2021 Central Oregon real estate in three short conversations

Well, 2020 has been a crazy year for everybody. Definitely not what we expected. Despite the state-inflicted suffering among local businesses, the Central Oregon real-estate market continued its upward climb.

Please allow me to share with you three conversations that are going to characterize 2021. The conversations are real, but the names have been changed to protect the innocent. Words are my side of the conversation only:

No. 1 Material Shortages and Higher Prices

Bruce! It’s me. Got a couple home builds going on and I need a couple garage doors…

Yeah, it has been too long. But I’m glad to talk to you too…

What? Skiing? Yeah man. Come on out. Snow is decent and you can crash with us…

Oh, no worries. I mean we’ve been friends for twenty years. Now about those doors…

You’re going to give me the friends and family deal? And get me to the front of the line? I appreciate that…

Wait. They’ll be ready when? March you said…

From refrigerators and stoves to garage doors and lumber, there is a nationwide shortage of construction material. And what’s left is expensive. Lumber alone is up 25 percent this year. Global supply chains are a reality, and they are broken. That combined with high demand is raising both prices and lead times. Demand for housing will continue to far outstrip supply through 2021. Houses just can’t be built fast enough.

No. 2 Demographic Shifts

Brian! Super glad you called. What’s going on?…

You want me to look at some property?…

In Sandpoint, Idaho?…

I love that town. Super cute and clean. And skiing at Schweitzer is off-the-hook. You looking at investment property?…

You’re moving?…

Can’t afford a place in Sisters?

But you and Mrs. Brian are both healthcare professionals…

Much of Central Oregon has already priced itself out of the market for young families. These are the same families that make a town vibrant, its economy diverse and healthy, and the schools run. Throwing a few “affordable” units into new developments isn’t going to help in any meaningful way. The median housing price in Bend is just touching $550,000. So theoretically, a young couple would need to come up with more like a $100,000 down payment. But the reality is that this a seller’s market with average time on market being about a week. So nice young couples are getting beat out by full-price cash offers. Which brings us to…

No. 3 Out-of-Town Money

Hey it’s Mike. WetDog Properties…

Who? Janice? Yes. Nice to meet you too…

You say Bob and Nancy referred you …

Yes, I remember them. They traded in a 1,000 sq. ft. shack in San Fransisco. We got them into 5 acres in Tumalo and a couple of rental houses…

You sold your house and now want to move to Bend as well?

Look, ah, Janice, we’re kinda full here in Central Oregon right now. But I’m hearing nice things about The Dakotas. Why don’t I call…

Well no, I really wouldn’t want to live there either…

Despite COVID’s best attempt to wreck the economy, there is still a lot of money rattling around out there. And it’s coming right for us. Combine the trends of working from home and an exodus from cities, and you have demand (and prices) in Central Oregon hitting new highs. The consensus among economists is to expect housing prices to rise more like 10 percent through 2021. Much of this demand is coming from out-of-town money, for whom Central Oregon is still a bargain.

There you have it. 2021 trends in three conversations. We’ll get back to our usual Dear Property Guy next time. In the meantime, have a safe and peaceful New Year.