OVERVIEW

Introduction

The U.S. real estate market in mid‑2025 stands at a pivotal juncture. Consumers, investors, and policy‑makers alike are navigating a landscape shaped by elevated mortgage rates, shifting supply dynamics, economic headwinds, and evolving buyer sentiment. Although all of these factors play a role in the real estate market, our clients must remain aware that headlines and monthly data points often don’t tell the whole story. For buyers and sellers, confusion and fear exist, leaving both sides weary of making a mistake. It is our goal to provide the guidance and comfort for our clients to make the right decision for them, whether that is to buy, sell, or hold. 

What’s causing the uncertainty?

While real estate is local, the forces driving today’s uncertainty are undeniably global and macroeconomic in nature. At the core is a complex interplay between inflation, interest rates, wage growth, and the broader economic outlook. Although inflation has cooled from its post-pandemic highs, it remains sticky in key sectors, prompting the Federal Reserve to adopt a cautious stance on rate cuts. Despite widespread expectations for easing, the Fed has repeatedly signaled that premature stimulus could reignite inflationary pressure, which has been forcing investors and consumers alike into a prolonged state of wait-and-see. Also, although wage growth continues to outpace inflation, the gains are marginal, and this has led to a buyer pool that is concerned about overstepping and a group of sellers who are afraid to leave money on the table. See Chart 1. At the same time, mortgage rates (although easing) remain high, which has also caused buyers to wait on the sidelines in hopes of capturing some rate relief in the future. However, the projections for where they are headed are no longer showing any big signs of relief. See Chart 2. This could serve to keep more buyers on the sidelines, but it could also prompt the opposite response. When buyers who need a home don't think there is a big financial benefit to waiting, often they won’t put their lives on hold for a marginal decrease in rates. The recent slight easing of mortgage rates, combined with the tapering expectations, has caused an increase in mortgage applications, and so we will be watching this in the months to come. See Table 1. Adding to this uncertainty is the broader economic landscape. Markets are grappling with persistent geopolitical tensions, the long-tail effects of pandemic-era stimulus, concerns over the effects of tariffs, and fears of an eventual recession. 

This has led to a situation where consumer confidence (which factors in consumer feelings across a broad spectrum of current economic conditions) and consumer expectations (which look at the expectations in the coming months) have both shown signs of cautiousness. See Chart 3. Concerns about tariffs remain one of the highest factors for consumers, leading to fears that affordability will continue to be a challenge. At the same time, global capital markets are recalibrating in real time, with stocks rebounding from a drop earlier this year and now back near all-time highs. These swings, combined with the economic concerns outlined here, have led to challenges with credit availability for some and a diminished appetite for risk for others. For real estate, this environment creates a paradox. Even if buyers and sellers sense opportunity, often they remain cautious, unsure whether conditions will improve, worsen, or simply linger in ambiguity.

Where are there signs of stability?

Amid the broader economic crosscurrents, the real estate market is quietly finding its footing in several key areas. Perhaps the most notable is the steady normalization of supply. After years of inventory constraints, active listings have risen slowly since 2022. This has offered buyers more choice while avoiding a flood that would destabilize prices. Transaction activity, while well below historical highs, has kept pace as inventory has grown, leading to a more balanced environment. If no new homes came on the market, it would take roughly 4.5 months to sell all the available homes in Bend. This now sits squarely in the range of what has been classified as a balanced market. For perspective, in 2008, there were so many homes and so few sales that it would have taken 25–30 months to sell through all the homes. See Chart 4. While sales activity is still below pre-pandemic norms, this controlled rise in inventory reflects a more balanced dynamic between buyers and sellers, not a market under duress.

Pricing trends, too, suggest resilience rather than volatility. Across many markets, prices have either held firm or posted modest year-over-year changes. Often, after seeing explosive moves in any market (stocks, bonds, etc.), there is an expectation that there will be steep corrections to follow. However, this is simply not how it has played out in the current real estate market. Even in regions experiencing a softening, the adjustment has been measured. Bend’s feeder markets have seen year-over-year price declines of somewhere between 1-3%. See Chart 5. Looking locally, we can see that the median home price in Bend has essentially been flat for 3+ years after a historic run-up from April 2020 to February 2022. Interestingly, if you draw a line following the trend of price movement during the decade leading up to the pandemic, the three-year flattening has essentially returned us to a price range that aligns with what would have been expected had appreciation continued at its previous pace. See Chart 6. This suggests a market that is becoming more rational, which is an encouraging foundation for long-term strength and stability. 

Where does this leave us?

This year started with consumers who had been hoping to time the market perfectly finally acknowledging that their fundamental need for a home took priority, and this led to early real estate activity. The announcement of tariffs in the spring and the stock market fluctuations that ensued led to a significant slowing in the expected spring/summer sales activity. As we analyze the data and look ahead, we continue to see signs of uncertainty and also evidence of stability. Hesitancy remains high, but for those seeking a home for their new job, family, or personal needs, there is reason to be optimistic. Waiting for the overall sentiment to shift can often lead to a situation where you are chasing the market. But being attuned to macro indicators, local shifts, and buyer/seller psychology can turn intention into opportunity. We would be honored to discuss your needs and compare options with clarity, calm, and centered on your goals.

Navigating the buying Process with Confidence 

Central Oregon is seeing a more balanced late 2025 market, giving buyers space to maneuver wisely. Homes now spend an average of 36 days on the market before getting an accepted offer, up from 26 last year. This should increase as the year progresses, often leading to opportunities for buyers to pair with motivated sellers who are ready to move on and sell at a discount. 

It’s also worth noting that the average number of days in escrow (time from an accepted offer to closing) is currently 31 days. This is down since last year and likely due to buyers offering quicker closings in exchange for lower sales prices. 

Given that mortgage rates continue to hover mid‑6%, strategic offers paired with decisiveness are producing results. Many remain in the “analysis paralysis” cycle, simply content to watch and wait. Yet for those willing to be patient but agile, the advantage has tilted firmly back toward well‑positioned buyers.

Navigating the Evolving Market

Central Oregon real estate still rewards sellers for their long-term investments, though with more nuance than the recent overheated market. As mentioned in the main article, inventory is rising. However, what is not counted in this are the homes that were withdrawn and terminated after not selling. Alongside the growing supply is slower absorption than in recent years. Currently in Bend, only 22.5% of homes listed for sale are going into contract, which is 10% less than last summer. 

On a positive note, despite days on market increasing and some homes not selling at all, 21% of the homes that are Pending in Bend did so within 7 days. This shows that homes that are priced, presented, and marketed well are still being met with buyer demand. With a wider lens, sellers can appreciate the significant equity gains built steadily over recent years, and can keep the big picture in mind when assessing a realistic listing price.