November 2023 Housing Market Update Bend Oregon

The holiday season is officially upon us, and with it usually comes slower activity in the real estate market. There are indisputable cyclical trends that we observe each year, and we expect the number of sales to continue to decline towards the end of the year. However, one of the largest factors affecting both buyers and sellers has been interest rates, and the news on this front has been positive. If this trend continues, we believe there’s a very real possibility it could buck some of the traditional trends. Let’s look at what’s happening.

Mortgage Rates

We normally begin our monthly update with a discussion on median home prices, but this month, we’ve decided to start with interest rates. Interest rates have been one of the biggest headlines in real estate this year and are a major reason why affordability is so challenging. They also contribute significantly to the lack of inventory for sale. As we’ve often mentioned, there are ‘would-be sellers’ who wish to move but can’t afford to exchange their sub-4% interest rate for one that’s double. However, the good news is that interest rates have stabilized and even started to decrease. Additionally, with inflation numbers declining and the Federal Reserve pausing its increases to the overnight lending rate, it’s likely that if this trend persists, the upward pressure on mortgage rates may continue to diminish. While this is all subject to change, at least temporarily, it shows signs of moving in the right direction.

It’s important to realize that rates are unlikely to return to the low levels we’ve seen in the past few years. Nonetheless, rate stability is a crucial factor for both buyers and sellers and will be what helps restore more normal transaction levels. We hope that some softening and stability in rates will enable sellers to make moves that better suit their needs. This would add inventory to the market, give buyers more options, and allow them to take advantage of lower rates to improve their lives at more affordable levels. If rates improve and we don’t see an increase in available homes, we could face a highly competitive market as buyers enter the fray to compete for very limited inventory. If rates don’t improve, we expect buyers and sellers to grow tired of waiting and proceed with their lives, even in an environment of elevated rates. For a live update on current interest rates, you can check here.

Median/Average Price

The median home price in Bend has slightly decreased this month, now standing at $735,000 for single-family homes on non-acreage properties. This is a reduction of about 7% from the highs in spring, but it’s also approximately 7% higher than where we started the year. Typically, in most years, there is a peak at some point in spring or early summer, followed by a decline of around 5-7%. Given this, the fluctuations we’ve seen so far this year are not uncommon, so we shouldn’t place too much emphasis on one metric alone. As we noted last month, the average price had been holding up stronger than the median. This suggested that some high-end sales were likely sustaining the higher average. However, in November, despite only a 4% drop in the median, we observed a 15% decrease in the average. This indicates that either the high-end sales have slowed down, or the lower end of the market is beginning to see some significantly lower numbers. We will continue to monitor the sales and try to detect subtle changes in activity, so we can help determine whether shifts in the numbers are indicative of overall market movements or are more confined to certain price points.