Another Bubble or Sustainable Growth?
It’s been less than 5 years since Central Oregon’s real estate market was considered one of the most dismal housing markets in the nation. Foreclosures and short sales were the norm, and it wasn’t unusual to see your neighbors loading up the moving truck in anticipation of the auction block. Today, Central Oregon’s market is on the opposite end of the spectrum. The nation’s rising star of Facebook’s “Top 10” lists, including Best Place to Raise Kids/Retire, Best Place to Bike/SUP/Golf/Fish, Top Ski Towns in the World, Best Place to …. You get the picture! REAL ESTATE IS BACK!!!
According to a recent article in The Bend Bulletin, there are 300% more moving trucks coming into Central Oregon than out, according to U-Haul. Home prices have appreciated 46% in Deschutes County since 2013. Building permits are continuing to be filed in record numbers. So, what does this all mean? Did our community learn the hard lessons we were given in 2008-2012, or are we back to our old ways?
A panel of real estate experts from our region explored this very question on April 20,2016, at the Bend Chamber Real Estate Forecast. There was an overall “guarded outlook” for our market over the next five years. The panelists explained that our local economy is more prepared for a national economic downturn than it was in 2008, and home prices continue to rise, but at a healthier rate.
Lenders are being more careful. Debt-to-equity ratios with construction and development loans are being maintained in a more disciplined manner than before, and builders aren’t relying on the speculators that flooded our market in 2005-2007. The banks are more selective when it comes to individual borrowers, as well.
Our local economy is more diverse than it was in 2007, thanks in part to the affordable commercial real estate market that out-of-area companies found during the downturn. Job growth in tourism and health care, data centers and high tech, and professional services is outpacing the construction employment growth. In 2007, construction jobs accounted for about 33% of all jobs in Central Oregon. Today, this number is much smaller. In fact, according to the Oregon Employment Department’s Regional Economist, Damon Runberg, there is actually a shortage of construction labor, as other industries continue to grow.
Overall, this is wonderful news for our local real estate market. We are continuing to grow, but at a healthy, disciplined rate that isn’t expected to bottom out anytime soon. Interest rates are slowly creeping up, which puts some control on unrealistic appreciation. As a community, we feel the recovery.