In today’s local housing and construction market, business is good.

Residential and commercial construction is steady, but permits are still relatively low — considering in 2005 there were twice as many building permits being pulled and still less in 2016 — but we can all agree that it’s not due to lack of demand. Contractors are busy, Central Oregon needs housing, so the demand is there, but supply is a big factor in the equation of why we keep hearing about how home prices continue to be well outside of the median household income range of what’s comfortable to “afford”?

According to Damon Runberg, local economist, Bend’s average monthly mortgage is around 40% of your average monthly income. The median sales price in Bend is holding steady at $450,000, according to the February Beacon Report, and the median household income is around $55,000. Here is a quick overview of why things aren’t adding up.

Land availabilityWe are running out of buildable land, so lot prices are skyrocketing. People are moving here at a record pace, and we don’t have enough shovel ready land to accommodate that. When you do find a lot in Bend, expect to pay around $150,000 to $300,000 for a standard 6,000 -square-foot lot. In comparison, the national average for a single-family lot is $49,500.

Regulatory feesWhen you pull a city of Bend permit to build a house, the fees are roughly $30,000 before you even can start building.

Subcontractor pricing has increased due to lack of qualified professionals and the skilled labor shortage and over-extended workload trying to accommodate the demand, and of course, increasing material cost passed on to the builder. According to the National Association of Home Builders, construction costs on average are about 61.1% of the home price.

The cost of their materials increasing due to multiple new taxes, tariffs and a big implementation of the 2020 Corporate Activity Tax is quickly becoming a huge devastating reality for the industry and will ultimately be passed on to the home buyer.

So the question is: Why can’t builders build houses we can afford? They are trying to keep up with the demand for development fees, regulations, land prices, labor and everything in between. Don’t forget, these are their jobs as well — so just like us, they need to work to pay their bills and keep roofs over their families’ heads. They take a huge risk in building homes and commercial buildings for this community and, just like any other profession, they deserve a paycheck. Sometimes, they even have to take out second mortgages on their own homes to pay for their next project or leverage assets to keep their businesses afloat and pay their employees.

What we need to do is hold strong. Use the local community for building materials, supplies and services when possible. Continue to encourage new people to get into the trades.

There are A LOT of contractors in this community who have very high standards, who are charitable, who are ethical and do business the right way. The builders everyone keeps blaming for the extremely high prices are the ones building shelter for our community and employing thousands of local people who are our friends and neighbors. Let’s support them instead of thinking they are the ones in control of our market.

Mandy Weidman is the senior vice president, operations and sales manager at Central Oregon Builders Association and has been with COBA since 2014. One of her primary goals is to ensure that the members of the organization have positive representation in the community and to advocate for the construction industry.

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.