In this section you will find the 2011 end-of-the-year update to the Bend and Central Oregon real estate market and trends, with MLS statistics, tables, graphs and more.

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 the monthly updates as of December 2009 and may start monthly updates again in 2012. Please contact me for specifics in the meantime.

Below you will find end-of-the-year statistics for 2011 with some brief commentary explaining the graphs, charts, statistics and the trends they seem to suggest. In general most of the market indicators seem to be indicating that prices and the Bend market has been bumping along the bottom for some time, and is poised to rebound. High unemployment, distress priced properties and an improving but still weak local and national economy may slow the recovery, but most experts from around the Country predict the Bend market will rebound more so than most. The bottom line is that people want to live here.

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

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 only 0.5% to $190,000 as compared to 10% the previous year. While total sales were flat, active listings dropped another 5% and reflects only a 3.6 months inventory based on the sales rate for the previous 12 months. Historically a 6 month inventory reflects a balanced market. Meanwhile both the median and average list prices went up 27% and 11%. All these indicators suggest the Bend market bumping along the bottom and possibly starting to rebound.

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.

As of the end of 2011 the median sales price had dropped 5% to $299,000 as compared to 9% the previous year. With the median and average list price down 9% and 13%, and less inventory of homes on lots, total sales jumped 20% for the year. Probably most noteworthy was the 13% drop in inventory to 8.0 months inventory which was at 36.4 months at the end of 2008. Once again the market indicators for homes on acreage suggest this market segment is also improving and may also be approaching the bottom.

The Average Sales Price Chart shows the average drop just 3% for homes on lots and 8% for homes on acreage - both at a lesser rate than in years past. Note that the average sale price of homes on lots is down 44% from the peak in 2007, and now reflects 2003 prices. While it is little comfort to those who bought at the peak of the market the average sale price has increased an average of 7% per year since 1990 which outpaced national averages. Further the average price increased every year from 1990 - 2007, showed a decrease for just the last 4 years, and overall shows a good long term market.

The average sales price tends to be the most quoted in the media. However homes on acreage can reflect one or many acres and thus the statistics tend be skewed. 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. 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.

The Median Sales Price Chart shows the median dropped just 0.5% for homes on lots and 5% for homes on acreage - again at a lesser rate than in years past. Note that the median sale price of homes on lots is down 46% from the peak in 2006, and now reflects 2003 prices. However the median sales price of $190,000 is also 48.5% higher than in 1998 which is the first year it was calculated in the MLS.

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.

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 gives a deceptive picture of the market trending. Consider the drop from $199,400 to $165,000 in November. 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. It better illustrates how the market is trending. A drop or increase in price one month does not indicate a trend.

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 and 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. 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.

Distress priced bank-owned and short sale properties further drove sales prices down. In 2008 just 10% of the total sales of homes on lots were distressed priced, but this jumped to 56% of sales in 2009.

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 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 have also started to come back in balance with demand with 8 months of inventory as of the end of 2011.

*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 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 a glut of new construction. As of November 2009 the market hit the 6 months inventory level, or 'balanced' market point. This trend has continued until we reached a low of just 3.6 months of inventory of homes on lots by the end of 2011. (Note that as of the end of February 2012 it has dropped to just 3.0 months.) Even homes on acreage are much better at 8.0 months. As prices and inventory have dropped and demand increased we now see evidence of a seller's market with many examples of multiple offers and buyers competing for the best values. In general we see a market and prices that may well be bottoming out and poised to begin rebounding.

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 501 active listings of homes on lots as of the end of 2011 represented just 3.6 months of inventory. Again that means that based on the demand for the previous 12 months it would take just 3.6 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 interest in the 51 active listings between $350,000 and $399,900. Note that the average days on market is higher than the average of 143 at 173 DOM and based on the sales of homes in that specific price range in 2011 those 51 listings represents 7.6 months of inventory - far higher than the average 3.6 months. If you happened to have a home in the $750,000 to $800,000 you are looking at 16 months of inventory and perhaps a difficult time selling.

On the other side of the coin, buyers in the $350,000 to $400,000 or higher price ranges will have more negotiation leverage than if they are trying to buy a home for less than $200,000.

Provided by Amerititle

The Deschutes County Notice of Default and Default Rescissions charts represent 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 (note the recessions) the number of NOD does gives a picture of the foreclosure trend.

As I mentioned above 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 56% of sales in 2009 and went as high as 70% of some monthly sales in the next year. In 2009 the median sale price of distress priced properties was $185,000 and a little less than $300,000 for non-distressed or 'traditional' sales. In 2011 the gap was $150,000 and $255,000. The point is that as long as there are low priced bank-owned 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.

Until the bank-owned properties and other distress priced properties are absorbed the market will continue to struggle. However it is difficult to impossible to determine just how many bank-owned properties there are in the queue. 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.

On the negative side the NOD increased in Deschutes county through 2010, but on a positive side the NODs were down 11 out of 12 months in 2011 and down 37% for the year. Some predict a lot of foreclosures to come, and some say they have peaked out. On the positive side only 12% of the active listings of homes on lots were bank-owned properties as of the end of the year. The local market does seem to be absorbing them fairly quickly. The lower priced bank-owned properties tend to get multiple offers as soon as they hit the market and Bend does not have the problem of a lot of vandalized, empty foreclosed properties that you read about in other parts of the Country.

Short sale properties represent another group of distress priced properties that also negatively affect the local market much as the bank-owned. I will save a discussion of this group for another time. 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 and the number of short sale properties increase, then recovery will be slowed. Time will tell...