Amid another record sales figure, buyers are pushing back

Median sales figure graphThe median sales price of a home in Bend, Oregon, set another record in July, the second month in a row that figure has reached unprecedented levels. But along with the rising median sales price came evidence that the market is highly competitive and buyers are pushing back on overpriced homes.

July’s median sales price was $412,500. That’s $3,500 (0.9 percent) more than June’s median price. June and July are the only two months out of the more than 10 years for which the Skjersaa Group has data that Bend’s median sales price has exceeded $400,000.

Compared with the median sales price of July 2016, this July’s figure rose 13.2 percent. The year-over-year increase in June was 10.5 percent – meaning that July’s sales prices showed a greater annual increase than June’s.

But there are signs that sellers need to get ahead of the game and price their homes competitively.

The average days on the market in July was 141 days, compared with 91 days in June. The 141 days is the highest for any July since 2012, which is the only year since 2010 that a July has had a higher days-on-market figure than this year. Put another way: July 2017’s days on the market are the second-highest for any July in the last eight years.

Looking at it another way, consider that the highest figure for average days on the market in any month in 2016 was 142 days – and that came in February, a typically slow month for home sales.

Inventory of homes matches high for 2017

And the inventory – the number of months it would take to sell all homes currently on the market given the current pace of sales – rose in July to 3.7 months, matching the highest month of this calendar year (January) and last exceeded in February 2016, when there was 4.9 months of inventory.

Our data is broken down by various price ranges, and as is usual with our monthly sales figures, not every price range tells the same story.

The inventory of homes priced at $625,000 and less is at most three months. Homes priced at more than $625,000 are driving a big part of the overall inventory figure.

Sellers reduce prices on sizable fraction of homes

Accompanying the record for median sales price figures these last two months is another noteworthy — and perhaps counterintuitive — statistic: the percentage of homes on the market with price reductions.

That number was 43 percent in June and 40 percent in July. We have to go back to February 2009 — before the housing market rebounded — to find a month in which 40 percent of the homes for sale had a price reduction.

There were 570 active listings in July. That’s the highest amount since August 2015 (583 active listings). And on Aug. 1, 2017, there were 638 active listings, the most since there were 638 in October 2014.

The sales data these past couple of months are open to various interpretations. Wherever you are in the real estate cycle — buying a home or thinking of selling — I can help you. My integrity, ethics and experience will ensure you of an optimal outcome. To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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ARM vs. fixed-rate loan: Which is right for you?

Even though interest rates for traditional 30-year mortgages are near the lowest on record, some home buyers in Bend, Oregon, take on adjustable-rate mortgages, or ARMs. These loans start, for a predetermined time, with an interest rate even lower than that of a traditional 30-year loan, after which the rate adjusts – and payments can increase dramatically.

Are there advantages to ARMs? And if so, who can benefit from them?

The obvious benefit of an adjustable-rate mortgage is the money saved during the initial, fixed-interest rate period. A few years ago, The Motley Fool ran the numbers on a $200,000 home and said the difference in lower payments and greater equity after five years – just before the interest rate would adjust – would be $8,450 compared with a fixed-rate loan.

Adjustable-rate loans can work for short-term owners

The example from The Motley Fool highlights one type of home buyer who can benefit from an ARM. “For people who know they probably won’t remain in their homes beyond a five-year period as the result of personal, work, or family situations, an ARM could make a lot of sense,” the article notes.

Even if an owner will be in a home after the interest rate in an ARM changes, there is a window of time in which an ARM will have required less in payments than a traditional mortgage.

A financial services firm in Bend provided an example of a $300,000 loan, a 10-year ARM at 3.625 percent and a 30-year fixed rate of 4.25 percent. The firm’s calculations showed that the ARM would be $107 a month cheaper than the fixed-rate loan for the first 10 years.

And even in a worst-case scenario of the interest rate adjusting to 8.25 percent after 10 years, the home buyer would save money compared with a fixed-rate loan for 22 months into the adjustable-rate period. So, for nearly 12 years, the homebuyer would have paid less with an ARM than with a fixed-rate loan.

An ARM can work if your income will increase

If you know your income will increase before the interest rate on an ARM resets, this type of loan might be something to consider. An adjustable-rate loan can allow you to get into a house at a lower monthly price point than a traditional loan, and once that bump in income arrives – a spouse re-enters the work force, for example – the post-adjustment payment could be manageable.

Many of the scenarios in which an ARM appears not just workable but even advantageous are predicated on knowing what the future holds about your situation – whether you will still be in your house, whether your income will be greater, and so on. As the cliché goes, even the best laid plans … .

Knowing one’s risk-tolerance level and understanding the subtleties of an ARM are necessary in weighing whether one is better than a traditional fixed-rate mortgage. I have a wealth of contacts in the financial services industry and can put you in touch with a professional who will help you map out the most advantageous loan for your situation.

If you’re in the market for a home, or considering putting yours up for sale, as your Realtor, I will exceed your expectations in the course of your transaction. To learn more about how I can assist you in your Bend real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Record for median sales price in June; $400K mark exceeded

Back-to-back months of declines in the median sales price of homes in Bend, Oregon, ended in June: The median price was $409,000 – a record for the 10-plus years for which the Skjersaa Group has data and the first time in that period that the median price has reached $400,000.

June 2017 figures share some characteristics from the same month in previous years, and the most important one might be that only once in the preceding 10 years was June the high-water mark for the median sales price in a calendar year.

June had the highest number of active homes (442) and the highest number of sold homes (246) this calendar year to date, as was the case with June each of the previous three years. In all three of those years, the June sales price exceeded what was then the year-to-date median price for the respective calendar year, but later months those years exceeded June’s median price.

Translation: Based on data from the last three years, June’s record-breaking sales prices could very well be eclipsed this calendar year.

It’s worth remembering that the median sales price is not an average sales price. The median is the amount at which half of the homes sold in a given month went for less than the median, and half went for more than the median.

Using the median figure rather than the average prevents the figures in question from being skewed by a handful of high-end homes.

(Which didn’t happen, anyway. Ten homes priced for $825,100 or more were sold in June, one fewer than in each of April and May.)

The inventory of homes on the market increased in June to 3.3 months. That’s the highest for a June since 2014, when it was 4.2 months. But, similar to a phenomenon we pointed out last month, the inventory for Bend as a whole is weighted by the most expensive tier of homes.

Inventory for homes in the range of $825,100 and $925,000 was 3.2 months, and for homes priced at $925,100 and up, it was 15.2 months. For homes priced up to $825,000 – which made up 79 percent of the active listings in June – the inventory was three months and less.

June’s median sales price was 10.5 percent higher than in June 2016. That marked the third year in a row that the year-over-year increase in June exceeded 10 percent. June’s $409,000 median price was 7.9 percent over the previous month’s – and that’s the highest month-over-month increase for a June since 2011, when the region was clawing its way out of the housing decline.

Another record was set in June, and that was for lowest average days on market: 91 days. It was the first time the average was less than 100 days since July 2016 (when it was 97 days) and only the third time since at least January 2007 (the extent of our data set) it has been less than 100 days.

It seems clear the real estate market in Bend has hit full stride. It’s an exciting time to be in the market – as a buyer or a seller. Whatever your position, I can assist in bringing about a solution that leaves you satisfied and in a great position.  To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Median sales price falls for second month in a row. What happened last time that occurred?

The housing market in Bend, Oregon, tapered slightly in May, as the median sales price fell for the second month in succession and the inventory of homes on the market rose compared with April. Still, the year-to-date median price remained steady at a price that represents a high for the 10-plus years for which we have data.

May’s median sales price was $379,000. That’s 4.1 percent lower than March’s median sales price of $395,000 and 2.8 percent lower than April’s median of $389,950.

If recent history is any indication, this dip could eventually turn into a trampoline. The last time monthly median sales prices declined in consecutive months was in 2016 (when they fell for three months in a row, in fact). That stretch of monthly declines after the median price reached $374,000 in May ended emphatically with a 7.5 percent month-over-month increase from August to September to $385,750 – the calendar-year high for 2016.

Two hundred seventeen homes were sold in May, four fewer than in April. The number of houses whose priced was reduced was 107 — 32 percent. The last time the percentage of active listings with a reduced price was that high was in the three-month stretch in 2016 when the monthly median sales figure dropped. (See the previous paragraph for what happened after that three-month stretch.)

Year over year, May’s median sales price showed a 1.3 percent increase from the corresponding month in 2016. That is the smallest year-over-year increase in a monthly median sales figure since January 2016. That month, the median sales price of $317,450 was 3.7 percent lower than in January 2015.

The 2017 year-to-date median price stayed at $380,000 after taking into account May’s sales. That remains the highest year-to-date median price on record. In fact, each month of 2017 has reset or tied the record for the highest year-to-date median sales price.

High-end homes a big part of inventory

The inventory of homes rose to 3.1 months in May. Inventory — expressed as the time that would be required to sell all homes on the market given the current pace of activity — was 1.7 months in May 2016.

May 2017’s inventory is skewed, however, toward higher-priced homes. Of May’s 337 active listings, 33 percent were priced at more than $725,000 (that percentage was 25 percent in March and 31 percent in April). For homes priced from $225,100 to $625,000, the inventory is in the range of two months. And two months of inventory falls well on the side of being a “seller’s market.”

Tied to the inventory is the volume of homes on the market. Each month this year, the active listings have been the fewest for those respective months in the 10-plus years for which the Skjersaa Group has data. As mentioned in the previous paragraph, the quantity of homes priced at $725,000 and less is particularly tight.

Late spring and summer traditionally are the most active months for real estate, and if you’re looking to buy a home or considering putting yours on the market, I can be of help. In my time as a Realtor, I have helped clients achieve their desired results regardless of the time of year and the trend of the market. To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Do these 5 things before you move into your newly purchased home

So, you’ve bought a house? Congratulations. Few things in our lives are more momentous.

Before moving into your new home, though, there are some things you might want to consider taking care of. Addressing these items now, before you’re settled, will generally be easier or more beneficial that if you wait to have them done.

1) Cleaning duct work. The duct work in your home is generally out of sight, but don’t let it stay out of mind. Dirt and debris accumulate in your ducting over time and affect the quality of the air you breathe. Even if you’re moving into a new home, there is reason to have your ducts cleaned before moving in. Dust, dirt and construction debris can fall into the ducting of even new homes. When choosing a company to clean your ducts, make sure it operates a truck-mounted system. Anything with less power will likely do no more good than an off-the-shelf shop vacuum.

2) Interior painting. The paint scheme of a house is among those things a buyer can change, unlike its location or the size of its yard. If you’re considering having your interior painted, keep in mind that it’s much more convenient to do it before the house is inhabited. Moving furniture to allow access to walls, and then dancing around that furniture while it’s out of its normal position, can be a headache. An acquaintance of mine said it was much easier putting up with weeks of major renovation in a bathroom than it was to endure the disruptions caused when he had his master bedroom and living room painted.

3) Carpet cleaning. Unless you’re moving into new construction, it’s safe to assume that the carpet in your home has had its share of traffic and its share of stains. Consider who else might have lived in your home — renters, maybe? — and their possible incentive (or lack of it) to keep the carpet in top shape. Particularly if you have children who presumably will play on the carpet, it’s worth considering getting a professional carpet cleaning.

4) Wall and ceiling fixtures. Related to completing any interior painting before moving in is evaluating fixtures such as lights and ceiling fans. If you’re thinking of replacing them, it’s best to do so before you move in — and before you have any interior painting done. It’s hard to determine, when changing fixtures, how much of a wall or the ceiling a new fixture base will obscure. Changing fixtures could uncover a paint scheme that no longer matches the remainder of the room.

5) A whole-house water filter. This is of concern in areas of hard water or questionable water quality. Hard water can stain appliances and your clothes. A build-up of materials can reduce the effectiveness of appliances and shorten their life expectancy. Installing a whole-house water filter before taking up residence in a new home will prevent the hard water from damaging appliances. Having appliances free of scaling stains will be a benefit should you in turn decide to sell your home. Appliances with hard-water build-up can turn off prospective buyers.

I love seeing people move into new homes. If you’re in the market to buy a home in Bend, Oregon, or if you’re considering selling your home, I’d like to help you. I have experience with and knowledge of the Bend market that will benefit you. To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

 

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Solid evidence that we’re not in another housing bubble

As the median sales price of a home in Bend, Oregon, nears the heights reached before the housing market crash, it’s reasonable to wonder if we’re experiencing another bubble.

Although no one can predict the future, there are solid indications that the rise in housing prices is not due to speculation or unsound lending practices. Instead, the evidence supports the theory that supply and demand are driving housing prices.

Interest rates this week hit a calendar-year low, despite recent increases in the Federal Reserve’s benchmark rate. The average of 30-year fixed-rate loans dropped to 3.95 percent (assuming an average of 0.5 point — a fee a borrower pays that corresponds to 1 percent of the loan amount.) Rates such as these — very low from the long-term U.S. housing market perspective — increase the buying power of those looking for homes.

Another piece of evidence is the percentage of mortgage originations with a relatively low credit score. Credit scores of less than 620 drew the largest percentage of mortgage loans in the first quarter of 2007 than at any other time in the last 14 years. In fact, sub-620 credit scores in that quarter had a larger share of the market than credit scores between 620 and 659.

Today, sub-620 credit scores make up a small fraction of mortgage originations — it’s the smallest credit-score segment obtaining mortgages. The conclusion: People who are buying houses have the financial means to do so.

Labor market indicators and the trend in the United States’ gross domestic product also argue against a recession in the near future. In Bend specifically, there are a sizable number of residents whose livelihood does not rely on local economic activity. The diversification that Bend’s abundant home-based workforce adds to the local economy provides a foundation of support to the local real estate market.

Also, as Bill Valentine, of wealth management firm Valentine Ventures has said, there are more people who want to live in Bend than the local housing supply can keep up with. Bend’s population has grown by 5 percent from 2016, according to a U.S. Census Bureau estimate released this week. The Bulletin noted that equates to 12 people moving to Bend every day.

When CoreLogic’s national forecast calls for a 4.9 increase in home prices by March 2018 — and that’s a forecast that encompasses all of the United States, not just a growing city such as Bend — it seems reasonable that prices in Bend could continue to increase — and increase more than the national average.

“If you want to see where we’re headed, look to other exclusive mountain towns,” Valentine said. The median price of a home in Boulder, Colorado, for example, is almost $550,000, about 38 percent higher than in Bend.

Clearly Bend’s is a dynamic housing market. Whether you’re looking to buy a home or considering selling, I can use my background and experience to help guide you through the process. To learn more about how I can assist you in your real estate transaction, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Median price drops in April, as does inventory of homes for sale

The median sales price of a home in Bend, Oregon, dropped in April compared with the month before, but the inventory of homes for sale fell for the third month in a row, leaving the tightest supply in more than 10 years.

The median sales price in April was $389,950. That’s 1.3 percent lower than March’s median of $395,000. The average sales price to list price of homes that sold in April was 97 percent, down from 101 percent the month prior.

On a year-over-year basis, April’s median sales price was 7.2 percent higher than April 2016’s figures. And the 2017 year-to-date median sales price rose to $380,000, $5,000 more than one month earlier and $40,000 more than the year-to-date median price through April 2016.

Despite the decline in price, April’s figure was the third-highest median sales price in the period for which the Skjersaa Group has data, which dates to the start of 2007.

Even with the decrease from March’s median sale price, April’s sales figures indicate the Bend housing market isn’t slackening. The inventory of homes — the time it would take for all homes on the market to sell, given the current pace of sales — is 1.4 months. And the average days on the market for homes sold in April was 96 days. Both of those numbers are the lowest for the time covered by our dataset.

The percentage of homes priced $625,100 and up made up 15 percent of the sales in April — the highest proportion of one month’s sales for homes of that price this calendar year.

Two hundred twenty homes were sold in April, the highest for that month in our dataset. Although that figure might reflect activity that was bottled up during our snowed-in winter, the unprecedented low average days on market would indicate that buyers are pouncing quickly.

There were 324 active listings in April, matching February for the fewest in a month this calendar year and the lowest for any April since at least 2007. May began with 389 active listings.

Now more than ever, a trustworthy, experienced Realtor is essential if you’re in the real estate market. on your side. Whether you’re considering selling your home or in the market for a new home, my insight and assistance will produce an optimal outcome. To learn more about how I can assist you, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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What are a buyer’s options after receiving a home inspection report?

After having your offer on a home accepted, a common next step is to have a home inspection. Rare is the home that will yield an inspection report that doesn’t call for attention to at least some non-trivial matters.

A buyer has two primary ways to respond to an inspection report. One is to submit an addendum to the sales agreement specifying that the seller will remedy items identified on the inspection report, employing qualified tradespeople and providing proof of completed work. Another option is to have the buyer receive a credit for closing costs and prepaid expenses, to cover the cost of the buyer having the issues addressed.

With Option A, the buyer has the peace of mind that an expert will have fixed a component of the house identified as requiring attention — furnace, water heater, etc. — and completed necessary repairs before he moves in.

It’s important to do a final walk-through before closing to make sure that issues buyer and seller have agreed will be fixed by the seller truly have been addressed. Naturally, you will want to obtain and keep proof that such work was completed. If something goes wrong during the period covered by the tradesperson’s warranty, having documentation will make it easier to get the problem resolved.

Option B might be preferred by some sellers. There is a school of thought that sellers should not examine any part of a buyer’s inspection report. Instead, this line of thinking goes, a seller should provide a credit for the costs of repairs and have the buyer take care of getting issues identified in the inspection addressed.

More responsibility falls to the buyer under Option B. Rather than having the seller arrange and pay for repairs, this buyer has to obtain estimates for the necessary work to receive a sufficient credit to cover repairs he will have done. Keep in mind that an estimate of the costs for a repair can be superseded once the work is done.

There are other options, of course, in working toward a compromise — such as using a combination of Option A and Option B to address whatever the home inspection report shows as needing attention.

Working with an experienced Realtor can help make the post-offer, pre-closing process go smoother for you. If you’re a buyer, I can help you decode a home inspection report while keeping the deal on track.

If you’re thinking of selling your home, I can help you negotiate a fair agreement arising from a home report. Whatever your status, I can assist you in your real estate transaction. Please contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Mortgage rates falling despite Fed’s increase

When the Federal Reserve Board raised its benchmark interest rate by a quarter of a point in mid-March, the consensus prediction was that mortgage rates would rise as well.

Instead, the interest rate on the popular 30-year mortgage last week fell for the fourth week in a row. It was 4.08 percent last week, Freddie Mac data showed, the lowest rate for this calendar year.

The Fed’s decision to raise its benchmark rate affects the price banks have to pay to borrow from one another. The decline in interest rates illustrates the importance to the housing market of the 10-year Treasury bond, whose ups and downs more closely prompt changes in mortgage interest rates.

Whereas the Fed’s decision to raise rates was regarded as a vote of confidence in the U.S. economy, the decline in the yield of the 10-year Treasury bond reflects an increased appetite for safety among investors.

The U.S.-backed Treasury note is viewed as among the safest investments in the world. In the face of recent international uncertainty, investors have ratcheted up their demand for these instruments. The higher demand has sent the interest rate, or yield, on these bonds lower, as the government doesn’t have to offer as attractive an interest rate to snag investors’ money.

In November, the rate on 10-year Treasury notes went from 1.77 percent before the election to 2.3%, an increase of a magnitude that had occurred only three times in the last decade. That rise was a reaction to projections about how the new president’s policies might affect the economy.

A few months after the inauguration, though, it’s clear that those policies might not be implemented as quickly or as easily as some imagined.

The 10-year Treasury yield is about 2.23 percent, Realtor Mag notes. It was about 2.62 percent a month ago.

The declining mortgage rates are a welcome development to potential home buyers. Lower rates translate to greater buying power — a point of interest in all markets, but especially one as robust as Bend’s.

If you’re in the market to buy a home, I can put you in touch with a lender who will prepare a package that’s right for you. If you already have financing — or if you’re considering putting your home on the market — I can also help ensure an optimal outcome. I will bring my knowledge of the Bend market to bear for your benefit.  To learn more about how I can assist you, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Sales prices approach highest on record

March homes sales in Bend, Oregon, picked up compared with the previous month and registered the second-highest median sales price in the last 10 years.

The median price climbed to $395,000 in March. The only month in our data set (dating to the start of 2007) that figure has been higher has been May 2007, when it was $396,250.

March’s median sales price was 11.3 percent higher than February’s mark of $354,853. Year over year, March’s median represented a 14.2 percent increase.

The 11.3 percent monthly increase in March was the largest in Bend since January 2015 had a 13.7 percent increase from the month prior.

Can anything be learned from January 2015 that can be applied to the future of the current Bend market?

That can’t be answered. But it is worth pointing out that January 2015’s median sales price of $329,700 turned out to be greater than the year-end median sales price for the entirety of 2015 ($327,500).

And January 2015 represented the fifth-highest month for sales price in that year, whereas January usually is among the lowest months for median sales price.

Returning to the present year, remember that typically, March’s median sales price represents a “support” level, or a springboard, for prices for the remainder of the calendar year. In each of the last six calendar years, the month with the highest median sales price has been September or August. So it would be unusual for March’s median sales prices not to be exceeded in the coming months.

Other information in the March sales data support the position that Bend remains strongly a seller’s market.

For one, the inventory of homes on the market was 2.0 months. Inventory represents the amount of time it would take for all homes on the market to sell, given the current pace of sales. There is some debate about the boundary between a buyer’s and a seller’s market (with figures ranging from three to six months), but there’s no debating that March’s inventory was the third-lowest for the time span the Skjersaa Group has data and the lowest for any March in that period.

The average days on the market in March was 112 days. That is 24 fewer days than in February (a halt to our record-breaking winter weather undoubtedly helped), and, perhaps more significant, 18 days fewer than in March 2016. The average days on market for the entirety of calendar year 2016 was 118 days.

We entered April with 273 pending sales, a number that promises another busy month.

As the real estate market gears up, it’s as important as ever to have a trusted, experienced Realtor on your side. Whether you’re looking to sell your home or considering buying, I can provide guidance and advice to ensure an optimal outcome for you.  To learn more about how I can assist you, contact me at (541) 383-1426, or visit Bend Property Search to connect with me through my website.

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Jason Boone | Principal Broker, CRIS | Duke Warner Realty | Skjersaa Group
Oregon Real Estate Licensee | 1033 NW Newport Ave Bend, Oregon