Many lots on Three Wood Road off Beach Loop Drive in Bandon display "sold" signs. Other building sites and homes in the area are being sold at higher prices than they had just a few years ago. World Photo by Lou Sennick

BANDON - "Premium development acreage adjacent to Bandon Dunes Golf Resort. Perfect for resort, planned unit development, golf and/or gated community, condo project. Invest in the future!"

The ad is typical of what can be found in a local real estate guide. Although Bandon is often described as a coastal village, visitors coming to the area now would be hard-pressed to apply that term.

Record numbers of homes are being built in this town of 3,000 - and not just high-end luxury houses with ocean views. Also under construction are smaller, modest homes on the east side of town, as well as the city's first condominium project, which recently received approval from the Planning Commission.

The building boom is no flash in the pan. The rapid pace of ongoing residential construction and planning activity shows little sign of easing, according to City of Bandon Community Development Director Jason Locke.

Locke said projects involving more than 200 new housing units and parcels are either under development or are being reviewed by the Planning Department. The projects include:

n the Face Rock Village condominium project, with 25 units off Face Rock Drive;

n the planned unit development of 85 housing units in the Bandon Dunes' Bandon Commons off Beach Loop Drive;

n 50 lots in phase one and two of the Ocean Terrace subdivision off Golf Links Road; and

n 42 lots in the new Rogers Addition subdivision off Seabird Drive; as well as other individual property partitions and housing units that are proposed in other locations throughout the community.

Of those other properties, Locke said four in 10 applications to the city are for manufactured homes.

The boom is creating a steady income for the city and real estate developers and brokers, contractors, sub-contractors and building supply businesses, along with a trickle-down of funding to the services that support those businesses.

But some in the Bandon area worry that the market for parcels and homes, which has soared into the almost unaffordable zone, will force those with middle incomes to move out of the area.

And that could drastically change the town's demographics.

Potential cost hike stimulates activity

The city's growth rate has remained at an average of 1.76 percent per year, Locke said, despite the building boom.

"I think there's a lot of speculation going on," he said.

The city doesn't issue building permits (those are issued by the state), but it does issue zoning compliance letters. Some attribute the recent sharp jump in the number of applications for letters to the city's proposal to raise system development charges from $4,000 to almost $14,000. The issue is on the May primary ballot because any raise in rates must be approved by a vote. The fees pay for basic infrastructure - sewer, water, streets and storm drainage - and are charged on a per-unit basis.

"People are coming in to get approval before the fees go up, if the measure is approved," Locke said.

Those who oppose the measure say the increase should be phased in, but the city contends the infrastructure needs to be in place to support the continued development and that developers should pay for that infrastructure.

No one argues that the flurry of activity is inevitable.

"Bandon is booming," said local real estate broker and Bandon native Chas. Waldrop.

"Since 2000, the area has seen one of the best development and construction periods in its history."

The area also is recognized nationally and even internationally as an excellent real estate investment market, according to Waldrop.

"In some areas of the market, prices have doubled or more than doubled, even in the last two years," he said. "And those aren't even ocean-view properties. Those have a life of their own."

One home with five acres of ocean front just sold for $2 million, according to Waldrop, and was featured in the "Robb Report," an international luxury lifestyle publication.

"Bandon's getting some good publicity," Waldrop said.

The former Southern Coos General Hospital site, property considered to have one of the best views in town, sold last year for $1.6 million.

Who is buying the property?

According to Waldrop, many are developers looking to invest in large pieces they can divide into parcels or create subdivisions or condominiums. Some are retirees who plan to move to the area later.

And like a domino theory, all the development is encouraging more of the same, Waldrop added. He likens the area to Bend, which is attractive because of natural beauty and a well-known resort.

"Bandon's always had the natural beauty, now we have the resort," he said, referring to Bandon Dunes Golf Resort. "It's making everyone feel that Bandon is a great investment in real estate and prices are still lagging behind other areas with comparable beauty and amenities."

According to statistics supplied by Ken Gregg, who maintains a real estate Web site, the average price for homes in Bandon has gone up from $143,000 to $280,000 since 2000. Land prices have increased from an average of $84,000 for a parcel, to $126,000.

Land sales jumped in 2002, when there were $13.5 million in sales, compared with $5.2 million in 2001. The upward trend continued in 2003, when land sales topped $10.5 million. Preliminary 2004 statistics show $5.6 million in land sales in the first four months.

The Coos County Assessor's office separates Bandon-area home and land sales into two categories: Beach Loop Drive, which offers ocean views, and Bandon residential. According to information compiled by Tamara Houghton of the Assessor's Office, Beach Loop average sale prices for land and houses have increased steadily since 2001. The average sale price for a Beach Loop Drive home is slightly more than $500,000, compared to Bandon residential, with the average home price at just above $150,000.

In comparison, the average sale price of a home in the county is $118,000.

Resort is a draw

Bandon Dunes, just north of town, does play a big part in the area's growing popularity, according to Locke and area realtors. Five years ago, when the resort was established, few would have predicted the amount of renown it would garner. And in response, a multi-million-dollar expansion at Bandon Dunes, including a third golf course, is in the works.

In addition, Bandon Dunes recently received approval to build 85 units of what is described on the application as affordable housing, in a planned unit development within city limits. The homes are intended to provide housing for the resort's mid-level employees, Locke said, with each having an average 1,100 square feet, with patios and common ownership of the surrounding amenities.

Former contractor Christo Schwartz, now a real estate broker, is investing with a partner in the area's first approved condominium project across from the Face Rock Wayside. Schwartz's first plan was challenged by neighbors as too big and boxy with its three-story units and was turned down by the Planning Commission.

After revamping the plans and getting rid of the third story, Schwartz gained approval and hopes to break ground on the project next month.

The 2.3-acre parcel will feature condominium and duplex units and a central clubhouse. Homeowners will pay an association fee for maintenance.

"My partner and I determined that Bandon doesn't have anything like this and there's a big demand, so we decided to do it," Schwartz said.

"We're the first to do it, but we take that responsibility seriously because we realize we'll be the showcase and will set a lot of the standards as far as layout and design."

Schwartz, who also runs a property management business, said those likely to buy the units are retirees seeking vacation homes or those who don't want the responsibilities of a single-family home.

Schwartz is confident the units will sell. "Bandon is discovered and people are realizing this is a great place to visit and to invest in because they can afford it now, before they retire."

Too few and too costly

But the construction picture is not all rosy, according to Locke. The available parcels within the city are being snatched up so quickly that it's become a sellers' market, with prices at premium levels and few properties available.

"These days, anything under $150,000 is considered affordable housing and people can hardly find that," Locke said. "For a lot of people, the trend can be negative, because people are being priced out of Bandon. You can't find a $35,000 lot anymore and set up a home for $100,000 to $110,000 because the cost of land has gone up so much. That changes the whole demographics in Bandon and not in a positive way. You're losing the chance for economic and cultural diversity."

Locke questions whether the upward trend can continue and said infrastructure needs could be a potentially limiting factor. But realtors believe the trend is likely to last - at least for the next several years.

Schwartz and Waldrop each said the city should consider annexing the "doughnut hole," a circle of undeveloped county land in the middle of the city. It's a matter of supply and demand, Schwartz said. If the area is annexed, the additional parcels will bring the price down so the average homeowner can afford to buy.

"If the city's urban growth boundary expands, there will be opportunity for middle income people to purchase lands and homes," Waldrop said. "I think there's enough within that urban growth boundary to satisfy everyone."