Central Oregon builders predict slow rise in home prices

Published 12:00 am Sunday, January 4, 2015

The lure of living in Bend will continue its pull on homebuyers in Oregon and beyond, and the price to buy those homes will continue to climb, just not as fast as it has the past two years, say two homebuilders in Central Oregon.

Higher interest rates late this year or early in the next, the rising cost of land on which to build and the eagerness of some developers to take profits as the economy improves may all contribute to higher home prices, said Luke Pickerill, marketing manager at MonteVista Homes. Pickerill tracks the figures associated with sales of homes in Bend in the $200,000-$450,000 price range.

“Developers are like these wounded animals, and they haven’t had a meal in five years,” he said. “Now there’s this big spread in front of them.”

Continued in-migration to Central Oregon means a steady demand for housing that, coupled with inflation, will also contribute to higher costs, said Dan Pahlisch, vice president for new business development at Bend-based Pahlisch Homes.

Both men said they believe the cost to purchase a single-family home in Bend will rise, but only so far before the price exceeds the average homebuyer’s ability to pay. In other words, expect a single-digit percent increase rather than the double digits of the past two years.

“I don’t believe in the coming year we will absorb as much cost increase as we incurred in 2013 and 2014, as those were big years coming out of a very tough market,” Pahlisch wrote in an email Monday.

The median price of homes sold in Bend and Redmond — the price midway between the highest and lowest — has risen steadily since November 2011, according to the Beacon Report, formerly the Bratton Report. The median sales price for a home in Bend started at a low in November 2011 of $166,000 and reached $325,000 in August 2014. The median sales price dipped to $295,000 in November 2014.

The average price for homes of all sizes and listed for sale in Deschutes County in November 2014 had risen by 12 percent to $467,000 over listed home prices in November 2013, according to data from the Multiple Listing Service available on the Central Oregon Association of Realtors website. However, the average price of a home sold in November 2014 was $302,000, just 0.3 percent higher than one sold the same month in 2013.

Pickerill, who closely tracks home sales on Bend’s east side, where MonteVista has projects underway, talked of rising home values in terms of the price per square foot. On the east side, he said, that number rose $18 per square foot in the past year, from $140 to $158. The county as a whole averaged an increase of $6 per square foot in the same period, according to data from the Central Oregon MLS.

For an 1,800-square-foot single family home in Bend, that’s a difference of almost $33,000, Pickerill said. “Break that down to the lowest common denominator,” he said. “That’s 65 percent of annual income (in Bend) each year. That’s a substantial number.”

The median income in Bend in 2013 was a little more than $53,000, according to the U.S. Census Bureau.

Deschutes County is no outlier in terms of a rising market in single-family homes. The median sales price across the U.S., at $269,800 in January 2014, had risen to $280,900 by November, according to preliminary data released Dec. 23 by the U.S. Department of Housing and Urban Development. The U.S. average sales price reached $375,200 in October before dipping in November to $321,800, according to HUD.

“The challenge is, who’s going to be able to afford a house?” Pickerill said. “The average person wants to live in Bend, but they have to make a choice. … The average homeowner will look at rising interest rates and rising costs and those could very well price a lot of people out of the market.”

Experts in January 2014 predicted interest rates could reach 6 percent by year’s end. But qualified homebuyers can still find a mortgage at 4 percent. That, and the expectation that building supplies will become more expensive in spring, means homebuyers have time to find relative winter bargains in the housing market, Pickerill said.

“It’s great for homebuyers right now,” he said.

Home prices have yet to reach their pre-recession peak, Pahlisch and Pickerill said. That means Bend will remain a seller’s market, with room to grow before prices reach a ceiling. The economic recovery, too, gives confidence to prospective homebuyers who have thus far held back.

Laura Hilton, a Bend real estate broker, sold 16 homes in 2014 and expects a good year in 2015. Many of her clients come from beyond Oregon, seeking relief from city life, she said. Others are up-sizing as their families grow or their income levels increase with the recovering economy.

The frenzied real estate market of 2012-2013 has cooled, she said. Sellers are getting 90 percent or better, on average, of their asking price but they’re not fielding multiple offers hours after posting their listings. Buyers are cautious, contemplative.

“People are back on their feet; they’re able to make decisions based on solid income that’s not in jeopardy,” Hilton said. “People are actually able to make it here rather than moving away.”

— Reporter: 541-617-7815,

jditzler@bendbulletin.com