Without question, the number one question we hear from clients, friends, acquaintances or just about anyone who we run into is “How’s the market?”. They aren’t always thrilled when we say “Well that depends” or “It’s actually really interesting right now” and then ask some follow up questions. However, it really is the most honest way to answer the question since this market is complicated and can give mixed signals on any given day. Our goal is that our market updates help clarify what is happening in the market and so we have broken this down into a discussion on price, supply and demand. Although the following data and analysis is a great start, the best way we can offer guidance is to schedule a call or meeting to talk about your specific questions.
Median Home Price
The median home price in Bend slipped slightly again and now sits at $667,500 for non-acreage property (according to MLS data). For perspective, it is off 16% from where it was in February 2022 (which was coincidentally the high last year) and is now roughly where it was in October of 2021. Normally we see a 6-10% decline in median price from the peak to trough on a yearly basis, so this last year was clearly more pronounced. All of this would be expected given the move in interest rates over the last 12 months and the continued headlines regarding the Fed and their attempts to get inflation under control. Barring any big news on the economic front, we would expect the annual cycle of increasing median prices throughout spring to be evident in the coming months. One of the bigger questions will be whether the luxury end of the market will pick back up. We have seen far fewer homes in Bend selling in the very upper end of the market to start 2023 than we did in 2022. With more sales taking place on the lower end of the market, this pulls the median lower and is at least one reason why the median has been slipping.
Supply
This section will allow us to highlight something that we have been saying repeatedly, oftentimes two headlines can both be accurate and imply two very different scenarios. Would it surprise you to see the two headlines below and know that they are both true?
- Sales in Bend jumped 33% in February!
- Sales in Bend in February were 4th lowest in 10 years (December and January were 1 and 2)
Sales volume is extremely low, there is no question about that. The real question is why? Is it due to lack of demand or lack of supply? The answer is that both are contributing factors, but although demand is lower, it is not as low as many think (we will get to this in a second). The real issue is the complete lack of supply. The reason people often refer to “Months of Supply” instead of number of sales, is because it helps put things in perspective. It tells you how long it would take to work through the existing inventory if sales continue at the same pace. Knowing that 112 homes sold in February in Bend by itself doesn’t tell us anything. Given that sales from February were actually accepted offers from January, it is important to know how many homes were for sale in January. If there were 1500 homes available for sale and only 112 sold, that would be a very different situation. The fact is there were just over 250 homes for sale on average in January, meaning that just under half of them sold. Given this pace, it would take approximately 1.3 months to work through the existing inventory of homes. Looking at the charts below, you can see that outside of the last two years, this is historically extremely low and a healthy/balanced market would be closer to 5 months in Bend.
Demand
We mentioned in the last section that demand has cooled, but wasn’t the primary reason for the lack of sales. There is no question that interest rate increases have tapered buyer demand or pushed some buyers into different price categories. However, the demand is still there, but buyers are just being more selective. We say this due to the following reasons:
- Ratio of New Listings vs Pending Sales
- The number of homes selling in less than a week
In February, there were 135 non-acreage, new listings that came to the market in Bend. In that same time there were 157 homes that went pending. Said more simply, there are more homes selling than are getting listed. This doesn’t happen in a situation where demand is low. The second reason noted above is almost as telling. To end 2022, we had noted that 25% of the homes that sold in Q4 sold within a week. Would it surprise you to hear that there are currently 287 Pending homes in Bend and 114 of those were on the market for less than 7 days. That means that 40% of the current pending sales had accepted offers in less than 7 days. Given that the overall Days on Market increased to 51 days (up from 36 in Jan), it would indicate that overpriced homes are getting punished and languishing on the market and new, well-priced listings are selling quickly.
Average Sale to List Price
We will add this last section to the discussion since it helps hammer home the point that demand is holding in line with the norms expected in Bend. When demand was sky-high, people were paying well above the asking price on average. However, this has now come back to the norms that were common prior to the pandemic and on average, buyers are paying 98.2% of asking price. The other reason this is holding steady near 98% is that sellers have gotten more realistic in their pricing. This is evident in the fact that there were only 97 price reductions in February compared to 151 in January.
Some other points to consider…
Mortgage Changes: These have ticked up again and so this is putting some pressure on buyers and either forcing them to shift their price point or negotiate some closing cost credits or buy-downs to get their payments lower. Here is the latest chart of current interest rates.
National Price Projections: The average expectations across a number of analysts is that the market will be flat to slightly lower this year, with prices continuing higher over the next few years.
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, 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. 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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