As 2021 began, with a jolt of chaos in
its first few days, statistics for real estate in Bend and other areas of the
country continue to reflect a boom driven by the confluence of the Covid pandemic,
rising stock prices and low interest rates.
Looking at the narrow slice of Bend
single family home prices, the 12-month graph of 2020 remarkably mirrors the
spike in virus cases and deaths as the first and second quarters of the year progressed.
Opening the year at a median monthly
price of $449,000, the graph shows a gradual increase from a baseline at $431,000
in November of 2019. Then monthly prices increased to $468,000 in April of
2020, dipped in May, then began a dramatic rise to $529,000 in July, topping
out at $560,000 in October.
All the while, as the federal
government struggled with virus testing and erratic national guidelines, coupled with uneven
responses of many states, the number of cases and deaths also rose
precipitously.
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| Bend median price trends |
In Bend and other communities bars and restaurants shut down or offered limited service. Laid off employees faced daunting financial challenges. But the number of residential home sales soared along with prices.
At year-end 2019 there were 205 single family homes sold that December on less than an acre. That plummeted as the dawn of 2020 to 134 sales in January and 127 in February, rose to 189 in March, dipped to 166 in April and 137 in May.
Then the frenzy began with a rise to 224 sales in June and 318 in July, before declining more slowly from then until 2020 ended.
From the statistics provided by Beacon Appraisal, and based on MLS of Central Oregon data, the decline in sales could likely be as much from continuing high demand, rather than a decline in buyer interest, as available homes for sale reached a historic low.
As of the 2020 close, Beacon Appraisal calculated inventory of available homes for sale at only 0.30 months, an industry metric computed by averaging monthly sales for the year and dividing that by homes listed at a given time. There were 2,573 sales in 2020, but only 65 listings for sale at year-end Beacon reported.
Bend and most of Central Oregon has been in a “seller’s market,” denoted by monthly inventory of less than four months for some time. Bend and Redmond both have consistently had barely three months inventory for many months.
A look at Redmond single family median price shows a less dramatic but steady increase from June of 2020, at $332,000, rising to $375,000 in December, with only a slight drop in November.
Similar to Bend, Redmond’s number of sales also rose substantially in Spring and Summer, form 66 closings in May, to 115 in August, before dropping back to 74 in November and then up to 89 in December.
Region wide for MLS statistical areas, Sunriver had the highest median sale price at $635,000 in December, with the lowest in the combined area of Jefferson County (Madras) and Crooked River Ranch, at $325,000.
Available inventory ranged from a low of 0.20 months in Sunriver to 1.2 months in Jefferson-Crooked River Ranch.
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| 12-month rolling median prices |
Heading deeper into 2021 questions arise as to whether the “pandemic bubble” in prices and sales will stay inflated. Or will there be a slow – or perhaps rapid – deflation given the overarching issues facing the economic recovery during the virus.
The Biden administration has already signaled it wants a new stimulus package approaching $2 trillion, on top of the $900 billion package approved in late 2020, and an earlier one for more than $3 trillion as the pandemic accelerated.
Some economists worry that early and unprecedented deficit spending by the Trump administration combined with the 2017 tax cut will be a further burden. Others say it is necessary to prevent additional economic pain.
Another school of thought argues that stimulus overreach by continued deficit spending and low interest rates could “overheat” the economy. This could occur, the premise goes, if the economy recovers more quickly than expected, increasing inflation risk. The flip side, the contrary opinion goes, is that the Federal Reserve can react by adjusting interest rates upward.
Rising interest rates might cool the real estate market. But that might also be offset as higher net worth buyers in particular shift assets out of what has been a booming stock market, usually more averse to interest rate rises, into more tangible eal estate.
But overall, Bend and Central Oregon’s extremely low inventory of homes for sale may well make this a seller’s market for the foreseeable future regardless of the national macroeconomic climate.
