Two months ago, throwing in 85 rolls of toilet paper to seal a real estate purchase agreement would have seemed highly unlikely. But today it’s just another sign of the strange times we are living through.
“This is true and I couldn’t make this up,” said Jay Campbell, co-owner of Woodhill Homes, the Bend-based homebuilder that managed to procure the stash of toilet paper to complete the deal. “We agreed to the terms.”
Such are the quirks of the real estate business during a global pandemic, when toilet paper has become a bargaining chip and home tours are done virtually, with brokers showing off granite countertops and French doors through online tours.
The COVID-19 curveball hasn’t completely dampened people’s willingness to purchase property in Bend. In fact, Campbell said he had received calls from out-of-state buyers who are considering a move to Bend in order to escape crowded big cities.
“One person decided that she was not going to wait another 4 years to retire and is ready to move here now from Seattle,” Campbell said.
Meanwhile, inventory of homes in the market has dipped due to sellers pulling their listings, often out of fear of too much foot traffic in their homes, so prospective buyers have fewer homes to choose from. That has helped to steady prices. The average price of a home in Bend is $475,132, a 5.7% year on year increase for single-family homes.
“We have lost a few sales to buyer’s concern over the COVID pandemic; however, we have offset those with new sales contracts,” said Campbell, who founded Woodhill in 2002. “So the net-net is the same amount of sales from when we went into the pandemic.”
While Campbell is encouraged by the market conditions he says the actual home building process has become slightly more complicated in recent weeks, as some suppliers have closed their doors. A cabinet maker in Washington state shut down due to COVID closures, which has slowed the homebuilding process for Woodhill by four weeks.
“We have to reorder cabinets from Oregon companies,” said Campbell. “While it’s great that they can complete our jobs, it is not possible for them to meet our schedules.”
The process of showing a home has also changed. Many agents now conduct video chat tours, wandering through a home and showing it through Facebook Live, Zoom or similar mediums, said David Gilmore, a broker for Coldwell Banker Bain.
When he does meet clients in person for a showing, Gilmore says he opens the door and lets them wander freely in the home to maintain social distance. Hand sanitizer, wipes and shoe covers are common sights by the front door.
“People are adapting to this new way of doing business to keep everyone safe,” said Gilmore, who has worked in Bend’s real estate market since 2010.
Brandon Fairbanks, principal managing broker of Coldwell Banker Bain in Bend, says the availability of homes to view has fallen in recent weeks. New listings have dropped by 50% since the pandemic started to shutter Oregon’s economy.
“COVID-19 suddenly changed the home-buying and selling process,” said Fairbanks. “Buyers could not personally visit and view homes. Sellers, nervous about having people in their home, began to pull listings off the market.”
Fairbanks said sales and prices surged in the first quarter, a run that was fueled by low interest rates, low inventory and an influx of out-of-state buyers. Some of the biggest sellers in Bend were luxury homes priced over $1 million.
“The first quarter of 2020 was almost record-breaking for our Bend office,” said Fairbanks. “Buyers were in full force bidding on very limited inventory.”
Some brokers say not enough time has passed to create conditions for a market downturn, especially with federal stimulus checks helping people make their rent and mortgage payments.
Dan Kemp, vice president, partner and broker with Compass Commercial Real Estate Services, said many of the real estate deals being completed now were set in motion three to six months ago. While March and the first part of April were steady in terms of prices and rent collections, the market could change over the summer.
“I think there is a real chance that we may have a couple of bad quarters but that we recover from this,” said Kemp. “Which is very different from the 2008-09 recession when there was no quick fix for the mortgage industry.”
Kemp said federal stimulus packages, which have totaled some $2 trillion, will help renters keep up with their payment schedules for two to three months. He worries if stay-at-home orders exceed that timeframe, cracks could open up in the fragile market.
“I think there is enough firepower in our economy to bridge this gap,” said Kemp. “The longer it goes the harder it will be to recover, and that is where you are going to see people get into situations where they can’t make their mortgage payments.”
Where do prices go from here? Gilmore expects prices to remain stable, despite the uncertainty of the job market and overall economy.
“My active buyers are more concerned about lack of inventory than current economic conditions,” said Gilmore.
Fairbanks, from Coldwell Banker Bain, anticipates home costs will flatten and buyer demand will slow in the medium term. But he expects buyers and sellers will both return to the market when conditions allow, due to pent up demand.
Many in the industry say rural communities such as Bend could become more attractive when the pandemic ends, as the urban lifestyle and densely-packed cities have lost their luster amid the health crisis.
“Communities with open spaces such as Bend may very well see an increase in demand as more people may want to leave larger cities,” said Fairbanks. “And as companies and employees adapt to new ways of working remotely.”