The spring market is officially here, and activity is picking up across the board. Inventory is climbing, and in many cases, buyers are responding. This has created a more dynamic push-pull between supply and demand. While pricing remains strong, there are external factors like tariffs, recent stock market volatility and of course interest rates, that are causing buyers and sellers to take an extra moment to pause and assess. As we move deeper into the season, the numbers will offer a clearer look at where things stand and where they might be headed next.
Mortgage Rates
Over the past month, interest rates haven’t done much to sway buyers into action. They have remained between 6.5-7% for most borrowers. They have clearly found some stability at this level and have been in this range since October of the last year. Despite calls for rates to lower by the end of the year and also hopes that recent stock market drops would cause a flight to treasuries (which in turn would bring down rates), at this point, that hasn’t come to fruition. Buyers and sellers who need to move are accepting the new norm and moving forward. Those who feel like they have some flexibility and who are willing to wait for what they deem to be a better opportunity, are being selective. The tricky part is that if too many people are doing the same thing, a drop in rates could lead to an influx of buyers and thus higher prices. Alternatively, if lower rates get enough sellers off the fence, it could lead to an influx of new listings, which could create added supply and potentially downward pressure on prices. It is the balance of supply and demand that will ultimately determine the outcome on prices. Let’s see what happened with prices over the last 30 days.
Median Price
The median is following the expected pattern of increasing into the peak spring selling season and ticked up from $700k to $748k for single family homes in Bend. This is also up slightly from this time last year and shows a 5.7% increase in the last 12 months. Given that it was around this time in 2022 that rates started to really take off, we thought it would be interesting to look at the chart below from a little further out to put it into perspective. Despite rates increasing from about 3.5% at this time in 2022 to nearly double that now, we are almost exactly where we were in terms of pricing. What does this say? Although sales have ticked down in terms of transactions (some buyers and sellers either chose to sit out or were unfortunately forced out of the market), it shows that there is an overall decent balance of buyers and sellers, which is keeping prices steady. The chart below shows the median price as well as a “smoothed” line which is the 3-month rolling average. The bottom line is that headlines show one data point in time, but it is often helpful to take a step back and look at the long term trends.
New Listings
As is the case every spring, the number of new listings increases each month through sometime in early to mid-summer. This past month, we saw 544 new listings come to the market in Bend and Redmond. This is just over 17 listings a day, each day of the month. Although that may sound like a lot, it is the same as last year and the third-lowest March total over the last 10 years. Yes, there are new opportunities coming to market, but the number is consistent and on the lower end of what we would expect. The reason we bring this up is that earlier this year, we discussed that this could be the spring for sellers who previously had been waiting for the perfect time to finally throw in the towel and just get on with their move. The fundamental reasons people buy and sell (jobs, family changes, health, etc.) can only be put on hold for so long before they become too impactful to wait any longer. So far, we have not seen a larger than expected influx of listings. As the weather continues to warm and things begin to green up, this next month will be a big indicator, as people often wait until things bloom before listing.
Pending Sales and Inventory of Homes
Pending home sales across Bend/Redmond ticked up slightly in March. We thought maybe we would follow the historical pattern of large bump in sales from Feb. to March, but this month showed only a slight bump of about 6% (it was closer to 10% last year). March had some variable weather with some late season snows and this historically is not good for sales. This, combined with little to no improvement in rates, had buyers sitting on their hands a little more than we would have expected. We will be watching the April numbers closely to help track current demand.
If we look at the number of pending sales to new listings, we can see that they are very close. We also know that some pending sales fall through and don’t close, and so with this in mind, we saw a 13% uptick in the number of homes available in Bend and Redmond. If you look at the chart below over the last 10 years, you can see why we have referred to the market as “normalizing.” The patterns are very cyclical and although the inventory is increasing, it is still lower than what we had been accustomed to in years past. Also, with the sales pace where it is, we have remained at roughly 3 months worth of inventory. As a reminder, this means that if no new homes came to the market, it would take 3 months to sell through the existing homes. Typically, a balanced market is closer to 6 months of inventory, and we wouldn’t expect to see price corrections until we were well over this level.
Days on Market (DOM)
The days on market for sold homes has ticked down across Bend and Redmond for all property types. In January, the median was 103 days and this past month it was 63 days. This is what we would expect as homes that sold in January, went Pending in November/December and were more likely to have been on the market for a while at that point. A much greater percentage of the homes going pending in March, were new to the market in the month or two prior, and so this causes the median to decrease. Please keep in mind that this number changes dramatically for different areas, price points, or property types. For instance, in Bend for single family homes on non-acreage, the median days on market is 32.
Some other points to consider…
Negotiation: The average sale to original list price was 96.26% in March in Bend. The average sale to the last list price was 98.31%, The difference here is that the second number tells the story after any price reductions. Given this, the average home sells at a discount of 1.7% of list price after taking an average price reduction of about 2%.
Price Change: The average of 2% quoted above is across all homes that sold. However, many homes don’t take any price reductions before selling. So if you just look at the average price reduction when one is made, you can see it is closer to 6%.
Inflation: This is a big indicator for the Fed, and after ticking back up earlier this year, it seems to be heading back closer to their target. You can see a chart of inflation here.
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 [email protected] 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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