Anyone who has followed the Bend, Oregon, real estate market coming out of the great recession has probably wondered: How long can prices keep rising?

After all, mortgage interest rates have moved off their historic lows and appear headed for further increases. Higher interest rates cut into consumers’ buying power, and homes that are out of reach for potential home buyers won’t change hands.

But rather than facing a ceiling imposed by higher borrowing costs, home prices instead appear driven by the scarcity of inventory. And given that relationship, anyone waiting for an end to the upward trend to housing costs might have to be exceedingly patient — whether they’re in Bend or elsewhere in the United States.

Mortage News Daily, reporting on national home prices in the fourth quarter of 2016, noted a greater year-over-year increase in prices in December than in November and October. That means that even during a holiday season that traditionally heralds a slowdown in real estate activity, home prices rose more compared with a year prior than in more active months for home buying.

Here are the numbers: The Federal Housing Finance Agency reported a 6.2 percent increase in home prices in December 2016 compared with December 2015. The year-over-year gain was 6.1 percent in November 2016 and 6.0 percent in October.

The agency’s Housing Price Index is based on the purchase prices of homes whose mortgages are backed by or sold to Fannie Mae and Freddie Mac. Those two agencies own or guarantee about 60 percent of the total U.S. mortgage market.

“In the years since the financial collapse, [Fannie Mae and Freddie Mac] have been the major source of credit for most people who got mortgages, and the only source of credit for less-than-pristine borrowers,” The Washington Post noted.

Andrew Leventis, FHFA’s deputy chief economist, told Mortgage News Daily: “Although interest rates rose sharply during the fourth quarter, our data show no signs of a home price slowdown. Although it will certainly take more time for the full effects of the elevated interest rates to be felt, there is no evidence of a normalization in the unusually low inventories of homes available for sale, which has been the primary force behind the extraordinary price gains.”

From the fourth quarter of 2015 to the fourth quarter of 2016, the largest gains in home prices were in Oregon, at 11 percent. Colorado was second, at 10.6 percent, and Washington was fourth, at 10.2 percent.

Bend trailed the state’s average as a whole. The median sales price in December 2016 in Bend was up “only” 9 percent from December of the previous year. The inventory of homes for sale in December 2016, though, was 2.3 months — which, before the 2016 calendar year — would have matched the lowest inventory during the 10 years for which the Skjersaa Group has data.

As an article in The Bulletin newspaper noted, the median price of homes in Bend is still less than for cities that have a similar appeal. In Boulder, Colorado, the median price for the first six months of 2016 rose almost 15 percent from $790,000 in 2015 to $905,000 in 2016. In Jackson, Wyoming, the median sales price in 2016 was up 2 percent from the year before, to $875,000.

“What is interesting is that Oregon in general, and in Bend, there is still arguably a cheap option relative to some of its comparators,” Duy told The Bulletin, adding that he sees no reason for home prices to stop climbing.

In an environment such as Bend’s, having a Realtor who knows the market is vital for your interests. My experience and knowledge will help you get your best deal, whether you’re a buyer or looking to sell your current home. Please contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.