There has been much speculation as to what will happen to the Central Oregon housing market. Our last recession started only 12 years ago, and it showed us that what happens elsewhere might not apply to the circumstances in Central Oregon. Our downturn was more drastic and was matched only by Las Vegas. The market reached its nadir in 2012, and it took three more years to recover to pre-2008 levels. Going into the recession last time, Central Oregon was massively overbuilt with spec-homes, contributing to the ultimate effect.

Central Oregon is not massively overbuilt at this time. However, Central Oregon is over-represented in properties for sale. Oregon has a population of 4,218,000, and Central Oregon (Deschutes, Jefferson and Crook counties) has a population of 246,288 (2017) or 5.8% of Oregon’s. On Zillow.com, there are 24,414 properties for sale in Oregon, and Central Oregon (slightly larger than the three counties) has 3,152 properties for sale, or 12.9% of Oregon’s. Using the same criteria by area, Oregon has 3,303 properties for sale that are listed for $700,000 and above, and Central Oregon has 574 properties for sale that are also $700,000 and above, or 17.4% of Oregon’s. Relative to the state average of properties for sale per capita, Central Oregon has about twice the average number of properties for sale and has about three times the average number of high-end properties for sale.

As of 2017, there were approximately 74,000 total housing units in Central Oregon. About 65% of these housing units (48,100) are owner-occupied, the rest being rentals. Using national statistics, 66% of owner-occupied homes will have a mortgage (31,746) and about 25% of those (7,936) will owe 90% or more of the home’s value through their mortgage. Thus, there are approximately 8,000 owner-occupied homes in Central Oregon that are the most vulnerable to a downturn in the economy with job loss or to a downturn in the housing market, or some combination of both.

Additionally, there were approximately 76,796 employed in our three counties in 2017. Jobs related to tourism and to construction are highly represented in Central Oregon. While construction jobs might not have been hit hard so far, in part due to the inventory of projects already in progress and because construction is considered essential, tourism-related jobs have been profoundly affected.

It is likely that different segments of the housing market Central Oregon will be affected differently. The combination of a vulnerable job with a vulnerable mortgage is quite worrisome, and it is likely that this segment housing market will be affected first. But the rest of the housing market in Central Oregon is not immune, and what happens there will likely depend more on what happens with the overall economy and the stock market, and how long it will take for them to recover.

What will happen to the housing market in Central Oregon? It depends. It depends on national factors, regional factors and local factors. What we can hope for is that the economy recovers quickly. If it doesn’t, then we are more likely to see the Central Oregon housing market go through a cycle like from 2008 to 2015. Mitigation of this risk will depend on rescue packages, stimulus packages, and mortgage relief from the federal and state governments. Loan servicers are being helped by the loan forbearance portion of the CARES Act, but it is likely that it will be harder to get a home loan going forward. What happens will also depend on the course of COVID-19. Will stay-at-home efforts and social distancing be effective? Will we try to reopen the economy too soon and risk waves of coronavirus? Will we have enough testing? Will there be a vaccine? There are many variables with many unknowns. Central Oregon’s housing market is at higher risk than elsewhere for a number of reasons, but Oregon is poised to recover more quickly due to its COVID-19 efforts.

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