Sisters housing costs continue to soar
Last updated 4/12/2022 at Noon
Neither the 15-month run-up in gas prices, now the highest ever recorded, nor the 40-year high in inflation, nor mortgage interest rates that just crossed 5 percent in some markets has slowed the market for single family homes in Sisters. To the contrary, March set yet another recent record with 38 transactions totaling $29,182,132. The average sale price was $767,951 and the median price was $712,500.
Last June, typically the busiest month for realtors, Sisters recorded 30 sales with a value of $22,307,273 averaging $743,576 and a median sales price of $622,500. The median price is a far more accurate gauge of the market as one or two large sales can skew the average. Thus, the market is showing a whopping 32-percent rise in the median price.
The already higher single family home prices were making it difficult for first-time or younger buyers to own in Sisters. Now it’s nearly impossible, lenders say, particularly with rates at or near 5 percent. Younger buyers are payment buyers, meaning it’s not as much about the price of the home nor the interest rate as what the monthly payment will be.
Just nine months ago, when rates were 3.5 percent and the median was $622,000, a buyer with 10 percent down would have principal and interest payments of $2,514/month. Last month, with 10 percent down on a median Sisters home at 4.5 percent interest, that monthly payment became $3,249, or $8,820 more in a year.
“That’s not possible for anybody making $25-$30, even $40 an hour,” said mortgage broker Reed Fox.
In a family where both adults are working, one making $45,000 and the other earning $35,000, that combined $80,000 income is not enough to carry a $3,000 mortgage payment. Lenders typically cap at 30 percent the amount of one’s income to housing. And that includes insurance, taxes, and maintenance.
Basically, to afford the average Sisters home, not the median, a buyer financing with 20 percent down needs an income of at least $130,000 a year to qualify. “That essentially rules out 98 percent of younger buyers or first-time buyers,” Tony DiMarco, another broker, said.
What’s driving the market? Realtors say it’s two things. One, the classic laws of supply and demand. More people are wanting to move to Sisters than there are homes to supply them. As of last Friday, only 22 homes were listed for sale in Sisters, eight of which were asking over $1 million, including one at $7.3 million. Not exactly starter-home territory.
The other, and even bigger factor in driving up prices professionals tell The Nugget, is the high number of cash buyers, more than half by some estimates. This is a fictional story but very real in context, realtors say. In 1975, Dick and Jane bought a three-bedroom, one-bath, 1,455 sq. ft. home in Lafayette, an East Bay, San?Francisco suburb.
With a $5,000 loan from their parents and $5,000 in savings, they bought the home for $165,000. Dick worked as an engineer and Jane was a teacher. After raising their kids and paying for college, their 30-year mortgage now fully paid, they sold that home for $1,197,000 (in two days, in a bidding war).
Eager to leave the high traffic, hectic Bay Area for quieter times, flush with their sales proceeds, they came to Sisters and plopped down $709,000 for a brand-new, three-bedroom, three-bath, 1,875 sq. ft. home in one of the newer Sisters developments. And pocketed almost a half million dollars.
This repeat scenario all over Sisters is pricing locals out of the market. “Kids that went to Sisters schools all their lives can no longer afford to live here when they come back from college,” one realtor lamented. “There are no more starter homes in Sisters,” another said.
A once “affordable” or starter home on Brooks Camp that Hayden Homes sold at the end of 2018 for $343,474 sold last week for $608,000, almost 6 percent above its asking price and 77 percent higher than its first sale in a little over four years. It should be no wonder that only the Dicks and Janes of the world can afford to live in Sisters.
The impact on workforce housing is devastating, employers say, as they struggle to recruit and retain employees who find it less difficult to afford housing in Redmond, Prineville, Madras, and La Pine, where jobs also go unfilled. Telecommuting, work-from-home jobs are plentiful and preferable to younger workers.
They will shun working is Sisters even for $50,000 or more, knowing they cannot afford to live here. Policy makers have little to nothing in their arsenal to reverse the trend and worry that the character of Sisters will be forever changed.