“Stasis” and “rebalancing” are a
couple of terms now used to describe the Bend and Central Oregon housing
market at the conclusion of 2022.
And any major movement up or down
will likely depend on the same factors that economists, the Federal Reserve,
the Biden administration and politicians continue to assess and debate –
inflation, a possible recession, interest rates amid an overarching and divided
political landscape.
The monthy median price for a Bend single family home on less than an acre in December of
2022, was $678,000, compared to $675,000 the same month of 2021 and the peak
monthly median for the year reached $773,000 in March.
The numbers are derived from The
Beacon Report, compiled by Beacon Appraisal Group with data from the MLS of
Central Oregon database.
For the entire 12 months ending in December
the rolling median sale price was $723,500, 13% above the $642,500 for the same
period of 2021.
Bend single family home sales for
the 12 months of last year dropped to 2023, a more than 17% drop, or 457 sales,
from the 2,480 reported for all of 2021.
Inventory at the end of December was
1.5 months, calculated by averaging sales the previous 12 months and dividing
into the currently active listings of 226 homes. Notably, at the end of 2021
there were only 74 current listings, a scant 0.4 month supply. A more stable
buyer-seller balanced market is considered to be four to six months, technically
meaning Bend is still a seller’s market.
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| 2022 by the numbers |
But seller’s appear to be sitting on the sideline for a number of reasons. High interest rates would mean many buyers would face higher payments if they buy another home; prices have been leveling in Bend, leading some sellers to hope for a return to the escalating appreciation of previous years. And buyers may also be waiting for an improvement in inflation trends and interest rates.
The R word and political direction enter the discussion
Add into the mix the possibility of
a recession, uncertainty of political direction following recent elections and
a presidential vote looming in 2024; and a tough year for stocks and retirement accounts. Waiting out the housing market may
have considerable appeal.
Days on market, a marker of demand
rose to 30 days, the highest level since April of 2020, when the tabulation of
that indicator was revised to reflect the days from the listing date to an
accepted offer, rather than a closed sale.
For much of 2020, 2021 and 2022 the
DOMs were in single digits before rising steadily to double digits from July of
this year– with the exception of a blip down from October to November.
One of the more notable signals of a
softening market for new single family homes is a steady drop in building permits,
which ended 2022 at the lowest level in four years. In April of 2021 a four
year high of 90 permits was recorded, dropping to 29 in December of 2021, then
rising to 87 in March of 2022, before plummeting since August to only 16
permits issued in December.
As in 2021, the four highest sale
price ranges of 2022, in categories of $50,000, were from $450,000 to $650,000.
Another trend continued with the number of $1 million plus sales rising from 15.74%
of 2021 sales to 19.67% in 2022, indicating some strength in the more upscale categories.
Going north 18 miles to Redmond, 2022
closed in December with monthly median single family prices at $425.000, below the $467,000
the same month of 2021 and substantially off the $538,000 reached in April this
year.
On a rolling 12 month basis, the
2022 Redmond median price was $512,000, a rise of 15% from the $446,500 for the same
period of 2021 – slightly more than the 13% Bend increase.
Most Redmond sales were clustered in
the $400,000 to $600,000 range with only two sales at more than $1 million.
Redmond also had more than 100 sales in the lower $300,000 to $400,000 range,
with only 70 in Bend.
Redmond’s total sales dropped from 1,071
in 2021 to 782 in 2022, while the number of listings at year end rose to 112
from 37 the previous year. Based on the average monthly sales Redmond’s inventory
stood at 1.5 months, compared to 0.4 months at the end of 2021.
It’s likely that Redmond’s market
experiences some of the same factors as Bend, in the lack of inventory along
with seller and buyer hesitation – by choice and/or necessity – due to
background economic factors.
Together, Bend and Redmond account
for 75% of the Central Oregon housing market, with a total of 3,094 of the 4,215
sales across the region.
A regional homebuilder see's "rebalancing" in 2023
In a recent blog post, Pahlisch Homes, the top middle to lower luxury homebuilder in the region, called the current market in a “much needed rebalancing” stage, citing inflation, recession fears and higher interest rates as slowing activity.
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| Interest rates since 1971 |
One statistic on the positive side, the company post noted, is that interest rates remain below the 7.76% fixed rate 30-year average from April of 1971 to December of 2022. As of January 5, Freddie Mac reported an average rate of 6.48%.
Pahlisch's point is well-taken. But consumers had become conditioned to historically low rates the past two years, even half of the current rate. Changing perceptions takes time.
First American Title’s weekly market activity indicator continued to rank the Bend housing as in “stasis” as of January 10. The national title company observed that prices have not moved upward for several weeks, but homes listed for sale are “sufficiently low to keep us in the Seller’s Market zone..”
Another potentially more dire concern that could upend all economic sectors– housing, retailing, stocks and other investments – could be a battle over raising the nation’s debt ceiling. This is often a contentious issue, pitting Republicans and Democrats in brinkmanship negotiations that are often resolved at the last minute with long-term solutions kicked down the road.
Now, with “burn it down” factions holding sway in the new Republican House majority, raising the ceiling could be even more difficult.
As a financial report from Axios Macro put it:
“A self-inflicted fiscal crisis could come at a terrible time amid a fragile U. S. economy, and undermine a Treasury market that underpins the world financial system.
In that case, it’s unlikely that housing in Bend or anywhere else in the country would be insulated against the prevailing economic climate.
