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Home Back Issues February 2007 Hot home market causes new headaches in small coastal cities

Hot home market causes new headaches in small coastal cities

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Archives - February 2007
Thursday, February 01, 2007
TheColonyBandon.jpg Luxury townhomes at The Colony at Bandon Cove will sell for as much
as $2 million.

BANDON — Home sales typically suffer the winter blahs, but not in Bandon. It’s as if the world-famous Bandon Dunes golf course turned this sleepy town into real-estate gold — especially when you can see the Pacific Ocean from the living room couch.

Getting the big view will cost between $1 million and $2 million this year. That’s the going rate now for reservations at The Colony at Bandon Cove, 18 luxury townhouses going up nine miles from the links. Six buyers have already made down payments and David L. Davis Real Estate broker Penny Allen expects to be sold out before the 2,200-square-foot units are completed in June.

“People are tired of the rat race,” she says. “The oceanfront has gone really wild.”

Drive north to Cannon Beach and Gearhart, and buyers will see the same wild scenario: $1 million-plus prices for increasingly scarce coveted beachfront properties. Eleven parcels in those two cities are priced close to $1.5 million — that included Arcadia Sands property in Cannon Beach, which sold for $1.4 million (land only) in late December, a typically slow time of year for real estate sales.

At least five new high-end developments in Seaside and Gearhart will go on the market in early spring, testing the region’s ongoing demand. “There’s definitely been a need perceived for new construction,” says Pam Vitas, a real estate agent at North Coast Realty in Gearhart.

The hot market is good for brokers but bad news for city and school leaders on the coast. They say the high cost of real estate is pricing their employees — including firefighters and police officers — right out of the area.

Late last year, Cannon Beach officials joined with the nonprofit group Community Action Team to look at ways they can build affordable housing on city-owned property, says city manager Rich May. To the city, affordable means homes between $250,000 and $350,000 — cheap by Cannon Beach standards.

Starter homes for young families are a huge concern for May, who says the affordability issue has been looked at for many years. “But nothing’s been done yet,” he says.

Already land constrained, Cannon Beach also changed its zoning laws and expanded its urban growth boundary by five acres to make way for new homes.

Meanwhile, the lack of affordable property is hurting Seaside School District, which sorely needs sites to construct four new schools in Gearhart, Cannon Beach and Seaside.

The current schools are located in tsunami zones. “Not only is property expensive,” says school superintendent Doug Dougherty, “but it’s full of sand and fill.”

The regional district gets no state funding because of its higher-than-average property values and is looking at all options, including land held by private developers, Dougherty says. A study due in March will tell the district where in Cannon Beach it can build a new elementary school, outside the risky tsunami zone.

Meanwhile, real estate professionals predict sales will remain stable in 2007, with some adjustment in appreciation after what Chris Childress, a real estate broker at Duane Johnson Real Estate in Cannon Beach, calls the “frenzy of the last two to three years.”

“Everything in town is holding its value,” Childress says. “It’s not slowing down, but we’re going to see appreciation slow a bit.”

According to RLMS figures, Bandon and Florence on the south coast and Cannon Beach, Gearhart and Seaside on the north coast saw the largest increase in land and residential sales over the past five years.

Home sales in Bandon jumped from $14 million a year in 2000 to $59 million in 2005, with average prices increasing 70% to $333,717. Meanwhile, appreciation of Cannon Beach homes increased at least 25% annually since 2003. The average price of a home there jumped 35% from $587,497 in 2005 to $798,330 in 2006.

Years of intense growth and new arrivals have created additional stress on the small coastal communities. Seaside is seeking a bond levy to pay for a new sewage system.

And, in Cannon Beach, out-of-town buyers upset local residents by tearing down older, funky beach houses to build taller, wider, more modern homes they say are out of character with the city.

“The people moving here are looking to buy lots and build ever bigger houses, which is what we saw in Lake Oswego when people discovered the lake,” says Dan Fost, who bought a second home in Cannon Beach six years ago with his wife. “Everything has to be big and gray-shingle.”

Those design features can be seen in several anticipated projects this spring. In Gearhart, where growth is limited by lack of land, lots at the 130-unit development east of the Highlands Golf Course go on the market this month. Prices are expected to range from $275,000 to $400,000. Windermere’s Barbara Maltman says three to four years ago the no-ocean-view lots would have sold for $125,000 to $150,000.

Down in Bandon there are plans to expand the city’s urban growth boundary in some areas and shrink it in others — a way to accommodate the ever-growing demand for land. City manager Matt Winkel says the city is also working on a workforce housing initiative and examining options such as selling city-owned property and buying new lots to build affordable housing.

In the meantime, Bandon’s reputation as a golf mecca and its drop-dead gorgeous beach continue to price out city employees.

— Kristina Brenneman


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