The changes have been slight, only one
here and another there.
But the mere sighting of a price
reduction in Bend’s single family home listings is enough to get attention in a protracted sellers market.
Now, moving into the traditional “selling
season” of late Spring and early Summer more and more listings are notable with
those euphemistic broker talk phrases such as “price adjustment” and “new
price,” or "improved price." And in some cases the
straightforward, unambiguous, “price reduced.”
Open houses hosted by brokers have also reemerged, after nearly disappearing in a heated market environment where multiple buyers would bid on properties before they hit the local multiple listing service.
Another slight but potentially
significant sign: Bend single family home inventory for May reached 1.3 months.
Albeit not a monumental number of available homes--and well short of the 4-6
months considered a balanced market—this was still double the 0.5 months supply
the same month last year.
Prices also dipped since April, down
from a median of $770,000 to $740.000. But that was 17.8% over the $628,000
median the same month of 2021.
The statistics are gleaned from the
Multiple Listing Service of Central Oregon database as reported by Beacon
Appraisal Group.
As a micro market Bend and Central
Oregon may not fit neatly into the marcro national market. But it’s unlikely
the region’s substantial recreation and lifestyle attractions will keep it insulated
from some of the same emerging headwinds.
This has happened before. Looking back, on
the eve of the Great Recessoin, as it is now enshrined, a top producing Bend
broker optimistically said, “we’re different, it won’t happen here.”
In a local television interview, the
broker confidently commented that Bend’s attractions would keep it from
plummeting into the abyss as was occurring across the country. Leading up to
that year Bend, including Deschutes and neighboring counties, had topped the
federal Federal Financing Housing Agency’s list as the highest home appreciation
metro statistical area.
Barely a year later Bend had fallen to
near the bottom in housing appreciation of the approximately 300 MSAs tracked
by the federal agency.
One factor now driving the national market
is a dramatic increase in lending rates. As of June 16, the federal housing
agency Freddie Mac reported that average 30-year mortgages had risen to 5.78%,
a major jump from the approximately 3.5% in early March.
Even with downward “price adjustments” in Bend homes, the increase in mortgage payments of several hundred dollars will continue to challenge many younger Bend families struggling to buy a home.
One variable that could prop up Bend’s
market is the ratio of cash buyers, even as median prices ratchet upward. Beacon
Appraisal’s analysis shows that 35% of Bend single family closings in May were
all cash transactions, indicating those buyers are solvent enough to avoid
financing and higher loan costs.Perhaps tamping down the Bend in-migration could be the cooling of what already has its own acronym,the WFH, or “work from home” movement. In turn that has spawned another acronym, BTO, or “back to the office” as some companies are requiring Covid distanced workers to get back to their desks.
An interesting anecdote comes from a broker in one of Washington state’s premier remote working environments, where a remote working day could be prefaced with a quick ski in winter, mountain bike in summer, or even a kayak on a lake after putting in the time.
The broker was representing a couple who had worked remotely during Covid from a small cabin, then decided to move up with a larger home purchase. The buyers were well-qualified with good incomes, but the bank decided to verify details in a call to their employer. It turned out there was a glitch – the company was bringing employess back to the office, and those who wanted to continue remote working would face a pay cut. The sale did not go through.
Closer to home some appraisers, not Beacon Appraisal cited earlier, say they’re seeing obvious changes, while maybe slight, that could portend a new era in regional housing.
One appraiser offered that sellers are
having a difficult time grasping the changes from only a few months ago.“The largest current struggle IMO is getting sellers to price their home to the changing market. People simply cannot believe that their neighbor sold for $x and they have the same home, but should list for lower than that.”
Another view comes from a leading brokerage team with the largest real estate office in Bend. Their view as expressed in a recent post and podcast is that the market is “moderating” toward being more normal – neither a crash or a correction.
Also difficult to factor in, either locally or nationally, is the sudden braking of what has been a continuing bull market for stocks.
Even during the pandemic, stocks were hardly affected. Then came the war in Ukraine, bringing higher inflation and the Federal Reserve’s admittedly delayed response in raising interest rates.
Now those with once-healthy 401K portfolios are looking nervously at the future, perhaps attracted by higher treasury yields as insurance against any unforeseen calamities. Merged with the uncertainty over midterm elections, intractable political divisiveness fueled even more by election deniers and many people may just want to take a break, wait it out to see what happens.
Here area some data points and comments on the national market:
· The National Association of Realtors reports home sales were down 8.6% in May from the same month of 2021.
· New rents on single family homes rose 14% May 2022 compared with May 2021.
· NAR says there’s still only a 2-6 months supply of homes across the country, but that’s up 33% since February.
