As we transition from summer to fall, clients continue to ask what we can expect between now and the end of the year. While we don’t have a crystal ball to predict exact interest rates, sales numbers, or appreciation, the data and activity do point to certain trends. These trends can give us a good sense of what’s likely to happen. Let’s dive in.
Mortgage Rates
Without question, the number one driver of activity (or lack thereof) across the market has been interest rates. There have been calls for interest rates to come down for some time, and it finally seems to be happening. Currently, rates are sitting around 6.2%. For a little perspective, this is a full point lower than where rates were in early May this year, and the lowest since Feb of 2023.
With all eyes on the Fed meetings this month, November and December, it is important to remember that the Federal Reserve is not adjusting mortgage rates. We often hear that clients are expecting mortgage rate relief if/when the Fed cuts rates, but this is not exactly how it works. The rate the Fed controls is the rate that banks charge each other to borrow money, and this affects things like interest on bank accounts, home equity lines, etc. Mortgage rates however are different and generally follow the movement of the 10-year treasury note. So as you hear news about Fed decisions, please don’t expect an immediate change in mortgage rates.
Here are the current estimates from the experts. When looking at the estimates below, please use some caution. First, the experts have been off in terms of how quickly any changes happen, so if you are needing to move, but putting your plans on hold in hopes of a quick change, this can be tricky. Second, if you are a buyer waiting for lower rates, we would suggest talking to your lender about how a lower rate, but higher price affects your monthly payment. The reason for this, is that when rates go down, generally more buyers step in and create an upward pressure on prices. Given this, although rates might go down, if prices go up, your payment could actually be higher. Lastly, if you're a seller waiting for rates to come down so you can buy something at a lower rate, we would use the same note of caution but add to it that there are likely other sellers in a similar position, and so that could mean added competition. The bottom line is that there should be a discussion with your broker and lender to create a plan that takes everything into account, as opposed to getting myopically focused on one thing. We can help with that.
New Listings and Pending Sales
As expected, the number of new listings coming to the market slowed in August. As you can see in the chart below, there is a very consistent annual pattern to this. In fact, the number of new listings in August was almost identical to the number of new listings in each of the last few years. As inventory was growing during the first half of the year, it felt like some clients were using this as a reason to wait and see what other options might come available. However, with the drop in new listings over the past month, it can often serve as a reason to get buyers to stop waiting for new options to come and potentially act on the ones that they have seen already. This year, with the relatively favorable changes in mortgage rates as well, it has the making for an interesting fall.
Pending sales
We saw Pending sales tick up for the second month in a row in August. As was the case last month, the number of pending sales have been similar to what we saw last year at this time. What is interesting is that August has the highest number of Pending Sales so far this year. This is not common and in fact going back over a decade, we couldn’t find another instance where this happened. Historically, the high for pending sales comes in April/May/June, but almost never this late in the year. Will this continue into September….it’s hard to say. But one thing we will point out is that in certain price points, pending sales in September so far are ticking up. For instance, above $3M in Bend (less than 10 acres), there have been 16 sales through the end of August. In September alone, 6 more have gone pending.
Homes for Sale and Median Price
Not surprisingly, with an uptick in pending sales and a down tick in new listings, the number of homes currently for sale has ticked down slightly month over month. There are still a little more than 1100 homes on the market across Bend (on average). As you can see in the chart below, this is steadily rising from the lows during the pandemic, but still well under what was the norm in the late 2010s.
So with the changes described above, how has this affected the median price? The answer is not much. We have included two charts below. The first is the monthly chart of median prices. It appears that it jumps around quite a bit from month to month. One month it’s up, the next it’s down. We have discussed in past updates that at least part of the reason for this is that with limited sales every month, activity on either end of the market can have a greater impact. However, when you change the chart into a rolling 3 month average, it smooths out these blips and the trends become clearer. Overall, the trend is that prices are steady and holding in the pattern that we would expect. Currently, the median price for a single family homes in Bend is $754,000 and $700,000 for all property types. For a little perspective, in August 2023, these were $759,000 and $720,000 respectively.
Days on Market (DOM)
We saw another uptick in days on market this past month, and currently the average days on market for all home types in Bend is 59 days. This is down from where we started the year (76) but up from 45 days at this time last year. Although this clearly shows the trend that homes are taking a bit longer to sell, another factor that can bring this average up is to look at how many homes that sold in any given month, were on the market for an extended period of time. At this point, the distribution seems in line, but we will continue to monitor to gain some insight into future movements.
Some other points to consider...
Sale to List Price: This has remained steady and is currently at an average of 98.4% of list price.
Here is a chart of this over the past few years. Please keep in mind that this is the sale to last list price. If you take into account sale to original list price (price before any price reductions), this stat is closer to 96%.
Inflation: This is always in the news and drives a lot of the interest rate discussions, so we have included a chart of this
here. As of now, this continues to trend toward the Fed’s desired target, which is why the markets are predicting multiple rate cuts this year.
Quick Sales (Buyer Demand): We have been tracking this for some time now, and about 20% of the current pending sales happened in less than a week. This has ticked down from about 30% earlier this year, but is still in the range we have seen for some time. The bottom line is that if homes are priced, presented and marketed well, they can still sell very quickly.
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.
Click here to sign up for our monthly newsletter! You can unsubscribe anytime.
