When comparing Bend Real Estate trends from 2005 with those of 2015, we are seeing significant increases in home prices, a serious lack of inventory (especially in the lower end), and many homes for sale receiving multiple offers. The MLS Trend report from June 2015 shows that this imbalance of supply/demand in the market has resulted in an increase of about 22% in the average price per square foot of Bend single family homes between 2005 and 2015.
So what is different in the conditions now versus the bubble of 2005/2006? During the Bend housing bubble, lending practices were designed to provide loans to the maximum number of people. No doc loans were common and buyers could even finance their down payment. Buyers often flipped properties they had just closed on as the demand for these properties continued to escalate and values continued to climb. These practices were unsustainable, however, and the crash happened when over extended homeowners could no longer pay their mortgages. Home values declined drastically and foreclosures, bankruptcies and short sales became very common.
Today, home values are increasing, but not at so great a rate as they did in 2005/2006. Part of the increase can be contributed to Bend’s population growth (creating additional demand for housing compared to available supply). During 2005, Bend’s population was 66,862 according to the US Census. In 2013, Bend’s population was 81,236. However, lending practices are much more secure than they were in 2005. Buyers are either living in their purchases or using them as investments. And many buyers are using cash rather than financing at all.
As we move forward, Bend should remain a town to which people wish to move. The new college, the lifestyle and the increased economic vitality of the community should continue to attract new homeowners. The cost of housing in Bend should continue to rise, but at a slower and more sustainable pace. However, when looking forward Bend does run the risk of pricing more of the lower end out of the market. The need to expand the urban growth boundary (and thus make more land available for homes) continues to be a hindrance to more affordable housing in Bend's future.
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