They have good jobs in Bend — she’s a registered nurse, and he’s a field engineer for Central Electric Cooperative.

They love to ski, and they plan to retire here.

But buy a house in Bend at today’s prices? Forget it, Patty Violet said Thursday. In Central Oregon’s housing economy, she and her husband are committed renters.

“We love it here,” she said, standing in the driveway of her east-Bend townhome, with its sweeping views of Pilot Butte and the eastern skyline. “We live here, and we’re going to stay. We just won’t own a home.”

The Violets are not alone.

Central Oregon is still attracting plenty of new people, property managers and rental owners say. But, in increasing numbers, families who are moving here from outside the area are choosing to rent for a year or two, either to wait for the sale of a house in their former cities or to wait for Central Oregon sellers to drop their prices.

Added to the usual mix of renters — in general, young or lower-paid wage earners who can’t afford to buy their own houses, along with lower-income seniors and people who rent while they wait for a new house to be built — the new additions are driving vacancies down this summer, and rents are starting to edge up.

In Redmond, rents on most housing types have moved up by $50 a month or more in the last few months, and landlord incentives — prevalent in last summer’s glut of unsold investor housing — have disappeared, High Desert Property Management property manager Amanda Flora said.

In some cases, the increases that landlords have been able to get have been dramatic, Smartt Property Management property manager James Rivera said, to the point where a three-bedroom, two-bath, 1,400-square-foot house that rented for $700 last year could go for $950 or $1,000 this summer.

Bend also has seen modest rent increases in most housing types, Deschutes Property Management owner Regan Scott said, with apartments that were fetching $700 a month at the first of the year now moving for around $725.

Incentives like deposit waivers and free months of rent have also pretty much disappeared from the Bend rental scene, Scott said, reflecting the first truly strong rental market the area has seen in years.

“This is what I would classify as just a nice, comfortable rental year for us,” Scott said. “There are lots of applications, and inventory is not turning over much.”

Price differences

Until January and February, when the Central Oregon Rental Owners’ Association compiled its most recent comprehensive survey of Central Oregon rental rates, the market looked relatively flat.

Rents on three-bedroom houses moved up only slightly in Bend from the previous January/February survey, gaining about 2.8 percent to reach an average of $992 a month. In Redmond, three-bedroom house rents actually dropped in the same time frame, sliding 10.8 percent from January/February 2006 to an average of about $820 a month at the beginning of this year.

What has happened to turn the markets around?

Slumping sales in Central Oregon’s housing markets are fattening the pool of renters, Flora said. In more ways than one.

For starters, the cost differential between renting and owning has widened dramatically in the last four years.

Median home prices in Bend have shot up 80.5 percent since the beginning of 2004, according to the Central Oregon Association of Realtors, while rental surveys show that the monthly rent on a three-bedrooom house has increased only 6.9 percent.

In Redmond, median home prices soared 76.9 percent over the same period, while average rents slid 2.8 percent.

And in Prineville, median home prices rose 85.4 percent, while average rents rose only 3.7 percent.

Consequently, even with the tax breaks that are inherent in homeownership, and even with the recent uptick in Central Oregon rents, a growing number of newcomers are deciding that renting is the better financial choice, Flora said. At least for a while.

Just as an example: A brand-new three-bedroom, $350,000 house that might rent for $1,200 or $1,300 in Redmond could cost a homeowner around $2,043 a month on a 6.75 percent, 30-year fixed loan, according to a basic mortgage calculation, not counting taxes, homeowners insurance and mortgage insurance. And that’s with a $35,000 down payment.

“I’ve had lots of people say, ‘Oh, I’m going to wait a year or two for the housing market to fall,’” Flora said. “That’s great for me. I’m not sure that’s going to happen, but I’ll rent to them if that’s what they want to do.”

Price speculation may account for a segment of the rental pool. But some renters also feel more blocked out of the housing market this summer by rising interest rates and tougher lending standards than they have in past years, Flora said. So the pool of renters is not being drained by the new home market as fast as it was when money was cheaper and easier to get.

Speculators

More than 1,500 homes were for sale in Bend alone at the beginning of June, according to the Central Oregon Association of Realtors.

At least a portion of those were homes owned by investors and “flippers” who bought in the last couple of years, hoping to make a quick killing in the hot real-estate market, then got stuck, Central Oregon Rental Owners’ Association President Becky Ozrelic said. Ironically, some of them have probably contributed to the squeeze in rental vacancies this summer by putting their houses back on the sales market, which, in effect, takes most of them off the rental market, even though they are standing empty, because most renters don’t want to move into what could become a short-term situation.

Despite the rising average strength in the local rental markets, landlords are a long way from being able to charge whatever they want, Ozrelic said. She had to drop the asking price twice on one of her 10 rentals when it came open this summer, each time dropping $50. The first drop didn’t work, she said. The second drew 10 calls in a day, which indicates that there is plenty of demand — but only if the price is right.

Where are things headed from here?

Ozrelic, who’s also a broker at Steve Scott Realtors in Bend, said she doesn’t get the sense that most people intend to flee the homeownership market permanently.

“I’m sure there are people whose old homes haven’t sold yet, but they really want to live in Bend, so they come here, pay low rent, and wait until their house sells,” Ozrelic said. “And then they pounce on something. If they sell their house, absolutely, it’s their intention to buy here. But right now, they don’t want to have that double mortgage payment.”

On the other side of the fence, the supply of rental housing may not continue to climb rapidly once the current speculator inventory is burned off, Ozrelic and Housing Works Executive Director Cyndy Cook said, largely because owning, or building, is still expensive.

At current rental rates, Central Oregon landlords aren’t able to make their properties “pencil” — have rents pay the full costs of ownership — unless they put a significant amount of money down, or have owned their homes for years, Ozrelic noted.

And construction costs have spiked sharply in recent years.

Housing Works, an agency that builds and maintains more than 600 subsidized rental units in the Central Oregon region for lower-income tenants, has seen cost estimates rise by 25 percent, from $9.6 million to $12 million, on the new multistory, 44-unit Lava Court complex in downtown Bend, Cook said. And construction hasn’t started yet.

“It’s really a challenge,” Cook said. “The costs are what they are.”