Barbara Randall began watching the Bend real estate market two years ago when she and her husband decided to move to Bend from Scottsdale, Arizona. The rising prices worried Randall, so soon after they found a buyer for their condo in February, they flew to Bend to find a house.

“We thought, ‘Wow, we better move sooner than later, or we’re going to be left behind,’” Randall said. “And we nabbed a really great house because of it.”

Home prices in Bend are now on par, at least in nominal terms, with the previous peak in 2007.

The median home price reached $396,000 in March, according to the Beacon Report, produced by Donnie Montagner of Beacon Appraisal Group in Redmond. The Beacon Report looks at single-family homes on 1-acre or smaller lots and includes Tumalo and Alfalfa in the Bend market. The median price of $396,000 hadn’t been posted since May 2007, before the collapse of a speculative bubble and the Great Recession eroded values by 58 percent.

The median price trough of $166,000 came in November 2011.

Economists and real estate professionals point out the current market conditions are nothing like a decade ago, but reaching that high-water mark nevertheless begs the question: Where does Bend real estate go from here?

“I don’t have any reason to believe the previous peak represents a barrier, that there’s something magical about hitting that previous peak that prevents it from going further,” University of Oregon economics professor Tim Duy said. Duy is also the author of the Central Oregon Business Index.

The recent median price doesn’t account for 10 years of inflation, Duy said. The real, or inflation-adjusted, home price index for the Bend-Redmond area is still about 18 percent below its previous peak, which came in fourth quarter 2006, he said. The home-price index tracks same-property sales over time, so it’s more accurate than Realtor-generated data, he said.

“What is most likely to derail the housing market is when we get a recession,” Duy said. “That is most likely to stifle or slow the in-migration of new residents.”

The current market is driven by short supply, as builders have yet to catch up with Oregon’s population growth, plus strong demand from buyers who are either earning enough money to afford a house, or have sold one in a more expensive market, said Josh Lehner, economist for the Oregon Office of Economic Analysis.

The upward trend in prices won’t change until supply increases or demand slacks off, economists said. The pace of construction in both houses and apartments is picking up, which makes the outlook “somewhat bright,” Lehner said.

But Duy doesn’t think new construction in Bend can catch up with demand, which he said is “off the charts.” Well before the bubble, Bend attracted a lot of midcareer professionals and retirees with the wealth to buy houses, he said. “Those fundamentals are still in place,” he said.

Unlike many people who move to Bend, Randall and her husband, Gordon Lind, both retired, were looking to buy a bigger home than their 1,000-square-foot condo. “The market, for us, is a little more expensive,” Randall said. “We didn’t want to go over $400,000.”

The retired couple found a house in Jones Farm, a new subdivision built by Stone Bridge Homes NW of Lake Oswego. They paid $399,900 for an 1,800-square foot home, which is the smallest floor plan the builder offers.

“Probably by July or August, we’ll be sold out with this neighborhood,” said Brent Landels, a Coldwell Banker Morris broker who represents Stone Bridge.

Landels thinks prices will continue rising 10 percent per year. “So a $400,000 house a year from now will probably be about $440,000, which is kind of scary,” he said.

Though Landels might have no trouble finding a buyer for a $440,000 house, he’s concerned that Bend won’t be affordable to future generations. He’s participated in the not-for-profit Bend 2030’s efforts to identify ways to provide more housing for middle-income people.

“How do we get houses for people who live here in town, not just people who move here with a lot of money?” he said. “We want our kids to be able to live here, too.”

The affordability of homes will continue to be a problem in Oregon, Lehner said, but he thinks the gap between prices and income will grow at a slower pace than in the past. That’s because supply is increasing, and median incomes in most Oregon markets are also increasing, he said. (Lehner did not look at median-income data for the Bend metro area.) “Maybe it gets a little more unaffordable in the next few years, but not at the same pace as in the last five,” he said.

Duy and Lehner both said that when it comes to real estate, most people give too much weight to their recent experience with the speculative housing bubble and subsequent crash.

“If you’re waiting for another crash in prices, you might be waiting a long time,” Duy said.

That doesn’t mean, however, that prices couldn’t decline again, Lehner said.

“If the mentality returns that ‘You have to buy a home today … because it’s only going to go up forever,’” he said, “that could allow for another bubble.”

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