It’s hard to believe another year is nearly in the books. This time of year always allows for reflection on the year that has passed and the upcoming one. We would also like to take a moment to reflect on the real estate market. Although making predictions is difficult, the signs we are observing suggest a stable and strong market in 2024. Let’s get into the details.
Mortgage Rates
Let’s start with the biggest talking point in the market right now: mortgage rates. Without question, this has been the most important factor and primary driver of the slowdown in sales over the past 18 months. However, after many months of speculation that mortgage rates would drop, we are finally seeing the signs of sustained relief. As of the beginning of November, rates were hovering just shy of 8%. Currently, at the time of this writing, rates are just shy of 7%. For perspective, consider a median-priced home in Bend with a 20% down payment. This change in rates would reduce the mortgage payment by about 10%, saving a buyer approximately $400 per month.
We will dive deeper into the Federal Reserve rate adjustments, inflation, and other economic indicators in our next State of the Market piece (CLICK HERE for prior versions). However, here we will focus on the signs that rate stability and potentially a little more relief could be in the future. This will undoubtedly bring an influx of buyers who have been on the sidelines, waiting for some relief. As you can expect, this will put upward pressure on prices. We are hoping that with rates in the 6-7% range, we will see more homes come on the market. This would provide the necessary inventory relief and bring some balance to the market.
Median Price
The median home price has stayed relatively steady and is now at $735,000. As we have indicated in numerous monthly market reports, our market follows a very cyclical pattern. Normally, this time of year represents the lower end of the price curve, with the median price typically beginning to increase in the first half of the year. Of course, we don’t know exactly which month will represent the low for the year, or whether there will be some other factors, like those in March 2020, that change that pattern. However, we do know that timing the market perfectly is challenging. We suggest you closely examine the data and carefully consider your life plans. Merging these aspects can help you enter or exit the market at a time and value that aligns with your goals. Although market swings in the last couple of years skew the data a bit, the chart below helps illustrate the pattern over the last decade.
Days on Market (DOM)
We continue to settle into a more normal market where homes take 20-40 days before receiving an acceptable offer. On average, homes in Bend are taking 42 days to receive an offer, with the median time being 23 days. Since this data pertains to sold homes, we also examine pending sales to gauge the speed at which current listings are selling. Similar to last month, about 21% of homes are selling in less than a week, and an equal percentage are taking 100 days or more to sell. To dissect it even further, there are currently 11 homes in Bend that are pending after more than 200 days on the market. Last month, only 6 homes sold after 200 days on the market. This is usually the time of year when seller fatigue meets buyers searching for discounts, and with such limited inventory in the market, some buyers appear to be re-examining homes that have lingered on the market.
New Listings
Despite an uptick in new listings in October, we saw the expected decrease in November, with 15% fewer new homes coming to market this year compared to last. This drop-off is a normal and expected pattern, with listings typically decreasing as the year ends and then increasing again in the new year. However, it’s important to note that on a national level, new listings have not dropped nearly as fast as they have in years past. The black line in the chart below represents monthly new listings across the country, while the black dotted line illustrates what this trend should have looked like based on historical patterns. This indicates more new listings are coming to market than would be expected for this time of year. Given that a significant portion of Bend’s market originates from other areas, it’s important to note the national trend of increased listings in a typically slow season. Could some of these new listings in our feeder markets be future buyers in Bend when their homes sell? Let’s just say we will be watching this closely.
Pending Sales
As we mentioned last month, the decline in the number of homes sold each month is not surprising, given the fewer homes for sale. It’s not as though there are more options with fewer sales; such a scenario would indicate weakening demand. However, this isn’t the case. In fact, we observe that on average, there are almost as many homes going under contract as there are new listings each month over the past few months. This is precisely why a local appraisal report indicated that November marked the 5th consecutive month where the inventory of single-family, non-acreage homes remained unchanged.
Average Sale to List Price
Our position aligns with expectations concerning this particular data point. On average, this is the time of year for the biggest discounts. Additionally, due to the increased number of homes selling after being on the market for several months, the average sale price has dropped to 94.4% of the original list price. The median, however, remains almost two percentage points higher, suggesting that a few heavily discounted sales have pulled the average down. As evident in this 10-year chart, we are at levels below the norm. Extrapolating too far or aiming for unrealistic discounts could lead to missing out on some good market opportunities.
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 into the data, please reach out to your Ladd Group broker. If you don’t have one, you can reach me at steve@bendpropertysource.com or on my cell at 541-280-2132.
There are also several ways to reach the team, so please let us know how we can help.
- facebook.com/bendpropertysource/
- Bendpropertysource.com
- info@bendpropertysource.com
- 541-633-4569
- Main office: 650 SW Bond St, Ste 100
- Tetherow Sales Office
- Assembly Office in Northwest Crossing
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