500 new houses on the drawing board in Madras
As housing starts boom all over the country, the Madras housing market grabs a piece of the action.
Pent up demand
"There's a backlog of millions of houses that need to be built around the country just to catch up with the housing backlog," says Steve Wilson, vice president of marketing for Monte Vista Homes, which is developing the Willowbrook subdivision in north Madras.
Land Use Permit applications show builders investing in hundreds of houses in Madras over the next few years to meet the demand.
So far in 2021, developers have permits for 365 homes in four separate subdivisions. That does not count the 153-lot Willowbrook subdivision already under construction in north Madras. And also doesn't include the 120-unit Yarrow Apartments, or the 50-room Bunkhouse Hotel planned next to The Inn At Cross Keys Station.
Those land use permits remain sketches on the drawing table until they actually start construction.
In terms of actual building, it's been a long time since Madras has seen housing construction this aggressive.
In 2005, Madras permitted 144 new homes, in 2006 the city permitted 118 new homes. Building plummeted with the mortgage crisis, and just now is starting to climb back up again with 58 homes built last year, and 75 built already this year.
"If we could maintain the amount of building going on right now, I think it'd be great for the city of Madras," says Madras Development Director Nick Snead. "Would I advocate for a lot more? Probably not."
Ali Alire with Signet Realty agrees. "I feel like Madras has always been intentional growth. Not building too quick too fast but adding very mindfully."
Alire has sold real estate in this market since that high point in 2005. Lately, she's noticed a voracious appetite for building in Madras. Take the Yarrow subdivision in east Madras for example.
"Yarrow in November had 68 lots available. Yarrow today has two lots available," says Alire. "I sold Yarrow for 15 years. Our average sale was six to eight lots a year. To sell 66 lots in an eight-month span is insane."
Madras has put out the welcome mat for developers. In December 2018, the city established its Housing Action Plan with a goal to provide housing for all incomes.
The plan made changes in the development code and reduced system development charges.
By creating a Housing Urban Renewal District, the city uses increased tax income from the increased property value to pay for infrastructure improvements like streets, sidewalks and sewers. That means developers don't have to pay the costs of those improvements.
"I do believe the city's housing policy changes in the past three years have been very effective," says Snead.
The dynamics of the Central Oregon market make Madras look good to buyers.
Snead sees home buyers getting priced out of the Bend and Redmond markets.
"Bend and Redmond housing markets are seeing immense pressure. Housing prices are at all-time highs," says Snead. "Income for residents is not increasing at the same rate."
Many people pouring into Central Oregon come from large metropolitan areas. They're selling smaller houses with million-dollar price tags. They flood the housing market with money, pushing prices beyond what people who work there can afford.
Wilson says affordability draws homebuyers to the Madras area.
"Our customers can purchase the same home they can get in Bend or Redmond for $100,000 or $200,000 less," says Wilson, "and they get a larger lot, and they get mountain views, and they get a rural setting."
Wilson says developers can't build houses fast enough.
"I can only think of a couple of times in the state of Oregon in the past year and a half that we've had a house get past framing before it sells."
Wilson points out with the increase in telecommuting, people no longer have to live in big cities.
Overpriced for first-time buyers
Along with the building surge came supply line issues and materials shortages pushing prices for lumber out of reach for builders.
Alire sees people who've purchased lots to build pumping the brakes on their plans, waiting for material prices to drop.
"My sense is when material prices drop, you'll start to see people build houses at a lower price point," says Snead.
That price point won't be low enough for first-time home buyers, says Alire.
"Three years ago, our average sales price was $240,000," says Alire. "Now we're closer to $400,000."
She would like to see builders address the need for lower-priced homes. "Three hundred and under is still a really hot market," says Alire.
When she shows houses, Alire asks people why they're moving, why they're choosing the Madras area. She's getting to see what attracts people here.
"People are moving close to their loved ones. With COVID, they realized they need to be closer," says Alire. "We're getting a lot of people who want that small-town feel."
You count on us to stay informed and we depend on you to fund our efforts. Quality local journalism takes time and money. Please support us to protect the future of community journalism.