Bend Oregon Real Estate - David Foster - Realtor

Bend Oregon Real Estate Market Trends

In this section you will find the 2013 end-of-the-year update to the Bend and Central Oregon real estate market and trends, with MLS statistics, tables, graphs and more. Updated trends through 2015 are available on an individual basis. Please contact me for specifics.

I added this section in 2003 in response to frequent questions about the Bend real estate market and added monthly updates in 2005. I took a break from posting the monthly updates as of the end of 2009 and yearly as of 2013.

Since late Spring of 2006, the Bend Oregon real estate market has been going through a period of adjustment and correction, from a "seller's market" with record high sales and appreciation rates to a "buyer's market" with low sales and decreasing prices. In general most of the market indicators seem to be indicating that prices and the Bend market bottomed out by 2011 and in most cases has improved, rebounded and shown signs of coming back into balance in 2013. The unemployment rate and the number of distress priced properties have dropped significantly and both the local and national economy are showing recovery.

As most experts from around the Country predicted the Bend market has rebounded more so than most. The bottom line is that people want to live here and the long term market projections are more positive than most places in the Country. Even with the drop in the market the average sale price of homes on lots in Bend have increased an average of 11% per year since 1990.

There is both danger and opportunity in today's market, and one of my goals for this section and as a Realtor is to help you see the difference. I welcome your questions about how the current market trends would affect buying and selling real estate decisions for you and your particular circumstances.

Homes On Lots* - List & Sale Price** - Bend Oregon

Tracking Homes on lots of less than one acre is probably the best Bend real estate market indicator, and generally as goes Bend Oregon, so goes the other towns in Central Oregon.

As of the end of 2011 the median sales price had dropped only $1,000 or 0.5% to $190,000 as compared to 10% the previous year. This marked the bottom of the market as it jumped 17% in 2012 and another 22% to $269,000 as of the end of 2013. Total sales as a indicator of market demand followed suit with an increase of 18% in 2012 and another 14% in 2013. Sales slowed slightly because of increasing prices and also a lack of inventory. Total active listings dropped by 37% and represented only 1.9 months of inventory as of the end of 2012.

With the rapidly increasing prices, demand started to slow, active listings increased by 57%, inventory rate increased by 37% to 2.6 months of inventory, the median list price dropped by 5% and the average list price dropped by 3% by the end of 2013. Part of the reason for this was an increase in new construction and fewer distressed priced properties. But also demand started to slip with a more than a 1% increase in interest rates in the last year. Each 1% increase in interest rate is equivalent to a 10% increase in price. Though it slowed a bit in 2013 from 2012 the Bend market appears well on its way to recovery with prices near the 2005 levels.

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Homes On Acreage* - List & Sale Price** - Bend Oregon

The market for Homes on Acreage or on lots of more than one acre tend to lag behind but follow the market for homes on lots because many buyers are willing to forgo acreage when they can buy more house for their money in town. The statistics and trends are less definitive as there are fewer sales and the acreage may be one acre or hundreds of acres.

As with homes on lots, homes on acreage prices bottomed out by the end of 2011 with the median sales price at $299,000. It increased 7% in 2012 and spiked 22% in 2013 to $390,000. The average sale price showed similar trending with a 3.6% increase in 2012 and a big spike of 27% in 2013 to $465,397.

The median and average list price went up 8% and 22% in 2012 and another 30% and 22% in 2013. Demand or sales increased 16% in 2012 but dropped 1% in 2013. This was due in part to the increased prices and the 32% drop in inventory. Probably most noteworthy was the 41% drop in inventory rate from 8.0 months inventory to just 4.7 months as of the end of 2012 and 4.9 months as of 2013. Note that at the worst the market for homes on acreage was at 36.4 months at the end of 2008. Once again the market indicators for homes on acreage suggest this market segment has rebounded dramatically but has slowed slightly as of the end of 2013. Again rising prices, fewer active listings, fewer distressed properties, higher interest rate all contributed to the slow down in 2013.

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Average Sales Price - Residential- Bend Oregon

The Average Sales Price Chart shows the average increase 21% for homes on lots and 27% for homes on acreage in 2013 and the second year of increase since the market bottomed out in 2011. Note that the average sale price of homes on lots had dropped 44% by 2011 from the peak in 2007 but has improved to just 25% less than the peak as of the end of 2013. This reflects close to 2005 prices.

While these improving numbers may be of  little comfort to those who bought at the peak of the market the average sale price increased an average of 7% per year from 1990 through the 2011 which outpaced national averages. With the spike in prices the last two years the average is now 11% per year. Further the average price increased every year from 1990 - 2013 except for 4 years. Overall this shows Bend to be a good long term market that is likely to out perform most.

The average sales price tends to be the most quoted in the media. However if this price includes homes on acreage which can include one or many acres, the statistics tend be skewed as the land value of each property can vary drastically. For example there was one exceptionally high price sale of a house within the urban growth boundary with developable acreage in 2006 which especially skewed that year and is illustrated by the spike in the average sale price for that year. Generally the statistics for homes on lots of less than an acre where the value of the land is closer to the same is usually more statistically valid. Further the median sales price is most valid. Note the median sales price for homes on acreage for 2006 in the following chart and how the one high sale does not cause  the spike in the trending line.

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Median Sales Price - Residential - Bend Oregon

The Median Sales Price Chart  shows the median increase 22% for homes on lots and also 22% for homes on acreage in 2013 and the second year of increase since the market bottomed out in 2011. The median sale price of homes on lots dropped 46% from the peak in 2006 to the low in 2011, but as of 2013 is just 24% off the peak, and now reflects close to 2005 prices. The median sales price has increased an average of 7% per years since 1998 which is the first year it was calculated in the MLS. Once again, this is better than national norms.

The median sales is probably more statistically valid than the average sales price because high and low aberrations in prices don't skew the median as much as the average. Once again the statistics for homes on lots are a better market indicator than homes on acreage because of the difference in the value of land. Note that the peak in median sales price was in 2006 while the average lagged behind and peaked in 2007. Tracking the median sales price seems to give a more accurate reflection of current trends.

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Median Sales Price - Residential - Monthly - Bend Oregon
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The Median Sales Price - Monthly Chart illustrates a common problem with how market statistics can be misinterpreted. Each month a local news media reports the median sales price for the homes sold that month. The Blue line reflects how the median sales price can bounce up and down on a monthly basis and can give a deceptive picture of the market trending. Consider the drop from $298,500 to $259,500 in October which would suggest a big drop in the market. Compare this to the change in the YOY median price of $260.000 to $263,200 for the same time period which shows the market continuing to trend up.

The Red line reflects the median price based on the total sales for the previous 12 months and as such balances out the differences in seasonal and monthly demand and monthly aberrations. It better illustrates how the market is trending. A drop or increase in price one month does not indicate a trend.

Recently the local MLS has also started combining homes on lots with homes on acreage which further skews the statistics reported by the local media. I still compile the stats for homes on lots separate of homes on acreage to give a better indicator of the market and thus my stats may not agree with media published numbers.

Homes On Lots - Active & Sold - Yearly - Bend Oregon
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The Active & Sold chart for homes on lots illustrates the basic relationship between supply and demand for the Bend real estate market over the last 10 years. Note that the demand as measured by the number of sales started to jump in 2003 (up 9% from 2002) and peaked in 2005. Demand also outpaced supply as shown by the active listings at the end of that year which reached a low point in 2005. By the spring of 2006 supply had started outpacing demand as prices also maxed out and this was reflected by a 28% drop in total sales and a 193% increase in supply by years end. Demand continued to drop through 2008 and it wasn't until 2009 that inventory levels started to come back in balance with demand. Much of the excess new construction had been purged by 2009, over priced re-sales had been taken off the market and prices had dropped significantly.

The market bumped along the bottom and was nearly flat for much of 2010 and 2011. Then in 2012 after prices bottomed out in 2011 the demand started to spike and sales went up 18% in 2012 and another 14% in 2013. Supply bottomed out in 2012. New construction, higher prices and interest rates, and fewer distress priced properties resulted in inventory levels increasing in 2013.

Distress priced bank-owned and short sale properties drove sales prices down for several years. In 2008 just 10% of the total sales of homes on lots were distressed priced, but this jumped to 56% of sales in 2009 and as high as 70% of some monthly sales in 2010. This rate started to drop and distressed priced properties represented just 11% as of 2013 - another positive indicator of an improving market.

Homes On Acreage - Active & Sold - Yearly - Bend Oregon
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The Active & Sold chart for Homes On Acreage basically mirrors the supply and demand relationship for homes on lots of less than an acre.  Note that again in 2003 the demand as measured by the number of sales started to jump (up 24% from 2002) and again peaked in 2005. Demand also outpaced supply as shown by the active listings at the end of the year which reached the lowest point in 2005. And once again by the spring of 2006 supply had started outpacing demand with a 34% drop in total sales and a 93% increase in supply by years end. Demand continued to drop through 2008 but has steadily increased since. Inventory levels also started to come back in balance with demand with 8 months of inventory as of the end of 2011 and 4.9 months as of the end of 2013.

Inventory Absorption - Homes On Lots & Acreage - Bend Oregon

*Data Points: months of inventory - active listings / (last 12 months sales/12).

The Inventory Absorption Rate chart is perhaps one of the best illustrations of how the Bend real estate market is trending. It measures the market demand and supply relationship in terms of number of months of inventory. Historically 6 months of inventory have been considered a balanced market. Less than 6 months have been called a seller's market and more than 6 a buyer's market.

Supply started to outpace demand in the spring of 2006 and months of inventory started increasing. The out-of-balance market reached it's worst point as of August 2008 when homes on lots went to a high of 16.5 months of inventory. This coincided with the beginning of the world wide economic crisis and the 'Great Recession". There was almost no demand at that time. Homes on acreage were hit even harder and had 40.2 months of inventory the same month. Sellers with homes on acreage simply had little hope of selling at that point in time.

Since that time the market has been improving and purging excess inventory including the glut of new construction that was left over when the market crashed. As of November 2009 the market hit the 6 months inventory level, or 'balanced' market point. The trend of demand outpacing supply continued from this point until we reached a low of just 1.9 months of inventory of homes on lots by January 2013.

By the end of 2012 prices had increased to the point that demand dropped off a bit. There were fewer distress priced properties and the supply increased including new construction. We ended 2013 at a higher 2.6 months of inventory.

During these last two years with low inventory and high demand we saw a seller's market with many examples of multiple offers and buyers competing for the best values. By the end of 2013 it was still a seller's market but has been trending back toward a more balanced market.

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Active Listings - Summary Price Information

Active Listings - Bend Oregon
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The Active Listings Tables shows the distribution of active listings across all price ranges. It illustrates the disparity of the list price of active listings and the average and median sales price. It also provides some insight to potential buyers and sellers as to the more narrowed price range that interests them.

Previously I noted that the absorption rate had dropped to the point that the 496 active listings of homes on lots as of the end of 2013 represented just 2.6 months of inventory. Again that means that based on the demand for the previous 12 months it would take just 2.6 months to sell the current inventory. However, that is the overall Bend market.

If you were one of those people that bought your home at the peak of the market in 2006 through 2007 with median sale price around $350,000 then you might be most interested in the 33 active listings between $350,000 and $399,900. Based on the total sales for that price range for 2013 those active listings represented only 2.2 months of inventory as compared to 7.6 months as of the end of 2011. This means the market had rebounded such that those buyers who bought a 'median priced' home at the peak of the market had a much better chance of selling as of the end of 2013. If you happened to have a home in the $750,000 to $800,000 range you are looking at 8.9 months of inventory, but even that is much better than the 16 months of inventory as of 2011.

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Deschutes County Notice of Default

The Deschutes County Notice of Default Table represents one of the big variables affecting the local real estate market - bank-owned foreclosures. While not all properties that receive a NOD actually do end up in foreclosure the number of NOD and Judicial Lis Pendens does gives a picture of the foreclosure trend.

Distress priced bank-owned and short sale properties drive sales prices down. In 2008 just 10% of the total sales of homes on lots were distressed priced, but this jumped to as high as 70% of some monthly sales in 2010. In 2013 the median sale price of distress priced properties was $185,000 and $280,000 for non-distressed or 'traditional' sales. The point is that as long as there are low priced distress properties buyers will want to pay those prices and sellers who have 'traditional' priced homes will find it hard to sell. Further the statistical averages will be skewed. The good news is that the number of distressed priced properties has dropped to just 11% of total sales as of 2013.

You will notice from the table above that the total number of properties in Pre-Foreclosure peaked in 2010 and dropped 74% as of 2013. Part of the reason for this is that the market improved, demand and prices went up, and fewer people were 'upside-down' (the loan amount exceeds the market value of the property) and unable to sell their properties.

Another reason for the drop in foreclosures was Oregon passed a law (SB 1552) requiring all lenders to submit to mediation with all property owners facing foreclosure if the lender chose the non-judicial notice of default process of foreclosure. The goal of the mediation was to see if there wasn't a way to restructure the loan or find some other way for the home owner to avoid loosing their homes. The law applied on foreclosure actions initiated on or after July 11, 2012 and had the unintended result of almost all lenders switching to judicial foreclosures. While more costly and including a period of redemption, the judicial foreclosure did not require the mediation. The State followed up in 2013 with SB 558 by adding the mediation requirement to the judicial foreclosure. This law applied to foreclosure actions initiated starting Aug. 4, 2013, after which all foreclosures slowed to a relative trickle compared to years past.

Until the bank-owned properties and other distress priced properties are absorbed the market will not fully recover. However though the number of NOD are down, it is difficult to impossible to determine just how many bank-owned properties there are in the queue or how many other 'upside down' owners there are. This has been called the 'shadow inventory' and is probably the single most important variable that will affect the Bend market and prices in the coming years. Many property owners would sell if they could and the fact that they are upside-down and can't keeps the supply low.

Short sale properties represent another group of distress priced properties that also negatively affect the local market much as the bank-owned. However these also dropped significantly in 2013. Further more the Mortgage Debt Relief Act of 2007 that allowed the homeowner to avoid income tax liability on any lender forgiven loan amount, expired as of the end of the year. As a result the short sale option which was always a difficult option for both sellers and buyers is not a viable option for many sellers.

On the positive side the number of short sales and foreclosures has decreased in Deschutes county through 2013. Part of the reason why inventory levels are still low is that there are still many upside-down owners who don't have enough equity to sell. Some predict a lot of foreclosures still to come, and some say they have peaked out. The local market does seem to be absorbing them fairly quickly and as prices go up fewer owners will face foreclosure. If the decreasing NOD rate, the high absorption rate of bank-owned and thus the low inventory levels are valid trend indicators then the market is going to improve. If however the banks are just waiting to dump more properties on the market soon, then recovery will be slowed. Time will tell...

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Email David for all areas and property types in Central Oregon 2013+ YTD Statistics.

Information has not been verified, is not guaranteed and is subject to change.
Statistics compiled from Central Oregon Association of Realtors MLS.
Delayed reporting of sales to the MLS may skew total results.

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