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Market Statistics and Data

A month into the new year, we have already observed some ups and downs in real estate activity. However, unless you are closely monitoring the daily data, these fluctuations might have gone unnoticed. The market exhibited early signs of activity during the first week or so of the year, but then ice and snow arrived, serving to cool the market both literally and figuratively. We stand on the precipice of the shift to spring, a time that typically brings a more sustained increase in activity. Let’s examine what the data suggests we can expect.

Mortgage Rates

Mortgage rates, which used to be addressed in the last section of our market update, have been moved to the first section for almost a year. This change was made because mortgage rates affect every segment of the real estate market. Currently, 63% of sales in Bend are financed purchases, with the remaining 37% being cash transactions. The norm we have observed has been closer to 75% over the past few years. However, with rates still hovering around 7%, this has certainly kept some buyers (and sellers) on the sidelines. Here’s a quick recap of the cycle we are currently experiencing:

  • Sellers with mortgages at 3% don’t want to buy something else at 7%
  • This keeps inventory low
  • With low inventory levels, competition drops and prices stay high
  • Buyers try to delay purchasing until rates or prices come down or inventory picks up

The tricky part is that when rates come down, buyers will jump in, which creates more demand and maintains upward pressure on prices. At the same time, sellers who were ‘stuck’ before now see an opportunity to make a change. The big question is whether there will be more sellers who have been on the sidelines or more buyers. The balance between these two groups will help dictate the direction of the market this year, as it does every year. At the end of the day, real estate always boils down to supply and demand, and this year will be no exception.

Here is a snapshot of what interest rates have looked like over the past 5 years. As you can see, we have been stuck in a range for a while. As the Fed tries to decide what to do with the Federal Funds rate, this will cause ripples across various markets, and we would expect to see some movement off these levels. Experts say they will be lower by year’s end, but as discussed above, if prices move up, that could still mean higher payments.

Median Price 

The median home price in Bend has been experiencing a slow but steady decline over the past few months. This trend is actually quite common on a yearly basis, as the median price tends to slip heading into the end of the year. We normally see the price rebound as the new year begins and leading into spring/early summer, when it usually peaks for the year. For single-family homes in Bend, the median price is hovering between $700,000 and $720,000, depending on whether you include acreage properties in the calculation. For perspective, this is up about 6% from where it was at the end of January last year but down about 10% from the peak last June. Therefore, for buyers who have said they wanted to wait for a dip, we would suggest taking into account that a dip has already occurred. If annual cycles are any indication, we would expect these numbers to begin ticking up in the coming weeks and months.

Days on Market (DOM)

As was the case last month, the time homes take to sell in Bend remains within the normal range observed over the last decade. At the end of January, homes were taking an average of 62 days to sell, with the median days on the market being 45. Both of these figures are only slightly higher than those recorded at the end of December. If seasonal patterns are any indication of future trends, we might expect that this could represent the peak (or be very close to it) for the year. Normally, during the spring and summer, a greater number of homes enter the market, accompanied by an increase in buyers, leading to a decrease in days on the market (DOM). In addition to observing the averages, we have also been examining current pending sales as a more immediate indicator of the market’s direction. Despite increases in the averages for closed sales, it is noteworthy that of the 258 pending sales in Bend at the moment, 27% went under contract in less than one week. Over the past year, this figure has been closer to 21-22%, supporting the assertion that demand remains strong. Assuming the majority of these homes close, we anticipate a decrease in the days on market in the coming months.

New Listings

You may wonder why we place so much emphasis on yearly patterns. If you examine the next chart, you will see just how consistent these can be. With the exception of the anomaly in the spring of 2020, which was, of course, due to the onset of the pandemic, the number of new listings entering the market has been incredibly consistent. This number tends to reach its lowest point in December and then increases until June/July before declining throughout the latter half of the year. One might question why the volume of new listings is so crucial. The answer lies in the fact that with more options available, more buyers are encouraged to enter the market, allowing the balance of supply and demand to naturally adjust prices. The reality is that buyers often have genuine needs (such as space, location, ease of living, etc.), but they may cite interest rates as the reason for delaying their purchase. However, a more accurate explanation might be, ‘None of the current options make sense for me given the current prices/rates.’ The subtlety here is that often, if the right house comes along, many will attempt to find a way to make it work. Of course, not everyone is able to do this, leading to some buyers being priced out. This is a very unfortunate reality and lies at the heart of the housing affordability discussion. We will delve into this topic in the next edition of the Buyer’s Corner in our State of the Market report, which will be available in the next week or so. Please be sure to check back on our site for the report when it is ready.

Pending Sales 

For the second consecutive month, pending sales in Bend have ticked up. From the low point in November, we have now seen an increase of about 38%. To provide a bit of perspective on how the number of pending sales typically fluctuates throughout the year, the peak often reaches nearly double the low point. Additionally, for some context, our current level of pending sales is about 25-30% lower than what was observed in the Januarys prior to the pandemic. As a reminder, we believe this discrepancy is due to the combination of low inventory and higher prices/rates, rather than a lack of buyer demand. We will also address this topic in our State of the Market report.

Some other points to consider…

Sale to List Price: This remains steady and homes are typically selling at an average of 98.6% of list price.

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 the decrease in inflation has stalled and is thus giving the Fed some pause in any Fed Funds rate adjustments at this time. The expectation is that they will still come later this year, but exactly when is not fully determined.

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. 

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