We are now past the halfway point of the year and continue to see what appears to be conflicting data. We also see that although buyers have been predicting falling prices and experts have been calling for falling interest rates, neither of these things have come to fruition. What we do see is that seasonal patterns to our market tend to give the best insight into what to expect moving forward. Let’s dive in and see what sense we can make of the data.
Median Price
In the last report, we noted that prices had pushed higher with the median jumping 10%. In June, we saw this trend continue and the median again pushed higher and now sits at $770,000 (for single family homes in Bend on less than an acre). On the surface, it may seem inconsistent that the median is now nearly at all time highs despite so much uncertainty in the market. However, as we alluded to last month, what we have seen is that there has been a higher amount of activity in the upper end of the market, thus causing the median and average to move higher. This makes sense as the upper end of the market is normally less susceptible to interest rate concerns or fluctuations and with the stock market well off its lows from last year, cash has returned to the market. In the past couple of months, we have seen a greater percentage of cash transactions and with that, a greater number of sales on the upper end. In fact, 24% of the sales last month were above $1M. By comparison, in 2019, only 5% of the sales were above the $1M threshold.
Days on Market
Last month, the median days on Market jumped from 7 to 13. As a headline, the fact that it doubled in a month might sound alarming or serve as a sign of changing demand. However, this is one of those data points that shows this kind of change almost every year at this time. Generally speaking, we see the days on market bottom out for the year sometime between May and July and then start to increase as the year goes on. The fact that it ticked up month over month is actually not a surprise at all and when you look at the decade before the start of the pandemic, 13 days on market would have been the lowest total for any month in 9 out of 10 of those years.
New Listings
Another seasonal pattern is that the number of new listings coming to market monthly increases from the start of the year till sometime in late Spring (April or May) before starting to tick back down throughout the summer. This year, with a longer than expected winter and a little more uncertainty surrounding interest rates, the uptick in listings started later and appears to be peaking later than normal. In June there were 274 new listings in Bend. By comparison June normally had about 325-375 new listings in the years prior to the pandemic, so we are still a ways off of that. Also for perspective, if this ends up being the high for the year, it would be about 25-30% off the average high for the year. This is no surprise as we have said repeatedly that sellers who have their mortgage at 3% will be less inclined to put their house on the market unless they really need to move.
Pending Sales and Inventory
With interest rates still hovering in the 6.5-7% range, financed buyers continue to be patient. It seems that unless the home is perfect, these buyers are taking longer to purchase or sitting on the sidelines until they feel compelled to act. Much like new listings, there is a seasonal pattern of pending sales peaking in May or June followed by an overall decline throughout the rest of the year. There is often a bump in activity in the fall, overall the most pending sales have peaked by this point in the year. So although the monthly decline in pending sales isn’t abnormal, what is notable is simply how many fewer homes are selling than in the normal years prior to 2020. Normally we see the peak months having between 250-300 homes going pending and this year we had 180.
Given that we have seen more new listings coming to market than homes going pending, it is no surprise that there are an increasing number of homes currently for sale. In past monthly updates, we have talked about months of supply, but here we will simply discuss the number of homes for sale. In June there were an average of 397 homes for sale. This is up from a low of 264 in February and an all time low of 121 in January of 2021. If you simply look at this time period, it would appear that the amount of homes for sale is skyrocketing. However, when you zoom out a bit you can see the following average number of homes for sale:
- June 2017 – 717 (80% higher than this year)
- June 2018 – 707 (78% higher than this year)
- June 2019 – 717 (80% higher than this year)
Average Sale to List Price
Despite the fact that homes are on average taking a bit longer to sell, the average sale to list price still remains above 99%. The median sale to list percentage is still at 100% so this should tell us that although some people are able to negotiate some discounts on overpriced listings, the midpoint and most of the sales are taking place right around list price. Please keep in mind that this ratio is the sale to “last” list price (the listing price when it went pending). If you take into account the sale to “original” list price it is closer to 97.5% If you look at homes on the market over 100 days, the average sale to “original” list price is closer to 92%. There are discounts to be had, but if you are searching for discounts across the board, it simply isn’t there.
Some other points to consider…
Mortgage Changes: As mentioned above, these have bounced in a range in the upper 6% range for some time. As you all know, this is probably the biggest influencer of market activity, so you can see a live update on interest rates here.
Inflation: This monthly data is what helps dictate the course of action of the Federal Reserve Bank and what they do with the interbank lending rates (not mortgage rates). This chart shows that inflation is coming back down and well off its highs, but still well short of the Fed’s target of 2%.
We would like to point out that although we have brought up the market levels prior to the pandemic on a few occasions, we are not saying that we expect to get back to these levels any time soon. But we do think that keeping some perspective on where we are in relation to years past is helpful. Things feel significantly less alarming when you see the big picture and since people make the best decisions when they are able to remove the excess emotion and fear, it is our goal to make sure you have the most information at your fingertips.
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.
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