Bend Oregon Land and Lot Sales
There has been a steady increase in lot sales and land value within the Bend Oregon real estate market over the last 5 years. Coming out the great recession, where developed lots could be found at less than $30,000 and long term investors where able to pick up foreclosed, ready to build subdivisions for greatly discounted prices, the cost of available lots for a buyer to purchase and build a custom home has grown considerably. According to data from the Multiple Listing Service of Central Oregon, when a comparison is made for the period March of 2012 to February of 2013 with that of the same 12 months in 2016 to 2017, the average active price of a Bend lot less than 1 acre has gone up 52.4% with the average sold price up 120.8% The active price today of a Bend Oregon lot less than one acre is now $256,000 with the average sold price $223,000.
The following chart shows the Bend lot sales trend over the past 5 years. The large spike in the summer of 2014 involved two subdivision sales, one of 56 lots and the other of 30 lots, which were sold to production builders.
What Do Lot Prices Mean for Bend Single Family Homes?
It is basic economics. When the price of the land goes up, so does the price of the home built on the land. In order to make a profit, most builders determine that the land cost of their final product should be no more than 25% of the total price charged. In other words, when a builder must spend $100,000 on a developed lot, the cost of completed home should be around $400,000. The developer who purchased the 56 lot subdivision in 2014 at a multi-lot purchase price of $69,000 per lot did build homes on the property which sold in the high $200,000s in 2014 with the last few homes sold in late 2015 in the mid $350,000s.
With the average active price of a Bend lot today at $256,000, a speculation builder purchasing that lot would need to price his completed home at over $1,000,000 to realize a profit. Obviously at these prices, only the wealthy can afford to purchase these homes.
Home affordability has been a great concern with in Bend for years. With the recent Urban Growth Boundary expansion, there will be additional land brought into the city, but the development of these new Bend land parcels will take years and city services such as sewer, water and utilities will have to be installed prior to any new homes breaking ground. Pending a major recession, we don't anticipate any relief in the near future for the price of a Bend lot.
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