Bend’s Apartment Excess: A Reality Check
If it feels like Bend is suddenly full of vacant apartments, you’re not imagining it. More than 1,187 multifamily units have been delivered over the past two years, with another 1,406 under construction. Vacant inventory now exceeds 1,000 units, and at current absorption rates, it could take up to five years to work through the excess, assuming there’s no additional development.
Supply vs. Affordability: A Critical Distinction
Contrary to common narratives, the data does not support the existence of a true housing shortage in Bend. The issue is better understood as an affordability challenge, influenced by several overlapping factors.
These include wages not keeping pace with costs, inflation, higher construction and labor expenses, rising utilities and insurance, and growing regulatory pressures such as restrictions on natural gas and SDCs.
Impact on Market Fundamentals
The combination of oversupply, elevated interest rates, and sharply rising operating expenses has impacted asset valuations.
Rents have stayed mostly flat over the past three years, while costs have climbed, compressing net operating income. Transaction activity has slowed as buyers base deals on current income and financing conditions. At the same time, many sellers are still anchored to past pricing, which has made it harder to get deals done.
Not all properties are affected equally. Newer Class A assets are feeling the most pressure due to higher rents and increased competition. Meanwhile, workforce housing and Class B/C properties continue to perform relatively well, with strong occupancy driven by more attainable price points.
Path to Market Stabilization
A recovery in Bend’s multifamily market will depend on a few key factors.Sustained population and job growth will be critical, particularly as growth has slowed from approximately 3% annually during the pandemic to closer to 1–1.5% today. Rent growth must resume, operating costs need to stabilize, and interest rates will need to moderate to support improved valuations and transaction activity.
Strategic Considerations
Even with current challenges, there are still opportunities in the market. Owners considering selling should focus on stabilizing occupancy and achieving true market rents, since buyers are underwriting based on actual in-place income. Taking care of deferred maintenance and pricing realistically for today’s conditions are also important.
Seller financing is another option worth considering. In today’s lending environment, it can help bridge pricing gaps and attract more buyers. It may also improve marketability, support stronger pricing in exchange for favorable terms, generate ongoing income through note payments, and offer potential tax advantages.
For Buyers: Position for the Next Cycle
While the short-term outlook is more challenging, it’s important to keep a long-term perspective. Bend still benefits from strong fundamentals, including its appeal as a lifestyle destination, steady population growth over time, and limited supply due to geography and regulation.
These factors support the view that Bend will remain a strong investment market over the long term, even as it works through the current oversupply phase. Historically, acquisitions made during periods like this tend to deliver the best returns over time.
