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Cascade Sotheby’s International Realty broker Nicolette Rice helped a client sell a house on the east side of Bend in June for $625,000.

That same house, more than 3,300 square feet with a rock-masonry exterior, was last sold in 2013 for $430,000. That’s a 45 percent gain in four years, or an average 10.5 percent per year, and it’s not unusual in Bend, according to the latest Beacon Report from Beacon Appraisal Group in Redmond.

Of 246 single-family homes sold in June, the median price was $409,000, up 11 percent from a year ago and representing a new high-water mark in housing prices, according to Beacon. The previous peak was $396,000 in May 2007.

Real estate brokers said the trend has people wondering how much higher prices can go.

“People are timid about buying because they’re feeling like the prices are too high,” Rice said. “They want to wait for reductions, but will the reductions come at the rate they’re hoping? That’s a huge question mark.”

There’s no way to predict when the trend might change course, or what might drive a reversal. It may take a recession or some other event that slows Bend’s population influx, said Tim Duy, professor of economics at the University of Oregon and director of the Oregon Economic Forum.

“There’s going to be sustained demand for residential property in the region until we hit something that is a really fundamental demand shock,” Duy said.

Although Bend prices appear higher now than before the housing bubble burst, the June median is still lower than the previous peak after adjusting for inflation. In today’s dollars, the May 2007 median, $396,000, would be $466,471.

Dave Feagans, a principal broker at Alpine Real Estate, doesn’t think the Bend median will continue rising dramatically this season. The June median was up 8 percent from May. Feagans thinks that represents the flurry of closings that took place 30 days to 60 days after selling activity resumed in the spring.

In the long run, Feagans believes, “our values and our equities are going to continue to grow.”

Dayna Lanning, a broker who is also a real estate investor, thinks there’s a limit to the appreciation, at least for houses priced at $350,000 to $450,000. That’s the price range new-home builders seem to be focusing on, she said. She recently sold a rental property on the east side in June for $385,416.

“That was the range I wanted to liquidate,” she said. “That’s the range that’s going to get saturated.”

If prices continue rising, homeowners who owe more than their houses are worth could see that situation reverse, Duy said. “Eventually you’re going to hit a price where people that were under water can now afford to sell,” he said. “That could be a really good thing for this market because it would unclog some supply.”

Prices are rising even faster in Redmond, where the median price in June was $295,000, up 21 percent from $243,000 a year ago, according to the Beacon Report. Duy said that’s a sign of how quickly people are being priced out of Bend.

Affordability is declining across the nation. “Fewer and fewer people can afford to buy a house with a normal mortgage under normal terms,” said David Blitzer, chairman of the index committee for the S&P CoreLogic Case-Shiller home price index.

The Case-Shiller index for Pacific Northwest cities has risen twice as fast as the national index, Blitzer said. Case-Shiller, which tracks prices only in major metro areas, was up 9 percent year-over-year in April in Portland. Bend’s prices rose about 15 percent over the same period, according to the Beacon Report, which pulls data from the Multiple Listing Service. The Beacon report represents single-family homes on 1 acre or less and defines the Bend area as Bend, Tumalo and Alfalfa.

It’s difficult to compare price trends based on Multiple Listing Service data to the Case-Shiller because the index tracks only same-house sales over time, Blitzer said. The Case-Shiller is an apples-to-apples comparison while Realtor-driven data is a snapshot of everything that was sold in a given month, he said.

Despite seeing a 45-percent gain after four years of ownership, Rice’s client, who is also her great aunt, Judy Brown, didn’t find another house in Bend.

“She wanted to live on the river, and she couldn’t afford to live on the river in Bend,” Rice said. “So she moved to Roseburg to live on that river.”

—Reporter: 541-617-7860, kmclaughlin@bendbulletin.com