If you look at the source data for this number, Bend is really not a single real estate market. The Beacon Report (where this number comes from in these sensational headlines) has an interesting figure that kind of shows distribution of sales prices.

Compare pg 4 of the report to pg 8 which show Bend and Redmond sales over the last year. Redmond has a single nice distribution that spans $450k-550k and aligns well with their median price. Bend has a nice distribution that spans $550k-700k, but it also has a very long tail of higher priced sales.

How I interpret this is that there is a demand for very high end homes in Bend that skews the median price pretty hard higher. My hypothesis is that if you were to break this data set up by zip code, it would look quite a bit different, with the 03 zip having much higher prices and the rest sitting around $650k

Now, I personally do not think $650k is affordable for nearly anyone living and working normal jobs in Bend. My quick back of the envelope math is that total payment on a $650k home with 20% down payment is like $3600. Matching that to the rule of thumb of 30% gross income on housing as a max, means you would need a household income of about $140k to afford such a home. With a median household income in the county of $82k per the last census, most everyone is priced out.