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December Market Stats and Data

With only a few weeks left in 2022, we would expect that the holidays and year-end activities would have people distracted from real estate. However, the first couple of weeks of December have seen a pickup in activity as interest rates and inflation have started to come back down. Let’s start by seeing what the numbers in November look like and then circle back to what we are expecting to see in the coming year.

Median Home Price

As we mentioned in a video last month, there are a number of reasons that the median price has been bouncing higher and lower for a number of months. The Bend median home value reached a high back in March and then has certainly seen some volatility. Despite ticking lower in October, the median ticked higher in November as is now at $696,000 for single family homes (less than 1 acre). For perspective, this is 10% lower than it was at its high in March, and 1.9% higher than it was at this time last year. This statement is a great example of how the headlines can spin something in either direction. The idea of a 10% slide since March seems drastic, however, when you put things in perspective and look back, you’ll see that on average there is usually a 5-6% decline in median from spring/summer until the end of the year, making the decline seem less drastic. Given that we are coming off a few years where double digit appreciation became the norm, it is not overwhelmingly surprising that the median would adjust more than normal. Additionally, this year saw the largest interest rate fluctuations in history due to an active Fed working to keep inflation in check. Given all of this, it is not surprising that the year has seen some fluctuations. However, we think it is valuable to be reminded that real estate is a long play and that despite a volatile year, we are still flat to slightly higher than where we were a year ago, and most predictions are for this flat to slightly higher appreciation to continue in the coming years.

Inventory and Pending Sales

Inventory historically dips as we head into the winter months, and this year is no exception. In November the supply of homes fell from 2 months, to 1.5 months. This means that based on the rate of sales, it would take 1.5 months to sell through the available homes in Bend. A balanced market would be somewhere closer to 6 months of inventory, so this lack of homes for sale is one of the biggest reasons for continued upward pressure on prices. Generally December or January are the lowest levels of inventory of the year, and we would expect that to be the case again this year. One trend that leads us to believe this is the number of homes we are seeing getting withdrawn. As sellers realize they can’t get as much as they previously thought for their home, we have seen an increased number of these sellers pull their homes from the market. In the last 3 months we have seen 145 homes get pulled from the MLS after not selling. For perspective, this is 45% higher than the same 3 months last year. We are expecting some of these homes to be put back on the market as the sales pick up in spring, however, there are a number of them who have an interstate rate in the 3% range and will choose to stay put and not re-list.  

The other factor in the inventory calculation is the rate at which homes are selling. This too has fallen over the last few months, and this past November had about 40% fewer pending sales than November 2021. Although this is to be expected as the “winter” market sets in, what we have seen is that this year, the movement in mortgage rates has been a better indicator of Pending sales than seasonal patterns. In the first half of December, mortgage rates have fallen about .5-1% points, so we will be watching to see if that translates to an uptick in Pending sales by year end.  

Days on Market (DOM)

Although we’ve seen fewer homes selling and more homes being pulled from the MLS, we have also seen that the homes that are selling are actually selling a little faster than they had been in October. The median days on market has dropped from almost one month to about 20 days. One reason for this is that buyers who are out looking in the winter are real buyers and not the proverbial “tire-kickers”, and when presented with fewer options, they don’t need quite as long to make a decision. 

Average Sale to List Price

One of the things that has buyers most excited is the feeling that they have some negotiating power in recent sales. As we have discussed in previous updates, in a normal Bend market, we have historically seen the average sale to list price in Bend somewhere between 96% and 98%. In the month of November, this was at 97.7% and is the first time we have been in this range since 2019. One point of caution to buyers is to remind them that this is indicating an overall trend and not an indication that you should always offer 2% less than asking. In some cases 10% under asking is still too much, and in others, asking price won’t get the sale done. Each scenario is different, so make sure you are not getting too caught up in a percentage. 

Some other points to consider…

Mortgage Changes: One of the major misconceptions is that Fed rate changes directly affect mortgage rates. As shown in the chart below, it is actually treasury rates that are the best indicator of mortgage interest rates.  

National Price Projections: The latest price survey amongst the experts has seen anywhere from a 5% drop in prices to a 5% gain, with the overall average calling for a flat to slightly positive price growth in 2023. 

Price Changes: This month we saw two things with regard to price changes that we found interesting.

  1. There were 28% fewer price changes in the market (sellers are becoming more realistic with their initial pricing).
  2. The median price drop increased from $50k to $60k (the ones who are forced to drop price are getting more aggressive).

We hope you find this information valuable and that it helps you towards your ultimate real estate goals. If you have any questions about this month’s content or would like to dive a little deeper on the data, you can always reach me at steve@bendpropertysource.com or on my cell at 541-280-2132. Also, if you haven’t seen our latest installment of our State of the Market, please make sure to REGISTER HERE for your copy. It is packed with good information to help you in your real estate journey.

There are also several ways to reach the team, so please let us know how we can help. 

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