By Rachael Rees van den Berg – Posted May 6, 2016
DOWNLOAD RUNBERG’S SLIDES - Real Estate Forecast Breakfast Slides_Runberg
Buckle up and get on board: Bend is going to change
Is Bend in a real estate boom, bubble or bust? That’s the question panelists answered on April 20 during the Bend Chamber’s Real Estate Forecast Breakfast, sponsored by Schwabe, Williamson & Wyatt.
Moderator Damon Runberg took an audience of nearly 400 on a journey through 2005-2007 to learn from the past.
Wages went up, people were getting hired and homes were being built, but building permits dropped like a rock, which in a lot of ways foreshadowed the bust that was to come, Runberg said, referring to the Great Recession and Bend’s housing bubble bursting.
“The last expansion was a real estate driven expansion,” he said.
Today the feeling of déjà vu might not indicate Bend is headed for a bust. There are similar trends happening with a few differences, he said.
“Bend has a diversified economy,” he said. “We aren’t leveraged in the housing industry the same way we were before.”
Runberg said the pace of building and construction is much slower today. Home price growth is based on sound supply and demand economics with a high demand for housing and a low supply, which, in turn, makes home prices rise.
As the panelists took the Tower Theatre stage and settled into the sofas supplied by La-Z-Boy Furniture Galleries, Runberg asked why there hasn’t been a ramp up of building permits.
“There’s been a lot of consolidation in the industry. Builders have a lot less access to credit. Going out and developing lots is very risky,” he said. “Both bankers and builders are hesitant to get back into that space. The builders today that can develop their own land are doing it for themselves in smaller phases.”
Throughout the forecast, panelists dove into issues ranging from the construction labor force shortage and the urban growth boundary, to homebuyer profiles and what types of more urban development might be on the horizon for Bend.
When asked about the future of Bend’s real estate market, Taylor said he was very optimistic and believed there were opportunities for returns; but that optimism was contingent on the discipline of sound lending and planning.
“We’re attracting great people to come here, but as important, we need to take care of the businesses that are here because these businesses have been a big part of our fabric and we’re growing so we need to make sure that we have space for them,” he said.
Taylor said the community has a good opportunity to really make a difference in how the city of Bend is shaped and how it looks in the future.
On the residential side, Klingman predicted home prices would continue to go up another 10 percent in the next 12-18 months. Near-term, he expected rates to remain historically low.
“There will be another pull back, when that is, my crystal ball hasn’t told me yet,” he said. “Long term, I think Bend is a really great investment.”
In the next 18-24 months, he said lease rates would continue to climb. Vacancy rates have dropped from north of 20 percent to below 6 percent for office, industrial and retail spaces.
“There’s very limited supply and as there continues to be demand, there’s only one way for rates to go,” he said. “It’s very much a landlord’s market these days.”
Skidmore said Bend is going to continue to grow. With the population increase, he said Bend will become more vibrant, but it will also change.
“Nothing is more constant than change,” he said. “I’m optimistic about it, but there’s going to be some growing pains and a little bit of adjustment on everybody’s part.”