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Now that the news outlets have covered the latest National City Housing Valuation Analysis, I think it’s time to clarify an important point of the study.

Today’s coverage of the study in the Bend Bulletin suggests its conclusion, that Bend is one of the most overvalued markets in the country, may be flawed:

Dave Woodland, the vice president and regional manager of Signet Mortgage in Bend, urged caution in drawing too much from the national survey, which doesn’t capture the true income of the area, he said.

“They look at Bend and say it’s overpriced based on reported compensation levels,” Woodland said. “The reason Bend is so popular is that it’s a great retirement area, and there are a base of individuals who are independently wealthy, self-employed or retired.”

This is the most common rebuttal of the study that I’ve heard. However, those suggesting that the attractiveness of Bend is not factored in have not examined the study’s methodology.

Actually, for the purposes of estimating “fair value” the study gives Bend a premium on par with similar areas such as Missoula, Montana; Flagstaff, Arizona and Santa Fe, New Mexico.

In fact, Bend’s premium is greater than that attributed to Boulder, Colorado; Las Vegas, Nevada and Naples, Florida and equal to that of ultra-wealthy Honolulu, Hawaii and San Jose, California. Take a look; The methodology is there for everyone to see.

I agree that Bend is a wonderful place to live but it is no better than these other areas. And it’s far from the utopic wonderland the housing bulls would have us believe.

So can we finally put an end to the “it’s different here” mantra? For one, it’s not valid. And two, it sounds way too much like the “it’s different this time” mantra of the tech stock bulls of 2000.

House Prices in America
Global Insight & National City Corporation
May, 2008

Bend rated as second in U.S. for overvalued housing
Jeff McDonald
The Bulletin
June 6,2008