Below is an article written by economist Joseph Ditzler regarding the housing market in the Bend/Central Oregon area. Enjoy reading it. The information makes sense.

No housing bubble ahead, economist says

Growth in Bend home values to slow, incomes to rise, expert says

By Joseph Ditzler / The Bulletin / @josefditzler

The first question, and greatest fear, that economist Matthew Gardner said he hears most often is: Are we getting into another housing bubble?

“Absolutely not,” Gardner said Tuesday in a telephone interview. He spent the weekend and Monday at Brasada Ranch, in Powell Butte, talking to Windermere Real Estate franchise owners gathered for their annual retreat. “We are in a pretty good place.”

The ghosts of the Great Recession — when ballooning home prices collapsed and fell to lows beneath loan values, putting many homeowners in foreclosure — still haunt the Central Oregon housing market.

That was then, Gardner said, the chief economist for Seattle-based Windermere since June. Conditions today weigh against a housing bubble, he said. Lenders typically look for better credit scores and larger down payments.

“Folks getting a home today are responsibly taking on debt,” Gardner said.

Gardner also predicted continued growth in employment, wages and housing inventory and a slowdown of the blistering climb in Bend home prices since fall 2011.

“We’ll start to see a slowing down in housing price appreciation,” he said Tuesday.

“It’s not sustainable, 10 (percent), 15 percent increases a year. Homebuyers are not making enough income to service that debt.”

Gardner forecast a more modest rise in Central Oregon home prices of 7.5 percent in the coming year. He also said he expects a rise of about 1 percent in mortgage interest rates to about 5 percent on a fixed, 30-year mortgage.

He also expects an average 5.4 percent increase next year in income in Oregon and a drop in the state unemployment rate to 5.1 percent. As people grow more confident in the recovery, they’ll expect more than being able to keep their jobs. They’ll exert more pressure on employers for pay raises, Gardner said. That should translate to more activity in the housing market.

“We’re going to see a lot more move-up buyers buying from people wanting to downsize,” Gardner said. “And, for the first time (since the recession), first-time homebuyers will be able to come back into the market.”

He also expects builders to take up slack in demand with a modest surge in housing starts next year that grows in 2017.

Also, high rents will give rise to a new generation of homebuyers, he said. Millennials, the generation born between approximately 1980 and 2000, will start raising families and rethinking their housing options.

They may be happier in something smaller than their parents owned, at a lower price point, Gardner said.

“This generation doesn’t necessarily want 3,500 square feet with a white picket fence, 2.5 children and a dog,” he said.