What’s
going on here?
The
nation leads the world in a dismal percentage of coronavirus cases and deaths.
The economy is in the tank, far away from the “V” shaped recovery and great success
in controlling the pandemic that Donald Trump touts. GDP is negative,
unemployment above 10%. Some airlines might as well be grounded. And national
retailers teeter in bankruptcy, several essentially on the verge of collapse.
Yet
the stock market seems disconnected from reality. Forget earnings. Keep the
foot on the buying pedal. From a 12-month low of 3,386.15 on Feb 19 as the virus
infected Wall Street, the S&P 500 index plummeted 33.92% March 23, then
rebounded to 3,360.47, or up 50.20%, on Aug. 10.
And
real estate, if anything, seems to be feeding on the negative energy and fear
of Covid 19 to reach new highs in many areas, including Bend and Central
Oregon.
A
report by Beacon Appraisal for July, 2020 confirmed regional housing demand
with news that the median price of a Bend single family home hit an alltime
high of $529,000, explaining the statistics were run several times to confirm
the number.
Driving
the trend is what local brokers say is a wave of buyers originating from urban areas.
Many of these are weary of unrest arising from protests that have been co-opted
by violent groups and dense living conditions making social distancing more
difficult.
One
top broker in Sisters noted:
“I
am very busy, and yes, a lot of the business is coming from people wanting to
get out of the big cities because of Covid and because of riots and crowds.
They are coming from Los Angeles, San francisco, Seattle, Portland, etc., etc.”
Deschutes
County’s (Bend the county seat) development department reported that the 351 new
single family home permit applications in July were 7.7% over the same month of
2019, noting: “We continue to experience stable permitting and continue to hear
of ongoing plans for construction throughout the county.”
From the July statistics the easy conclusion could
be that Covid 19 has stimulated, rather than dragged down the market. The question
is how long the bump will last but with Bend inventory hovering at only a month
plus/minus it’s doubtful it will collapse soon or suddenly.
With
interest rates in the 3.0 to 3.5% range, and even lower with some lenders, financing
will continue to sustain a good percentage of sales. And in the Bend area,
expatriates from urban areas often arrive with cash--no financing contingency
needed--by dint of much higher prices and accumulated equity from their homes
in other cities and states.
One
factor in the constricted inventory could be homeowners deciding to stay put
and refinance with favorable rates several points under their current mortgages.
Why sell now? Wait out the political, economic and Covid 19 turmoil given that the market appears stable
enough to sustain momentum.
Consider
that in the Seattle-King County area of Washington the median price of a single
family home also hit a historic high of $727,500, topping the previous record
of $726,275 more than two years earlier May of 2018. In many cases inside the Seattle
city limits, with a median price of $805,000, nearly 100-year-old cottages of
less than 1,500 square feet are selling at nearly the median. Compare that to a
newer Bend home of 2,500 to 3,000 square feet at the same or lower price.
Another
view is to put the first seven months of 2020 side by side with 2019. By that
metric Bend median sales prices are up 2.22% over 2019, while the number of sales rose
significantly to 1,295 – a 26.34% leap as July led the way at 318 sales.
