in winter, mountain bike in summer, or even a kayak on a lake after putting in the time.
            The broker was representing a couple who had worked remotely during Covid from a small cabin, then decided to move up with a larger home purchase. The buyers were well-qualified with good incomes, but the bank decided to verify details in a call to their employer. It turned out there was a glitch – the company was bringing employess back to the office, and those who wanted to continue remote working would face a pay cut. The sale did not go through.
            Closer to home some appraisers, not Beacon Appraisal cited earlier, say they’re seeing obvious changes, while maybe slight, that could portend a new era in regional housing.
            One appraiser offered that sellers are having a difficult time grasping the changes from only a few months ago.
            “The largest current struggle IMO is getting sellers to price their home to the changing market. People simply cannot believe that their neighbor sold for $x and they have the same home, but should list for lower than that.”
            Another view comes from a leading brokerage team with the largest real estate office in Bend. Their view as expressed in a recent post and podcast is that the market is “moderating” toward being more normal – neither a crash or a correction.
            Also difficult to factor in, either locally or nationally, is the sudden braking of what has been a continuing bull market for stocks.
            Even during the pandemic, stocks were hardly affected. Then came the war in Ukraine, bringing higher inflation and the Federal Reserve’s admittedly delayed response in raising interest rates.
            Now those with once-healthy 401K portfolios are looking nervously at the future, perhaps attracted by higher treasury yields as insurance against any unforeseen calamities. Merged with the uncertainty over midterm elections, intractable political divisiveness fueled even more by election deniers and many people may just want to take a break, wait it out to see what happens.
            Here area some data points and comments on the national market:

·         The National Association of Realtors reports home sales were down 8.6% in May from the same month of 2021.

·          New rents on single family homes rose 14% May 2022 compared with May 2021.

·         NAR says there’s still only a 2-6 months supply of homes across the country, but that’s up 33% since February.

Q1 2022: Prices continue upward with low inventory

             Predictable. No surprises. More of the same.
            Those are some of the likely responses of anyone monitoring the Bend and Central Oregon real state market, which has been in an upward arc for months. Or make that years.
            The latest numbers come from Beacon Appraisal Group of Redmond, based on tablulations by the MLS of Central Oregon covering Deschutes, Crook and Jefferson counties.
            In the first quarter of 2022 the median price of a single family home sold in Bend rose to $773,000, a nearly 4.45% jump over the $740,000 in February and 13.17% more than the $683,000 in January.
            On a rolling 12 months basis from the end of March 2021 through March 2022, the median price rose by $115,000, from $535,000 to $650,500, or 22%, over the previous March 2020 through March 2021 period.
            There were 2,503 sales for the 12 months, with only 132 listings at the end of the period. Calculated by averaging sales for the 12 months, the inventory based on current listings in a scant 0.6 months.

            Viewing sales by price groupings, 57.69% of units sold were in the $400,000 to $700,000 range. There were only 100 sales lower than $400,000, and only four listings under that at the end of March this year.
            The number of $1 million plus sales continued upward, with 391 above that and 70 of more than $1.8 million.
            In Redmond, the median price for March of 2022 was $520,000, a rise of 7.66% from February. The rolling 12 months median for Redmond was $450,000, 24% over the $363,500 for the previous comparable period.

Redmond

            Redmond had 1,056 sales in the 12 months and only 55 listings at the end of March, translating to an inventory of only 0.6 months, the same as Bend.
            There were 58% of Redmond sales in the $350,000 to $500,000 range and none above $1 million.
            Although Redmond’s 12 months median price of $450,000 was 30% lower than Bend’s, the smaller city to the north had only a single listing under $400,000 at the end of March, even lower than Bend’s four in that range.

The smaller submarkets

            In the smaller submarkets tracked by Beacon Appraisal and the MLS of Central Oregon, single family sales totaled 1,140, with Crook County leading the group at 333 closings.
            Also included in the smaller submarkets are Sisters, Sunriver, La Pine and Jefferson County (including Madras and Crooked River Ranch).
            Sunriver – including the resort complex of Sunriver Resort, Caldera Springs and Crosswater – had the highest median price mark in the first quarter of 2022, at $885,000, with 33 recorded sales.
            Sisters was next with a median of $667,000 on 38 sales, followed by La Pine, $452,000 on 51 sales; Crook County, $390,000, 70 sales; and Jefferson County, $356,000, 62 sales.
            Inventory in the smaller submarkets ranged from a low of only 0.12 months in Sunviver to 1.5 months in Jefferson County. La Pine has a 1.2 months supply and Crook County 1.3.

The Drought Worsens: Another summer of crop and wildfire problems expected

 Update: Significant new snowfall of nearly four feet  that began April 8 in the high country will result in new snowpack information for the Oregon Cascades and Deschutes Basin. As of early April 12 the NRCS Snotel gauges at Three Creeks Meadow showed that snowpack had increased from 84% of median on April 4 to 91%, and that snow water equivalent rose to 30% of median from 16%. Early April 14 Mt. Bachelor ski area reported 43 inches in the past seven days and a base of 104 inches, the first time over 100 inches this ski season. Water resource officials say it's not likely the new snowfall will substantially alleviate coming summer drought conditions.

            First the good news: It rained April 4 in lower elevations and snowed up to a foot in the higher country. Mt. Bachelor touted 10 inches overnight to freshen the slopes.
            Now the bad news: It is unlikely that even an unseasonably wet April and May will bring much relief to drought conditions that are only worsening as much of Central Oregon heads into summer. 
                 A look at the federal Drought Monitor map for Oregon as of March 31 shows the state and Nevada are the only ones in the western United States with counties experiencing “exceptional” drought – the driest conditions reported.
            All told 15.01% of Oregon is in the exceptional category and 88% rated as being from severe to exceptional. East of the Cascades only portions of several counties along the northern border escape being in the severe or worse drought categories.
            Crook County is the only one of all the counties entirely in the exceptional category. But significant chunks of Deschutes, Jefferson, Lake and Klamath join Crook in having the worst conditions.

            Notably, California is experiencing overall the worst drought conditions in the nation with the entire state in a range of severe to exceptional drought. But none of the state is listed as in exceptional drought.
            The federal drought monitor is a project of the National Drought Mitigation Center at the University of Nebraska, with data collected from cooperating federal agencies including the US Department of Agriculture, National Oceanic and Atmospheric Administration and Department of Commerce.
            Also offering scant evidence that drought conditions will improve is data on snowpack and its moisture content, or snow water equivalent, reported by the Natural Resources Conservation Service, part of the federal agriculture department.
            The NRCS’ Snotel location for Three Creeks Meadows registered a snowpack of 84% of the median. But the water content of the snowpack was only 16% of median.
            The daunting outlook for summer has already resulted in the Governor’s drought declarations for Jefferson, Crook and Klamath counties, the latter which has resulted in massive acreage lying fallow in recent years due to climate and endangered species issues. Deschutes County has also declared a drought and is waiting for the Governor’s action, which will unlock some relief in the form of subsidies to haul livestock water, ability to tap groundwater wells and graze land placed in conservation.
            Apart from the agricultural impacts the dry conditions have already prompted warnings from wildfire management agencies to brace for an active summer season that could begin early earlier than usual and extend longer.

Eager shredders at the lift line April 14

            Jefferson County has (or had) Central Oregon’s most productive agricultural lands before the continuing drought of the past few years. The North Unit Irrigation District which manages irrigation water in much of Jefferson County has cut allocation to 0.45 acre feet of water per acre, from the Deschutes River system, and 0.225 from the Crooked River.
            An acre foot is the amount of water required to cover an acre of land to a depth of one foot, or approximately 326,000 gallons.
            As reported by The Bulletin of Bend the allotment is the lowest in district history and only one-fourth of an average year.
            The North Unit district, and its growers and livestock ranchers, are at the mercy not only of overarching climatic conditions but also challenges to manage water releases from the region’s dams to protect the endangered spotted frog.
            And the North Unit’s water rights are junior to those of the Central Oregon Irrigation District, most of whose members use water primarily for hay production rather than higher value food crops.
            Most of the irrigation water in the Deschutes and Crooked River basins comes from snowmelt and is captured in upstream reservoirs.

            A look at the early season levels in several reservoirs emphasizes the remarkable obstacles confronting water users this summer.
            On April 5 Wickiup Reservoir, which holds water for North Unit junior water rights irrigators, was at 55% capacity, holding 110,244 acre feet compared with 115,403 the same time last year and 42% below historic average.
            By contrast, Crane Prairie Reservoir, which holds water for COID’s senior rights, above Wickiup on the Deschutes River, was 85% full at 49,967 acre feet, only slightly below 2021 at 45,298 and ahead of the 42,406 acre feet average.
            Recognizing the distortion between senior and water rights, COID officials have been encouraging its members who do not need water for the coming season to, in effect, contribute it for the benefit of North Unit irrigators.
            Oregon water law permits water rights to be returned “instream” for habitat and fish conservation, which can also free water for use by junior rights holders. New efforts are underway to create a "water bank" that could theoretically provide a market to provide the resource to where the need is greater.

 Previous

DROUGHT: The glass lower than half empty made even worse with a June heatwave

Another drought season in the works: Low snowpack and reservoirs

 Snowpack, water and endangered species - A complicated calculus

Fact Sheet of Draft EIS for the Deschutes Basin HCP

https://www.fws.gov/oregonfwo/Documents/DeschutesHCP/deisFR/mtgs/Deschutes%20Fact%20Sheet%20-%20WEB.pdf

Complete DRAFT HCP as of August 2019

https://www.fws.gov/oregonfwo/Documents/DeschutesHCP/deisFR/DBHCP%20Entire%20Document%20August%202019.pdf

A Timeline of the Spotted Frog ESA listing in the Deschutes Basin

https://bendisbetter.blogspot.com/2016/02/spotted-frog-esa-listing-creates.html

Rivers Edge Golf Course Sale Closes: Improvements Planned

             As the first days of Spring 2022 brought sunshine and rising temperatures, a new owner announced  March 21 it had closed on the purchase of the Rivers Edge Golf Course off Mt. Washington Drive in Bend.
            The news comes after a coalition of homeowners and a homeowners association had filed lawsuits in 2021 to prevent development of the 18-hole course for nearly 400 housing units by prominent Bend-based developer and homebuilder Pahlisch Homes.
            Then golf course owner Wayne Purcell subsequently reached a settlement with the plaintiffs, pulling back from an earlier April of 2021 announcement of his plans to sell to to Pahlisch. Instead the longtime Rivers Edge owner said in late October he would sell the course to the plaintiffs for $500,000, giving the prospective buyers 120 days to complete due diligence and close on the 141- acre property.
            Title to the property is now recorded in the name of River’s Edge Community Master Association, which was created with four participating homeowners associations including Rivers Edge Owners Association, Upper Rivers Edge Owners Association, Majestic Ridge Homeowners Association and the Point Owners Association.
            In announcing the sale, master association president Jeff Kramer, said the course would remain open to the public, and that work would begin to improve the course condition and upgrade the clubhouse restaurant.

Earlier posts:

Homeowners play a good round at Rivers Edge course

Trading golf for homes: Rivers Edge proposal raises future housng issues

 

 

New density rules open divisions in single family neighborhoods

            UPDATE: As of February 18 Bend city planners say there is no longer an active application for development of the Compass Corner site. More details in the future.

          Proposed projects at different points on Bend’s Awbrey Butte are focusing a debate over affordable housing, the impacts of high density and multi-family units in traditional single family neighborhoods--and related new city development code provisions.
            Comments by residents regarding proposals by separate developers for the West View project on Glassow Drive on the west side of the butte and Compass Corner on the northeast side both emphasize that the scale and traffic impacts would be detrimental to existing neighborhoods.
            However, both proposed projects appear to fit an emerging city strategy to encourage more multi-family and higher density housing in neighborhoods otherwise zoned RS, for standard single family homes.
            Latest versions of the city code follow Oregon’s new statute, House Bill 2001, intended to force higher density in single family neighborhoods, with the objective of easing the crunch of escalating housing costs beyond affordability levels for many families.
            Among new code provisions is the potential to build up to a quadraplex on a lot of at least 4,000 square feet in a typical neighborhood of single family homes. The code would also downsize current requirements for off street parking.
            As the provisions take effect, homeowners in some neighborhoods have begun to review requirements in their covenants, conditions, and restrictions, or CCRs, that stipulate what type of housing can be built. In theory, CCRs restricting construction to only a single family home would supersede the city code, but legal action might be required to enforce the CCRs.
            One of the two Awbrey Butte projects gaining much attention is Compass Corner, proposed as a mixed use development for as many as 63 studio, 1 and 2 bedroom apartments, up to four floors including retail space. Parking would be above and below ground on the 1.02 acre site overlooking Mt. Washington Boulevard and bordered by Awbrey Road

Compass Corner concept plan

NW.
            County records show the site is owned by Hotel Management LLC, with a registered agent at the same address as that for owners of the recently opened My Space hotel off Bond Street above the Old Mill District. The registered agent is Sueng Lee, at the same address, while LLC members and addresses on the Oregon business registry include Michael Chun of Bend; Anthony Kim of Federal Way, WA; and Shilla Yi of Tacoma, WA.
             In a January online presentation, representatives of the development team fielded comments from area residents who complained the several story buildings were out of scale for the neighborhood, would create traffic hazards and result in parking spilling onto narrow streets.
            Some commented online that neighbors should hire an attorney to oppose the project, as was done by owners in the Rivers Edge community who appear to have prevented the golf course there from being developed for housing. (links to Rivers Edge

Homeowners play a good round at Rivers Edge course

Trading golf for homes: Rivers Edge proposal raises future housng issues

             The project vision appears to have expanded considerably since the city posted a “pre-application meeting summary” of the proposal in February of 2021. That document noted a project to include 35,000 square feet of apartments and 5,000 square feet commercial, up to four stories with surface parking.
            Now in the proposal under consideration by the city as of November 2021, Compass Corner would include 63 apartments in two buildings with up to 10,000 square feet of commercial space. The two buildings would total more than 57,000 square feet along with underground and surface parking. 
             A little over two miles on the other side of Awbrey Butte some neighbors are mobilizing with yard signs to oppose the 6.5 acre West Hill Development that would include 42 units of townhomes, duplexes, triplexes, and quadraplexes on 29 lots. It could also result in removal of more than 700 trees.

West Hill on Glassow overview

            In a guest column in the Bend Bulletin, one resident wrote that,” The objection is not over development per se...The concern is over the scale of the project and the lack of fit with the surrounding neighborhoods, physical environment and supporting infrastructure.”
            Taking a stance more favorable to the project, another writer responding in a column that,  “To complain about housing in your neighborhood (and mine) that does basically the same things that the building of your home did is peak entitlement. Being against the development because it doesn’t exactly mirror what is currently there, despite the law allowing such development, only compounds the cost of building and the shortage of housing.”
            Principals of the West View project are members of Oregon Builders Developers LLC Glenn Kotara and Mark Huffman, both who have Bend mailing addresses.
            By mid-January of 2021, neither Compass Corner nor West View had come before the city planning commission for review, which would be a step before going to the Bend city council.
            With Compass Corner a conditional use permit allowing an exception to maximum size on the site would be required. And it’s possible the issues swirling around both projects could result in both being considered by a hearing officer after public sessions.
            Although not yet in the development planning stage, another site in the same Awbrey Butte area of Compass Corner could also become part of the density discussion.
            At the northeast corner of NW Sonora and Awbrey Road are two lots, one of  0.20 acre and another of 0.14 acre which were listed in January, and became pending sales in 24 days,  as potential sites for duplexes on each property. The site is at the southern intersection of the neighborhood served by streets linking to Compass Corner and abuts an often busy roundabout at a sloped point on Awbrey Road.