August Market Update
What started in July with a feeling of a slowing has continued into August. This is not unexpected, in fact each year tends to play out this way. The frenzy of spring and early summer wanes in the second half of the summer as people take time for vacations and to enjoy the outdoors. This seasonal market shift is even more pronounced this year as there is a very real threat of increased restrictions with COVID cases on the rise. Let’s see what the numbers looked like for July and discuss what this could mean moving forward.
Median Home Price
According to MLS data, the median home price in Bend reached $660,000 in July, which is slightly higher than the $640,000 result from June. For perspective, this median home price represents a high for the year and is about 22% higher than where it was in July 2020. Looking at year-to-date, we are at a 12% increase in the median home price since the start of 2021, and are a whopping 45% higher than January 2020.
As expected, the number of new listings peaked in June at 337 followed by 327 in July. Most years we see a pattern of highs in June followed by a fairly steady tapering of new homes coming to market in late summer early fall. December often represents the low where on average we see about 68% fewer new listings than we do at the peak of summer. Last year we only saw a 54% drop in new listings during that period, which was no doubt due to sellers seeing an opportunity to capture market appreciation and list their homes at what would typically be considered late in the season. Will this happen this year? That remains to be seen. So for buyers who are waiting for more inventory to come, we would caution that seeing a huge influx of new homes would mean the market would have to buck the trend that it has seen in each of the last five years (see chart below).
Number of Pending Sales
Tracking pending sales instead of actual homes sold gives us a real-time look at how many homes are selling in the current month. Tracking the number of closings is really just lagging data showing us what went under contract 30-45 days ago. What we want to know is what buyers are doing right now and how many buyers are getting offers accepted. With this in mind, we saw the largest number of new pending sales in July. As discussed last month, August actually represented the largest number of pending sales three out of the last five years. The jury is still out on if this will happen again this year, but from what we are sensing in the market this will likely not be the case. Sales activity seems to have fallen fairly quickly over the past couple of weeks as buyers finish summer vacations, break from looking, or reassess their needs.
Days on Market (DOM)
With so much activity happening each month, of course homes are still selling very quickly. As mentioned previously, we look at two data sources for this statistic and we see that both are showing a slight uptick in time before sale. Between these two sources, we are seeing anywhere from five to ten days on market, which is up from four to eight days on market last month. In previous years, we had seen an average time on market of roughly 50 days, so we are 10-20% of the norm this time of year. Needless to say, that still makes for a competitive market for buyers.
Average Sale to List Price
Days on market gives us the sense of how quickly people are acting, while the ratio of sale price to list price gives us some insight into how aggressive buyers are with their offers. July represents the first time in seven months that this ratio actually decreased. It is worth pointing out even with this decrease, homes are still selling on average for 103% of list price, but it is down from a peak closer of 105%. It was exactly a year ago in August when homes started averaging more than asking price. With such a sustained drive, it is no surprise that things are starting to normalize.
Some other points to consider…
- Inventory: This represents how long it would take to sell through the active homes if sales continued at the same pace. In a balanced market, this should be close to 6 months. In March this was less than two weeks. We are now back to about one month. This is a good sign and will help lead to a more balanced market.
- Price Changes: Although not displayed in a chart, we are also keeping our eyes on the number of price changes as that is something that many buyers will notice and look at as a sign of a shift. In July, we saw 220 price changes vs 132 in June. So far, there have been 113 in the first two weeks of August. This is likely the result of overzealous sellers pricing their homes too high as well as a shift in buyer eagerness.
- Interest Rates: There is nothing new to report here as rates continue to fluctuate but remain close to 3% for most buyers. These are still at historic lows and continue to fuel new purchase interest from buyers. Significant shifts in rates may taper demand, but as of yet, we have not seen large enough movement in rates to keep people on the sidelines.
- Forebearance: We continue to watch for signs of foreclosures coming as a result of forbearance. As of now, we don’t see signs of this as the number of borrowers still in forbearance has decreased from about 5M to about 1.86M. Given that 86% of owners have at least 10% equity, we don’t expect a flood of foreclosures as these owners will have options to sell and avoid foreclosure.
We hope you find this information valuable and helps you towards your ultimate real estate goals. There are a number of ways to reach us, so please let us know how we can help.