It’s hard to believe we are approaching the halfway point in the year. School is letting out, the weather feels like summer, and more people are coming to Bend on vacation. So far, the housing market continues to see upward movement in prices, but over the last month, inventory has risen, and sales have dropped. As we continue into the busy tourist season, what does this mean for the real estate market? Let’s dive in.
Mortgage Rates
There is no question that mortgage rates continue to be one of the biggest factors in keeping buyers (and sellers) out of the market right now. The Fed continues to watch the inflation data for signals that it is in check, and this past month, they saw some signs that it was heading in the right direction. Bond markets reacted well to this, and this drove yields lower, which caused mortgage rates to drop over the last couple of weeks. After registering a 2024 high at about 7.25% in May, they have now retreated to just below 7% for most borrowers.
Last month, we discussed how the ratio of financed to cash purchases was trending back toward the expected 75%, but this past month we saw this total drop again to about 62%. The reason for this is that rates ticked up for the first few weeks of the month and didn’t start to provide relief until near the end of May. Assuming rates continue to remain steady or tick lower in June, we would fully expect the number of financed purchases to tick up again.
Median Price
The seesaw pattern that we saw with the median home price in the spring of 2023 seems to be reappearing in 2024. Normally there is a relatively smooth pattern of price movement month to month, but with sales remaining relatively low, this causes the median to bounce around. We now sit slightly higher than where we started the year and also slightly higher than where we were at this time last year. Looking at the chart below, you can see that despite some back and forth movement, the trend is that on the whole, prices continue to tick higher. One of the biggest drivers of this has been the lack of inventory. With fewer choices, buyers are competing for the same homes and this keeps an upward pressure on prices. However, there have been changes in the inventory levels and in the next section, we will talk about how this may start to cause some changes in price pressure in the coming months.
Homes for Sale and Sold Homes
As we have discussed previously, there are cyclical patterns that we would expect to see. One of these is the expected rise in homes for sale. This past month, we saw an expected rise in the number of available homes for sale. Generally speaking, this normally ticks up during the first half of the year, and then tapers off in the second half of the year. So far in 2024, we are continuing to follow this trend, but what is worth noting is the number itself. We are now higher than we have been since the start of the pandemic with an average of about 1000 homes for sale in Bend. For a little perspective, although this is the highest we have seen in 4 years, we are still roughly 33% lower than what we had in 2019. We would need to see 500 more homes come to market without selling to be back at the levels we were accustomed to just a few years ago.
So just how many of these homes that are available are actually selling? The answer is a bit surprising this month. Despite more choices for buyers, fewer buyers actually purchased in May compared to the month prior. This bucks the trend that we would expect and so we will be watching this one more closely. At this point, it could be due to the factors discussed above with regard to interest rates, it could be that sellers are wanting too much for their homes and buyers are unwilling to pay, it could be that buyers have stepped away altogether, or it could be something entirely different. We would say that we believe it is likely the first two reasons and not that buyers have stepped away. A metric we keep close tabs on is how quickly the homes are going Pending, and we still see strength here and will dive into this in the Days on Market section below.
Inventory
We have talked about inventory (or months of supply) repeatedly in this monthly report as well as prior editions of our semi-annual State of the Market Reports. Basically, months of supply takes into account the number of sales that are happening and compares that to how many homes are available for sale to determine how long it would take to sell through the existing homes if the pace continues at the current rate and no new houses come on the market. This helps give a snapshot of the state of the market and how balanced things are between buyers and sellers. Historically 5-6 months of supply would indicate a balanced market, but we have been hovering around 3 months or less since the pandemic. However, this past month, with fewer sales happening and more homes available for sale, we saw the months of supply tick up above 3 months for the first time in a number of years. This is a sign that the market continues to normalize and strike a more balanced level between buyers and sellers. One thing to note on this is that months of supply can change based on price points as well. If you are interested int the subtleties of how various price points are performing, please reach out and we can go through all this with you.
Days on Market (DOM)
Despite an uptick in days on market, the chart below pretty clearly shows that we are following the pattern we would expect. We now have a median of about 18 days on market in the city of Bend. What we are also seeing is that about 33% of the current sales are happening in less than a week. We have been tracking this ratio for some time and as we have previously discussed, the norm is usually around 22-25% of the pending homes selling within a week. This tells us that there are still buyers out there and when a home is priced and marketed well, it can still sell quickly. However, before sellers use this as a reason to price their homes higher, it is important to note that the average days on market is still hovering in the 50 days, so this tells us that there are still a number of homes that are closing after many months of being on the market.
New listings have been slightly outpacing what we saw at this time last year and falls in line with what we would expect when comparing it to the last few years. Just as we mentioned with Homes for Sale, we can provide a little perspective by comparing the May number (471) with the number from May 2019 (667). We are seeing on average, about 29% fewer listings in 2024 than we did in 2019. With fewer choices and increased costs, some buyers have been sitting back and waiting for the right opportunities to present themselves.
Some other points to consider…
Sale to List Price: This has remained steady and is currently at an average of 98.7% of list price. For perspective, the median sale has now spent three months in a row at 100%. Here is a chart of this over the past few years.
Inflation: We touched on this earlier, but thought including the chart here would allow you to see and track this as well.
Building Permits: This helps us track what to expect in terms of new construction that may be in the pipeline. This past month we saw an uptick in build starts after a month of decline. We saw a stat recently that showed that nationally, roughly 30% of the homes for sale are new. For perspective, the average between 1983-2019 was 13%.
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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