(An Eagle Crest home listed with Eric Wilson of RE/MAX Key Properties in Bend | Photos by Riley Visuals)
To describe the current residential real estate market, one might best imagine the scene by visualizing a shark tank at dinner time. The feeding frenzy taking place in Central Oregon and in many areas across the country is shocking and boils down to this: supply and demand.
The past year has been full of the unknown, but perhaps one of the biggest surprises throughout it all has been the performance of the real estate market. Most in the industry did not see this market coming, and no one really knows how long it will last.
“About a year ago when everything started happening, I thought to myself, ‘Okay, buckle up for the long ride of not working,’ but it was the exact opposite of what I thought would happen,” says Eric Wilson, a residential associate with RE/MAX Key Properties in Bend. “Since April or May of last year, it’s been very busy, and much has changed as far as pricing and demand from buyers. We are fortunate to live in a beautiful place that is fantastic for recreating and raising a family, and that brings a lot more people. Unfortunately, we just don’t have the inventory to accommodate all the demand, and that is the case for both buyers and renters.”
At Cascade Sotheby’s International Realty, Managing Principal Broker Marta Boelens says that a year into doing business during the pandemic, her team is up approximately 40 percent in sales volume over the previous year. “We didn’t know what to expect when this all started just over a year ago,” she says. “The leadership team at Cascade Sotheby’s met consistently, and always had a plan to move forward. Thankfully, the pandemic ended up benefiting the industry, and we are in one of the hottest markets of all time. We had to pivot and adapt to doing business a little differently, but our brokers did that well and we provided as much support and encouragement as we could. Now, most of our brokers are seeing their best year ever.”
“Weirdly enough, 2020 was the best year I’ve had. I’ve been very blessed, and I’m super appreciative of that,” agrees Ginny Kansas-Meszaros, principal broker and owner of Ginny Kansas Real Estate in Sunriver. “Now, there is so little inventory. When you have listings, you are fortunate.” Kansas-Meszaros says that as an experienced Realtor who has been in the business for 18 years, she does very little advertising, and most of her business is through word of mouth. “I’ve been working with sellers who I’ve known since the ‘80s. I have realized that in this market, it’s necessary to network with other Realtors to find listings before they go onto the market, or to be a ‘gorilla realtor.’ I literally walk the streets with my clients; I send letters and knock on doors talking to neighbors to see who’s listing or might be selling. I also have a few builders I work with. We have to go back to the value of relationships; you have to know clients and builders who are willing to sell.”
Buying, Sellers and Realtors Face Challenges in this Market
Although prices are at record highs for homes, the experts agree that this market is challenging for all parties involved. “On the selling side, it’s almost as crazy as buying. You can get double-digit showings each day the home is on the market. And then you may get double-digit offers. That really takes a plan on the part of the agent to know how to address that,” says Wilson. “With sellers, there are lots of questions, like, ‘Where am I going to go if I sell?’ We are seeing a lot of rentbacks, and contingencies such as the sale being subject to the seller finding another suitable home.” Kansas-Meszaros adds, “Sellers are afraid to sell. Lots of people are moving to the Midwest, to Iowa, South Dakota or Missouri, but sellers in those areas don’t want to sell to anyone either unless the buyer’s house is pending and past the appraisal and inspection.” She continues, “This is a new situation of having to review multiple offers at one time. Escalation clauses are coming in. You have to vet with the buyer’s lender to see if they can really afford it. Maybe the broker has checked whether the person can really afford that higher price, maybe not.”
For investors looking to sell their houses, Kansas-Meszaros says that COVID requirements have created struggles. “Tenants may not be able or willing to leave,” she says. “There is less ability to show a home because tenants must be given a 24- to 48-hour notice to show. Tenant law is stronger than real estate law now. Owners have to do more to sell their own homes than ever before.”
On the buying side, discouragement and frustration are widespread, the Realtors say, because there simply aren’t enough houses to go around. “With buyers, either we just aren’t finding the homes they want, or they have put offers on multiple homes and are not getting them due to the competition,” says Wilson. “It’s disappointing. These buyers are great people with good budgets, but it’s just not all coming together. It’s frustrating for them, and requires a lot of patience from me as their agent. It used to be that when I had folks looking in Bend at a more affordable price point, if they couldn’t find something here, we could look in Redmond or maybe Three Rivers South. But those areas have appreciated so much that now you really have to be flexible, especially if you are on a budget.”
Boelens says she is seeing buyer fatigue, and buyer’s remorse over paying more than the list price for a home. “It’s so competitive that new strategies while making offers need to be utilized.”
Kansas-Meszaros agrees that the issues facing buyers in Central Oregon are multifaceted. “I have had offers for $150,000 over asking price. Sellers are not willing to do any repairs. They are very much in control of the situation. This is a challenge because people are setting their own prices. Within minutes or hours, or maybe days, a listing is gone. Buyers are super frustrated and disheartened.” She says they are waiving appraisals, repairs and inspections, and they are so threatened by the lack of inventory that they are afraid to ask questions. “It’s more important now than ever before to have a hard-working Realtor,” she says. “You need a skillful negotiator. You need to know how to ask for repairs and not be afraid.”
Local buyers — those already living in Central Oregon trying to purchase a home for the first time or wanting to move from one area in the region to another — are also facing stiff competition from out-of-state buyers, Kansas-Meszaros says. “Because inventory is tight and people want to live here, we are in the top ten. We have what they are looking for, so they are coming in droves. We are getting tech people from San Francisco, Washington and other parts of California who are coming here and can compete at higher cash levels.” These buyers are also more accustomed to density, she says, so they don’t mind living in a more congested part of town or being surrounded by apartments. “It’s interesting the influx of people and where they are coming from. High-end homes, from $800,000 to $4 million, are really selling.”
As a buyer, Wilson says it’s important to be as prepared as possible. “Be pre-approved for your mortgage, have a clear idea of your budget and how much you are willing to spend and know the parameters of the house you want and the location. Some of this is getting diluted due to lack of supply. But have this ironed out, so that when you see the house you want to be in, you have clarity and can really go for it.”
Sellers and buyers aren’t the only ones feeling the pinch of this market: Realtors are also facing unique challenges. “Fast and competitive describe it for me. Navigating those issues and doing upfront education with both buyers and sellers is crucial,” says Wilson. “It’s about pace and preparation, especially on the purchasing side. We are looking at really educating our buyers on what the conditions are like, especially when they are ready to make that first offer.” He says that buyers want to offer asking price; but when they don’t get the house they want, they realize just how tough the market is. Kansas-Meszaros says, “You have to research, put in time, know your clients and their neighborhoods, get solid pre-approvals and have frank talks with mortgage lenders. You must still go through the appraisal process, even with these puffed-up prices.”
Deal Breakers and a New Way of Doing Business
Conditions that can stifle a sale include out-of-state lenders backing up the loan process, escalating costs of building supplies, permitting issues and a backlog in appraisal requests due to the high number of mortgage refinances that are taking place as a result of record low interest rates. “There is a huge uptick in man hours. Escrow people are literally working on Sunday nights at 10pm,” explains Kansas-Meszaros. “Lot prices are way up. New Era homes and some of the other builders are getting a lot more business. Even in La Pine, with the new development going on, the builder has sold out all his lots. Lot prices and building costs have gone up exponentially: There is a wood product that all the builders need to use that has gone up from 8 cents to 12 cents, then to 32 cents and is now over 50 cents per unit. It’s crazy-making.”
Realtors, like many other professionals, have also had to quickly learn new skills over the past year. “We definitely had to adjust,” explains Boelens. “We are having to rely on technology much more than we did in the past. We have had to adapt in a few different ways. We had to work within the guidelines that the pandemic allowed, and brokers are having to do more videoing, zoom conferencing, virtual signing and more. It requires quite a bit of explaining to buyers and sellers how to navigate the changes and help them understand the process.”
Just how long this extremely tight market will last is unknown. But Kansas-Meszaros says the inevitable problems that come along with such a market have begun to emerge. “If you want too much and accept a higher offer, appraisers are starting to kick back. Properties are now coming back onto the market because they don’t appraise. And by then, the backup offers are gone. Buyers are having to cover the difference in cost not covered by the loan.” Another quandary buyers are facing is development, she says. “This is causing delays; brokers need to put in the comments that there is development and construction going on in the area. People have to be ready for that development. In this industry, there are some new people who are really well trained, but others who just aren’t doing their due diligence.” And then there are the love letters that potential buyers are writing to sellers in hopes of swaying the outcome, she says. “There are fair housing concerns due to the love letters being written. A seller could pick a buyer for the wrong reasons. But this could lead to lawsuits. Sometimes, people are overextending what they can pay.”
As buyers on a budget are getting priced out of Bend, Kansas-Meszaros says she wonders what will happen. “I wonder what is going to happen in the surrounding areas, and in mobile home parks. Are developers going to buy them out? Are zoning changes going to happen?” She adds, “I don’t see that there will be a correction for a while. Rates were going up but are coming back down again.”
While no one can predict the future, moving forward through 2021, the Realtors say their desire is to keep helping their clients achieve their goals, despite the volatile market. “My goal, from a business perspective, is to continue to help as many people as I can, whether they are selling or buying,” says Wilson. “It can be a frustrating and complex process. My goal is to make it as easy and stress-free as I can for my clients. I try to take on some of that burden for them.”
