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Why Building Costs are Going Through the Roof

If you’ve started building or remodeling your home recently, congratulations! And also, condolences.

Congratulations is due because the shortage of construction workers in Central Oregon has forced you to wait much longer than usual to begin your project. Most quality builders in the region are booking six months out, at least. Unfortunately, that delay has cost you big time on costs of materials and availability.

What’s driving these unprecedented price hikes and back orders for construction supplies in Central Oregon?

According to Hank Hill, owner of Bend Craftsmen Company, both issues can be tracked in part to the economy and a summer of wildfires.

“Times are the busiest a lot of us have ever seen,” says Hill. “Material prices have been fluctuating a lot and some of my preferred vendors, especially for appliances and tile, have seen significant back orders and delays.”

Damon Runberg, regional economist for the Oregon Employment Department, supports Hill’s observations with hard numbers. In late August, during a Central Oregon Builders Association presentation, Runberg noted that the only Central Oregon economic sector to see positive gains in 2020 is construction, growing at a rate of 2.8%.

In conjunction with this growth, a backlog for lumber supplies started earlier this year after mills in both Oregon and Washington were shut down or had significant layoffs due to the economy. Construction work continued in Oregon, and as the economy got moving again, people were unable to return to the mills or weren’t rehired. Lumber supplies quickly disappeared as did larger appliances from local suppliers, further straining builders’ budgets and timelines.

Ryan Jennings, operations director for Redmond-based Hayden Homes, said during the COBA presentation that there’s been an 80% uptick in costs since April. At that time, 2x4s or narrow lumber purchased in bulk cost $300 per 1,000 square feet. As of late August, that cost jumped to $835 per 1,000 square feet. Jennings notes this hike adds thousands of dollars to the price tags of new buildings and exacerbates the ongoing housing crisis.

Aaron Brent-Fulps, owner of ABF Construction, also reports during a visit to Home Depot in early October that plywood normally priced at $16/sheet was selling for $46.

As a result of these increases, Builder magazine calculates an increased cost of about $16,000 for the typical new single-family home. Sadly, the situation is not likely to improve soon as the rebuilding of infrastructure damaged or destroyed during Oregon’s summer fires is expected to spark another peak in lumber demand.

What can you do to minimize the damage?

In a high-demand building climate such as the one we’re in now, Karna Gustafson, vice president of government affairs and legal counsel for COBA, encourages consumers to check that their contractor has a Construction Contractors Board license.

“Especially post this summer’s wildfires, there is serious concern that fly-by-night contractors will have ample opportunity to take advantage,” she said.

In addition, Hank Hill recommends that consumers should work to establish a “cost-plus” format with their builders, or to include contingencies in contracts that will cover unexpected extra costs.

“If a contractor prepares a proposal now, but the project starts in six to 12 months, it can be wise for both parties to have another assessment of pricing and cost prior to construction commencing to re-evaluate.”

In any case, the one saving grace that can offset increasing construction costs is that home values in Central Oregon have continued to skyrocket, setting multiple records for median prices. Which means you could recover those extra construction costs just as quickly as you accumulated them.

Some information provided by K. M. Collins.

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Thinking About Selling Your Home? Think About These Four W’s First.

The Why, What, When and Where of Moving Out

When you consider the challenges inherent in putting your property on the market – the repairs, the cleaning, the showcasing – it begs the question, “Why on earth do you want to sell it in the first place?”

Of course, there are any number of good reasons to sell your home, including:

  • Relocating for a job opportunity or to be closer to family members.
  • Upsizing for a growing family or downsizing for an emptier nest.
  • Moving to a more desirable neighborhood.
  • Dropping out of home ownership in favor of a rental.
  • Taking advantage of a seller’s market.
  • Consolidating multiples homes.

Whatever the reason, once you’ve answered the crucial question of Why and confirmed your desire or need to sell, the plan comes together with greater ease and industry professionals hired to market and sell the property have a bottom-line goal to accomplish. You also have support to answer the subsequent questions of what, when and where that should be addressed prior to listing the property.

Closely related to the Why, the “What” plays a crucial role in the sale of a property and post-closing activities. In addition to identifying the goal of the sale, you need to ask yourself:

  • What are your plans for the proceeds?
  • What’s the sales price threshold that you will or won’t agreed to?
  • What repairs and concessions are you willing to make for a successful close?

Essentially, making a plan ahead of time means you will be better prepared for drawing the line in the sand where you will be more satisfied with the sale.

Not surprisingly, the “When” questions are all about timing. If you’re selling your primary residence, you need to consider when it is that you ideally want to move. If moving and being out during the winter months is not your thing, for example, then it doesn’t make sense to list your property for sale in the late fall/winter. Some potential buyers may feel the same way. On the other hand, buyers at this time of year are generally pretty serious about moving. The other big “When” questions, of course, relate to your escrow closing and the availability of your next address. Knowing these prior to actively marketing the property for sale will make the necessary post-closing activities easier to digest.

Finally, the “Where” addresses a couple of important things, Including the destination of the moving van after closing, in the case of an owner-occupied sale. If your intent is to cash in and rent a home, it’s best to be clear about the state of the rental market. As you’re probably aware, the Central Oregon rental market (not unlike the real estate market) is incredibly competitive. So you’d be wise to begin the rental search as soon as the property is listed for sale.

If you’re planning to purchase another home with the proceeds:

  • Where will your next home be?
  • Where are the area’s amenities, schools, medical services etc. that fit your specific needs?
  • Where are the closest grocery and home supply stores?

Knowing where you are going when the sale closes will make for a smoother sales process, as well as help to quell the stress of uncertainty in an already stressful situation.

Once you’ve answered all of the important Why? What? When? and Where? questions about your home, then it’s only a matter of Who is going to buy it.

Some information provided by CHRISTIN J HUNTER.

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Duke Warner Trend Report for September 2020

It’s official, and Fall is here! After an epic summer of historical portions, for both home buyers and sellers in Bend, the leaves are changing, and there is a slight chill in the air. Central Oregon is as beautiful as ever, and although the seasons are changing, the real estate trends remain as fast and furious as the spring and summer. In our monthly Trend Report, we offer valuable insights by reviewing last month’s activity, which can be a wonderful resource for any upcoming trends we might see as we finish out October and move into November.

We continue to see throngs of homebuyers from out of the area seeking to relocate to Central Oregon. As many of us know, Bend has been a magical vacation town for many people and families for generations. We are not surprised to see some urbanites taking advantage of the remote work possibilities and landing on Bend as their new home destination. Just as the past several months, unprecedented transactions both in the fast selling process and the number of active home seekers who are outbidding one another is a larger factor in the increasing housing prices. The active Bend listings for September increased mildly from August but were still historically low due. Homes continue selling at a rapid-fire pace- often within hours of hitting the market. The low inventory in both Bend and Redmond markets continue to create a sellers’ market.

October 1st Inventory and September Activity

With a slight bump in active listings as of October 1st, the Bend market has 197 active listings, and Redmond experienced a substantial drop in current listings at 111. The supply and demand of buyers vs. sellers continue to be quite the precarious dance in the real estate market in Central Oregon. Still a seller’s market regardless of the season now would be an excellent time to consider selling your home if it is on the radar for Spring 2021. We see the combined active listings for Central Oregon at 308, a dip from 322 last month.

Property values are increasing substantially daily, and our experienced, local brokers have not slowed down as the summer months progressed into Autumn. They continue to seek out the ideal home for buyers, which has required 24/7 diligence as a real estate expert. The Redmond markets showed 127 homes sold, 109 new homes on the market, and 139 homes pending. The bulk of active homes on Redmond’s market were in the $325,100 -$425,000 price range, showing 42. The $225,000 – $325,000 had half the active listings from August at 6, and the $525,000 & up price range showed 38 active listings.

For Bend, the numbers in September were similar to August except for the $225,000-$325,000 range  with only 1 active listing, 32 in the $325,100-$425,000 range, 38 in the $425,100-$525,000 range and 23 in the $525,100-$625,000 price range. Eager homebuyers are waiting for additional homes to be put on the market, in all price ranges, as the Duke Warner Realty trend report data exposes. We showed a slight increase to 50 active homes available in the $925,100 & up price range compared to 42 in August.

As the real estate market continues the expeditious pace, buyers should expect to compete with multiple full-price offers. If you are on the fence regarding selling your home and trying to price your property, we encourage you to consult with your trusted Duke Warner Broker for seasoned, expert advice. Our brokers will share their experience, knowledge, and excitement while they work for you. Duke brokers know how to price properties according to the market trends and current housing competition. At Duke Warner Realty, we can help you plan, sort out the details, and get you started on your home buying or selling journey.

Sold and Pending Listings

Bend had 329 pending homes in August and 272 in September. These numbers confirm the sellers’ market telling us both buyers and sellers seek to finalize a purchase or sale. For sold listings, there were 306 in August and 286 in September. In Redmond, we saw 133 sold listings in August and 127 in September. We expect the homebuying frenzy to continue feverishly through the end of 2020 well into 2021.

A Real Estate Expert is More Important Now Than Ever Before

Many of us know and value this special place we call home. Central Oregon is a beautiful place to live, and no matter what stage of life you are in, there is something for everyone in the real estate market. As you consider your housing needs, start to plan and look ahead; whether you want to buy or sell a home, keep us in mind for your real estate ventures. Our professional brokers can offer great insights as you navigate your next home experience. Give us a call today, and let us help you get started! We can be reached at 541.382.8262 or send us an email at info@dukewarner.com. Because you can’t fake experience.

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It’s Not Over til It’s Over.

A real estate transaction is never guaranteed until it officially closes. We have all seen the highlight reel blooper of a football player who got so excited about celebrating an inevitable touchdown for his team, he spiked the ball before crossing the goal line, giving possession to the other team.

Similarly, when you’re selling a home, even though you have accepted an offer and the loan has been approved, it’s a little too early to start doing your victory dance and sending out moving announcements.

Why? Because until the sale has closed and the deed is recorded, the proverbial touchdown has not been scored and the game is not over.

Needless to say, these are interesting times in the Central Oregon real estate market. Things are so competitive and unsettled right now, there’s always a possibility of a transaction going awry with no warning and for completely unexpected reasons.

For example, even when an escrow is cruising along and the loan documents are ready to be signed, it’s not unheard of for a buyer to get cold feet and rethink their decision to take on a big mortgage. Sure, it means the buyer will have to jump back into the pool and start the whole process over again. But it might actually lead to a better relationship and possibly a more agreeable sale price.

Today more than ever, real estate transactions in Central Oregon have their ups and downs – as in prices and demand for homes being way up and interest rates are way down. So, the desire and the ability to make one of the largest purchases of a lifetime are always changing. More importantly, human emotions (like fear about employment) are playing a more significant role in the market, which means the unusual and the unexpected are becoming more frequent and almost commonplace.

The bottom line is, even when the closing goal is clearly in sight, you can’t take anything for granted and start celebrating early. The transaction is not complete until you go the whole nine yards and the transfer of deed is recorded.

Some information provided by Christin J. Hunter.  

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Suburbia or bust!

Desire to exit cities fuels strongest June home sales since the housing boom or 2005.

The sudden recession earlier this year caused a sharp decline in the real estate market. But increasing consumer confidence, along with an emerging demand for modern houses with the amenities for working off sight and home schooling outside of congested cities made for a rousing recovery in June.

According to a monthly survey by John Burns Real Estate Consulting (JRBC), purchases of newly built homes jumped 55% in June over last year. That was the largest annual gain since homebuilding began again following the massive housing crash just over a decade ago. It’s also the highest pace for sales since the height of the unprecedented housing boom in 2005, which of course, was spurred on by negligent lending in the subprime mortgage market.

“Sales in the distant commuter areas are the most robust,” said John Burns, founder and CEO of JBRC. “A lot of computer-oriented people have proven to their co-workers that they can be productive from home, and have sensed, or officially been given the green light to work from home at least a significant portion of the time.”


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