Bend’s Move from Regional to National Real Estate Player
An explanation of the effects of Bend’s move from regional to national real estate player on increasing home prices and low inventory and why they both should continue for many years to come
Thom’s explanation of Bend Oregon’s unique real estate market, its move from regional to national renown, and why our home prices are and should continue to increase faster than most of the rest of the country’s.
I often hear from home buying clients moving to our little Bend, Oregon from other areas of the United States, the majority of my business, that our prices scare the heck out of them. Not necessarily the prices themselves, but the rapid and constant increase in those prices. I am often hit with the question, “Do you think the run is about over?”, to which I offer an emphatic, “NO, I believe it is just beginning.” I understand that the Bend real estate market seems strange to folks from “normal” real estate markets, where people often move across town, people move in for jobs, and so on. But, there are some very real and time tested reasons why this occurs, and why it will continue into the foreseeable future. This reasoning also explains the vast difference between the rise in our market in 2004-2007, and the similar rise we are seeing now. And remember, we are not yet back to those highs, even now.
There is a phenomenon in stock market analysis known as “the transition from regional to national markets”. The largest gains in stocks often occur when a business, such as Chipotle, Krispy Kreme, Wells Fargo, and Uber, to name a few of recent years, transitions from being a regionally known and focused player, to becoming a nationally known and focused player. These gains can be hyperbolic and exponential. I have been a watcher of Jim Cramer for years, and he often says these are his favorite stories, and is constantly trying to uncover them for his viewers.
Bend’s move from regional to national real estate player makes it the Chipotle of real estate markets. Except that, unlike Chipotle, we are in the early stages of the discovery process.
Ladies and gentlemen, there could hardly be a more pertinent explanation for this Bend’s meteoric and continuing rise than this. If we were to talk baseball innings as a metaphor for where we are in this timeline, I would have to guess we are at the end of inning two. And it also provides insight into the Bend real estate market now, versus the Bend market of the early 2000’s. At that time, Bend was not well known away from the West Coast. Our real estate brokerage rarely had clients from further West than Colorado, and the vast majority came from California, Oregon, and Washington. Bend is a very small real estate market, and so the easy credit at the time combined with a relatively large amount of people- those that discovered our amazing area early- to spike Bend home prices severely. When I had the occasional client from the East, they would tell me that none of their friends or neighbors had ever heard of Bend.
Flash forward to NOW. The majority of my business now comes from EAST of the Rockies. I am told by my clients from there that their friends and neighbors most often HAVE heard of Bend, and they often tell them as they move away “Gosh, you are so lucky to be moving there!”. Bend is in newspapers on the East Coast quite commonly, and in national magazines every single month as “one of the best places to move”, “best places to visit”, “best places for business”, “best places to retire”, “best ski towns”, “best places to live”, and on and on, as the various links I have posted on my site over the past few years attest. I have begun to grimace each time I see our little town mentioned in a magazine, as I know that will bring yet more folks to our area, and as we are such a small area, there are not enough homes to go around. That was evident last year, and it is MUCH more evident this year, when it is already difficult to find a home and SECURE it here. And again, our town is SMALL, and hemmed in by Federal land. There is, and will remain, only so much to go around. Last year, Deschutes County was the SEVENTH FASTEST growing County in the United States, with a population of just over 170,000. There is a link on the front page my BENDHOMEPAGE.COM website to this story.
You might think I would be jumping for joy at this phenomenon, based upon the nature of my Bend real estate business. Actually, it is quite the opposite. It has become more difficult to find and SECURE homes for my clients, as they have to move QUICKLY ( their own markets don’t necessarily teach them to do this), and they have to come in as close to full price as possible (which is a tough pill to swallow for anyone). Large agencies I must compete with have much more ad money to spend than do I, and there is a glut of agents moving in, mostly from Southern California, who want to get rich quick, though their service quality is much lower, they don’t know the area, they haven’t been through the boom and bust cycles here, and they are often still in their early 20’s and have never even owned a home. I have many clients who have waited, and waited, and waited to purchase a Bend primary home or an investment home, and I have watched them fall further and further behind the pack, missing vast gains in appreciation, because they are not convinced that the phenomenon I speak of is real. And yet, they are seeing it with their own eyes, year after year. Some of those folks have been priced out of our real estate market and now will never be able to make the Bend home purchase they had so hoped to make.
Furthermore, the two real estate markets most often mentioned by my clients compare that Bend to others, are the Lake Tahoe area, and Aspen. These two dramatically illustrate the vast vacuum of pricing space we have above our heads, which we are quickly filling. According to the January edition of Nevada Business, Lake Tahoe’s average sales price in that month was $807,088. Contrast that with our January average of $395,000 (which as of February is up to $403,000)!!! And Lake Tahoe is still in the middle innings of the regional to national discovery process, in my opinion. Aspen, which has been the go-to mountain-play town for the East for decades, is at the top of this food chain, certainly in the ninth inning (or maybe extra innings!) of this process. And, according to the Aspen Times in February 2015, the average sales price there at this time is . . . $4 million. We are talking about a price per foot around $1000, versus Bend’s average per foot price, around $200.
Yes, it will be many years until Bend gets there, and I would like nothing more than if we did not EVER get there, though I think that the Tahoe numbers are not that many years away, maybe 10. But I think fighting reality is a fool’s game. The trend is as obvious as the nose on my face, and I have a rather large nose. Adapting to reality is where wisdom lies. Frankly, at this time in Bend’s life as a town we get more press than either of the other two (which occurs in the early stages of discovery, of course), we have more overall recreation than either of them (more lakes, the desert, more federal lands, rock climbing, water sports, skiing, the Pacific Crest Trail, power sports, mountain biking, mountaineering, backpacking and hiking, a well developed and growing restaurant and pub scene in the land of Beervana, a top tier regional hospital, a quality airport, some of the nation’s best fishing rivers, interesting volcanic environments, hot springs, and we are closer to the Ocean as well as the rainforests of the valley . . . need I go on?), and we have the sunshine we are famous for. We also have more water availability for the future than the drying up area of Tahoe. This year Bend is seeing more California home buyers again, people concerned with living somewhere that has readily available water stores, but will not even think of living in the dark and gloomy areas of the Willamette Valley, Portland, or Washington State. And their wholesale return promises to further compact our tiny real estate market.
It is simply a case of supply and demand. Our supply is and will always be small. Yet our demand increases dramatically every year.
Yes, BEND IS NOT THERE YET AND WON’T BE FOR A LONG WHILE. But if you think this ride is nearly over, if you think that Bend’s real estate market won’t fill at least a major portion of that massive vacuum above us, I believe you have not yet adjusted your thinking to the reality on the ground and the concept of moving from being a regional real estate player to a national real estate player. Everyone knows that real estate is all about location, and Bend has that in spades. But I am here to tell you that there is a second piece of that puzzle that is nearly as important in my experience. It is known as RELATIVE VALUE. And it is that one, more than anything else, that will continue to fuel Bend Oregon’s ridiculously hot real estate market for the foreseeable future.