Although the real estate boom is now only a nostalgic memory, Bend remains one of the most overvalued housing markets in the country.
That's the word from the prestigious economic analysis and forecasting company Global Insight, which released its third-quarter report on home prices this week.
Prices have been falling all across the country, according to Global Insight's press release, to the point where the US housing market as a whole is now undervalued by 5.7%. But the Pacific Northwest in general, and Deschutes County in particular, apparently haven't gotten the word yet.
"While the contraction in residential real estate value is national in scope, it is most severe in the Southeast and Southwest, areas which were among the most overvalued in the country three years ago," the press release says. "According to the third-quarter analysis, extreme overvaluation is now 'essentially nonexistent' - only three metro areas met the definition of extreme overvaluation, down from a peak of 52 metro areas in 2005. Only the Pacific Northwest remains overvalued."
The three "extremely overvalued" areas are Atlantic City, NJ, St. George, UT and good ol' Bend, OR.
Bend's current median household income is about $56,000 and the median home price is $292,000, according to the GoBend Realty site. Using the rule of thumb that a family can afford a home that costs three times its income, the median price in Bend should be in the neighborhood of $168,000.
Why are home prices staying so inflated in Bend even though virtually nothing is selling? The only explanation The Eye can think of is that a lot of people here haven't yet figured out that the bubble has burst and are still pricing their homes unrealistically high. They're still dreaming that some rich Californian will show up and pay half a million dollars for their $150,000 house.
A bit less of that famous Bend smiley-face optimism and a bit more healthy realism might help us get out of this mess sooner.
