Welcome to 2022. And maybe fasten
your seatbelt.
Inflation and CPI up, but GDP also up,
interest rates on the rise – maybe with several Fed Reserve moves, midterm
elections on the horizon and Covid still hanging around.
What could go wrong with this bubbling
stew of issues?
And how does this all affect the
macro and micro view of real estate, including down to ground level here in
Bend and Central Oregon?
First, let’s take a look at how 2021
rolled to an end, with a focus on Bend as the largest submarket segment in the
region.
As compiled for the Beacon Report by
Beacon Appraisal, 2021 sales of single family homes on less than an acre in the
greater Bend submarket totaled 2,480, down 3.61% from the comparable 12 months
of 2020. Beacon’s numbers are based on data from the MLS of Central Oregon.
Median prices for homes on less than
an acre sold at a median price of $675,000 in December. On a rolling 12 months
the median price was $642,500, or 30% more than the $496,000 in the comparable period
of 2020.
The largest number of sales, 45% or
1,107 homes, were in the $450,000 to $650,000 range, while only 51 homes sold
at less than $400,000 and 176 under $450,000.
A continuing trend has been the
upward movement of sales at $1 million or more, with 405 in that range during
2021.
Another repeated metric in the Bend
market is tight inventory of only 74 homes for sale at year-end, which
translates to only a 0.40 month supply based on the average of the past 12
monthly sales.
In Redmond, the region’s second
largest submarket, 2021 sales totaled 1,071, a slight increase over the 1,056 sales
in 2020. The 30 homes on the market as of year-end mirrored Bend’s inventory of
only 0.40 monts.
Redmond prices up 27%
Redmond’s median price for December
2021 was $375,000 with the median for the rolling 12 months at $446,500, 27%
higher than $351,000 for the same period of 2020.
More
than 56% of sales, or 605 homes, were in the $300,000 to $400,000 range, evidence
that Redmond continues to be a more affordable choice in the top two regional submarkets.
Across the other five small
submarkets single family homes sold on under an acre totaled 1,121 in 2021, with
most sales, in Crook County (incoluding Prineville) at 340 sales and the next
highest number, 230, in in the Jefferson
County (Madras) and Crooked River Ranch combined.
Inventory in those areas ranged from
lows of only 0.25 months supply in Sisters and Sunriver at year-end to three
months in LaPine.
The Beacon Report only tabulates quarterly median sales for the smaller submarkets. The most expensive submarkets were Sunriver and Sisters. Monthly sales over the four quarters ranged upward each quarter from $794,000 to $865,000 in Sunriver and, in Sisters, from $479,000 to $645,000. Of the other areas, LaPine prices were highest at $391,000 for the 4th Quarter.
As for where to in 2022, it’s doubtful that there will be a major influx of homes coming to market to move inventory from the current sellers market to a level of 4 to 6 months that signal a more balanced “normal” market.
The uncertainty over interest rates, with the Federal Reserve signaling perhaps several rate increases, could dampen demand. And if Covid reaches a peak, begins to decline substantially and there are no severe new variants the rush to resettle out of major urban areas could taper.
Moreover, though, as the customary mantra goes, Bend and Central Oregon will continue to be attractive for lifestyle values, retirement amenities and as a haven for remote working.
Whether prices can continue to rise at rates of 25% to 30% annually could be the most important question for 2022. It’s doubtful.
