Surge in Activity Sees Big Increase in Bend Single Family Permits Issued
After several seeming false dawns, the climate looks a lot brighter for new residential construction this year as latest data shows the number of Bend single family home permits issued for the year-to-date through April 2012 up 55 percent compared to the same period last year.
More good news illustrative of the relative strengthening of market conditions also comes with figures showing Notices of Default for Deschutes County down 65 percent for the corresponding timeframes from 2011 to 2012, amid the perception of a general whittling down of distressed inventory.
Greg Welch, owner of Greg Welch Construction, who specializes in spec and custom homebuilding and who has been particularly active in the NorthWest Crossing development, having built over 70 homes in the popular Westside community, has witnessed the surge in activity first-hand.
He said: “Things are crazy busy right now. We noticed a pick-up in business from around mid-January and it has just built momentum since, with a lot of interest from clients looking for homes and making offers.
“I think the pent-up demand due to the overall slowness of the last three years has caught up, inventory is thinning and interest has been further stimulated by an extra dip in rates. A number of factors have combined to produce the recent sales wave which we have noticed in neighborhoods throughout the westside.”
Welch observed that often clients were also looking for more updated floor plans and flexibility in styles of a contemporary flavor, rather than the standard or previously traditional craftsman-type design, with buyers responding to builders “stepping out of the box” and experimenting in terms of creativity.
He added, “Overall, there seems to be more confidence – a sense of things stabilizing and feeling that we have hit bottom and are moving back up.
“People are increasingly picking floor plans they like and buying to stay. Realizing there may not be a whole lot of options down the line, particularly in buildable lots, they seem happy to settle in and start enjoying all the amenities Bend and its community has to offer.
“A higher proportion of our business is still in spec homes and we continually strive to look for opportunities in areas where we feel clients are looking. You try to find the right lot and envision the potential buyer profile and broadly tailor to those needs.
“It is really gratifying when a buyer comes along and says ‘I feel like this home was built for me’.”
Welch said that a large proportion of buyers were from out of town, including a number of “empty nesters” or people getting ready to retire and positioning themselves to live in Bend, with the most popular custom home size currently running in the range of 1700-3500 square feet, adding, “Many people from outside the state have been monitoring the market here for a while and feel this is the right time to jump in.
“They are realizing the current options aren’t going to be there forever, especially in terms of lot selections for which the list is dropping, and seem to be feeling some sense of urgency.
“Also, people are focusing on the green features and better insulation packages that new homes can offer. The City of Bend has just raised the bar regarding its energy code and we are among those who have already raised our energy efficiency levels.
“This is especially important to consumers in light of increasing utility costs, and when you explain the green features they appreciate that some upfront investment is balanced out by energy cost savings in the long run. Technology in this sustainable area in every business is getting greener and stronger.”
Jim Yozamp, president of PacWest Homes which specializes in design-build product, echoed Welch’s perspective, saying, “We are very busy right now, and people are seeing the value of dirt priced at the low of 12 years ago.
“They are sensing their opportunities may be limited in the future, especially in terms of dwindling product and the current historically low interest rates.
“Babyboomers are retiring and getting tired of waiting for things to happen and want to take advantage of current values.
“It’s been all design build in the last 18 months and we have not had much of any issues with appraisals. People appreciate working with established quality contractors with a firm structure and foundation who can efficiently manage land and construction costs.”
Activity in the new home arena so far this year has been felt across the board, with competitive pricing and people from the whole range of demographics able to get into new homes. Leading the way in the number of new single family home permits issued in Bend through April 2012 were Hayden Enterprises with 28, followed by Pahlisch Homes at 18.
Pat Huber, owner of RE/MAX Key properties in Bend, who compiles regular analytical quarterly data, said, “Bank-owned and short sales are making up less of our market. The standing inventory of distressed properties in Bend for the first quarter was 30 percent of our market versus over 40 percent last year at this time.”
Huber suggested the leading indicator of a healthy market is the level of new construction units that are closing, with this segment in Bend up by 45 percent in volume in Q1 2012 compared to last quarter.
She added, “More significant is the average selling price for new construction. While normally one would not be happy to hear that this has decreased year to year – that is exactly what we needed to see.
“For the past four years, the majority of new construction was high end, custom homes or specifically on the West side of town. For Q1 2011 only 15 percent of new construction homes closed were under $250,000.
“This latest quarter over 45 percent of new construction units were homes sold under $250,000. Buyers are realizing that they can afford a newly constructed home in Bend at close to the same price as a short sale or bank-owned property.
“This is the signal that we have turned the corner and are moving forward again.”