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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Median sales price up in January even as pace of sales slows

Median sales chart

By Jason Boone

The numbers of homes sold in Bend, Oregon, in January dropped compared with previous months — which probably shouldn’t be a surprise given our weather — but the median price of those homes that were bought was on the rise.

The median sales price in January 2017 was $370,813 — 4.6 percent higher than in December 2016 and 16.8 percent higher year-over-year.

If data from past years hold true this year, the January median sales price can be viewed as a floor of price support for the rest of the year. In four of the previous five years, the median sales price in January wound up no lower than the second-lowest median sales price for the entire calendar year.

In 2015, though, the year that was the exception, the end-of-year median sales price of $327,500 was lower than January’s median sales price of $329,700.

A total of 130 homes were sold in January 2017. That’s the fewest since 125 homes changed hands in February 2016. (On a per-day basis, though, the rate of sales last month was in fact quicker than in February 2016.) You’d have to go back another year, to January 2015 (when 120 homes were sold), to find a January with so few homes sold.

A drop in activity was also seen in the number of homes coming to market in January: 127, which is the fewest in any month in more than two years and the fewest in any January since 2012. Of course, Bend’s record-breaking snowfall could very well be responsible for at least some of the slowdown in real estate activity.

Other observations about January’s sales data:

  • The inventory of houses — the amount of time it would take for all homes on the market to sell, given the current pace of sales — was 3.1 months in January. That’s the lowest inventory for a January in the 10 years for which the Skjersaa Group has sales data and about 10 percent lower than the 3.4-month inventory of January 2016.
  • Sellers are pricing their homes appropriately. The average sales price to list price was back up to 99 percent from 98 percent in December 2016.
  • The percentage of active listings priced at $625,100 or more was 36 percent in January 2017. That’s the highest percentage of homes on the market in that price range since August 2016 (39 percent). There was 9.1 months of inventory of homes in that price range last month, the highest since February 2016.
  • Average days on the market rose from 121 days in December 141 in January. That is comparable to the previous January (138 days in January 2016). In the last five years, January’s average days on the market turned out to be the highest or second-highest figure for that calendar year.

After the snow clears, the pace of real estate activity in Bend is likely to pick up steam again. If you’re thinking about buying a home or considering selling, my knowledge of the market can be a considerable asset working in your favor. 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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Expansion of city boundary won’t result in new homes over night

By Jason Boone

With the city of Bend, Oregon, making progress toward an expansion of its urban growth boundary, some observers of the real estate scene might think that the market for homes — both owner-occupied and rental — will relax from the last couple of years of tight inventory and rising prices.

But although the boundary expansion is designed to provide enough land for 17,000 homes, it will take a nontrivial amount of time before shovels hit dirt and homes come to market.

The Bend City Council approved the latest iteration of its expansion plan Wednesday night, moving the process further along. The working version of the expansion plan targets about 2,300 acres that could be developed under urban standards instead of governed by Deschutes County’s rules.

State law mandates cities create an urban growth boundary, to constrain the creep of urbanization into forests and farmlands. Bend’s planned expansion is hoped to account for population growth through 2028.

Having more buildable land inside Bend’s urban boundary should be a welcome event for developers and residents. The attractions of this once-sleepy mill town have led to a slim inventory of homes for sales, rising sales prices and a rental vacancy rate that has been less than 1.5 percent for four consecutive years.

“The biggest element of the lack of affordable housing is the lack of affordable and developable land within the urban growth boundary,” Tim Knopp, executive vice president of the Central Oregon Builders Association, said this year. “Until we start annexing land and getting a consistent urban growth boundary, we’re going to have affordability issues in the Bend market.”

Once the city council and the Deschutes County Commission approve the expansion plan, it still has to pass muster with the state. And that’s not a slam dunk. An earlier expansion plan — one that included more than three times as much land as the current plan targets — was rejected by the state in 2010.

State approval will come at the earliest this winter, a city planner said, according to a Bulletin article.

And once the state signs off, it’s not as simple as planting survey sticks and pouring foundations.

The expansion plan proposes neighborhoods that are, so to speak, self-contained. The new developments are envisioned to be convenient for foot and bike traffic, with workplaces and residences as well as amenities such as grocery stores. Designing such neighborhoods and bringing plans to fruition are complex, lengthy processes. Think years, not months.

So, although the urban growth boundary expansion holds out the promise of more housing, that promise doesn’t come with an expected due date.

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Tour of Homes demonstrates high-end properties are in demand

By Jason Boone

What can the annual Central Oregon Tour of Homes tell us about the real estate market of Bend, Oregon?

In addition to offering home-buyers a chance to see what local builders provide, the profile of the homes on display might furnish insight about the state of the market — and where it might be headed.

Tim Knopp, executive vice president of the Central Oregon Builders Association, which stages the tour, said more than a dozen homes on the tour are priced at $1 million or more. There has never been this many seven-figure homes on the tour, he said. A few others are in the $900,000 range.

“And there are not as many affordable homes on the tour as there have been in previous years,” Knopp said.

The tour is scheduled to run on two weekends in July.

The proportion of million-dollar homes on the tour corresponds to market conditions. According to an article in The Bulletin newspaper, the months of inventory of $1 million-plus homes is less than nine months now, compared with 32 months of inventory a year earlier.

It’s worth noting also that in each of March, April and May of this year, the percentage of sold homes priced at $525,100 or more outstripped the percentage of similarly priced homes sold in any other month since the start of 2009.

Those sales have helped drive the year-to-date median sales price of homes in Bend (through the end of May) to $349,500.

At the other end of the price spectrum, there isn’t much on display — either on the tour or in the marketplace.

“There are more and more millennials who are starting to come into the market,” said Vern Palmer, co-owner of Palmer Homes in Bend. “But we currently don’t have any product for them.”

Palmer and Knopp said the shortage of homes affordable to first-time buyers is a function of the lack of affordable land to build on.

“And so we have a lack of supply,” Knopp said, “but we have constant demand for people to live in Central Oregon, so that naturally drives the price of the land up — which drives the price of homes up.”

The city of Bend hopes to address the issue of available land with its planned expansion of the urban growth boundary. According to the latest update of the city’s Urban Growth Boundary Steering Committee, “The preferred scenario focuses future growth in opportunity areas within the existing UGB and in new complete communities in expansion areas. Nearly all expansion areas include a mix of housing, employment areas, shopping/services, and schools and parks.”

Said Knopp, “The biggest element of the lack of affordable housing is the lack of affordable and developable land within the urban growth boundary. Until we start annexing land and getting a consistent urban growth boundary, we’re going to have affordability issues in the Bend market.”

With my experience in the Bend market, I can help you identify the right home at the right price. Or, if you’re thinking about selling, I can market your home to secure an optimal price in this market.

To learn more about the Bend market, or to view area homes, contact me at (541) 383-1426, or Bend Property Search to connect with me through my website.

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Median sales price continues rise, but is a ceiling near?

By Jason Boone

The median sales price of homes in Bend has increased every month this year.

The median sales price of homes in Bend has increased every month this year.

The median price of homes sold in Bend, Oregon, in May was the second-highest in the last 10 years, but there are signs that prices might be nearing or at a peak.

At $374,000, the median sales price in May 2016 trailed only that of May 2007 ($396,250) in the time span covered by the Skjersaa Group’s data, which dates to the start of 2007. May’s figures represent an increase of 2.8 percent from April’s median and marked the fourth month in a row the median sales price has increased.

May’s sales data pushed the year-to-date median sales price to $349,500.

Of the 243 homes sold in May, nearly one-fourth (60) were priced at $525,100 or more, which contributed to the rise in the median price. The percentage of May’s home sales priced in that range was similar to the rate in May 2007 (31 of 118 homes, 26 percent) and was a high for 2016.

Housing inventory in May declined from a record-low 2.1 months in April still further, to 1.7 months, even as active listings rose to 462 homes, a high for 2016. Months of inventory estimates how long it would take to sell all of the homes for sale if no new properties went to market. Six months is commonly used as the boundary separating a seller’s market and a buyer’s market.

Among the other figures from May:

• The number of pending sales at the end of the month numbered 266 homes, fewer than the previous two months.

• The average days on market was 114 days, the lowest since the 109 days in October 2015.

• Nearly one-fourth of the active listings in May had a price reduction. That is the most for any month this year.

In the last three years, the number of homes sold in June was no lower than the second-most of any month that calendar year. The robust number of pending sales and the low inventory at the end of May 2016 indicate another busy month probably lies ahead.

Still, the reductions in price last month indicate the market might be reaching a zenith with pricing. Current conditions make it imperative for sellers entering the market to price their homes exceptionally well to garner the attention of buyers as competition becomes greater.

My experience in the Bend market can help you market your home in our current conditions, or if you are looking to buy a home, I can help you find the right home at the right price.

To learn more about Bend home prices, get started with listing your Bend home, or to view area homes, contact me at (541) 383-1426, or Bend Property Search to connect with me through my website.

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Builders say regulations make up $84,000 of new home’s price

Regulations

Source: www.atlasnetwork.org

By Jason Boone

Many businessmen and businesswomen are certain that government rules and regulations result in higher prices for consumers, even if they can’t put a finger on precisely how much those regulations cost. Now, a study by the National Association of Home Builders has put a dollar sign on government oversight of new home construction.

Based on the average price of a new home, according to the home builders association, that estimate equals more than $84,000.

According to the NAHB, an estimated 24.3 percent of the final price of a new home is attributable to government regulations.

The home builders association made similar regulatory estimates in 2011 — before the nation’s housing market had substantially recovered from the Great Recession. Since then, the price of new homes has increased. The home builders report, citing Census data on new residential sales, says the average price of a new home sold rose from $260,800 at the time of the 2011 report to $348,800 now.

“When applying these percentages to Census data on new home prices, the data show an estimate that regulatory costs in an average home built for sale went from $65,224 to $84,671 — a 29.8 percent increase during the roughly five-year span between NAHB’s 2011 and 2016 estimates,” the home builders association said in a release highlighting the report.

And, the report notes, although home prices have risen from the depths of the recession, increases in per capita income have been slower to gain traction.

In Bend, System Development Charges are often cited as having an inordinate effect on the price of new homes. These charges are imposed on development and used to help fund water, sewer, streets and parks.

The home builders association’s report differentiates between costs resulting from regulations imposed during the development of a lot and those incurred after a finished lot is bought by a builder. The ratio of the cost of regulation during development and during construction is about 3 to 2.

Costs incurred during construction include permit, hook-up and impact fees as well as changes in codes and standards over the past 10 years.

Included in the tabulation of the costs of regulations incurred during development are the costs of applying for zoning or subdivision approval, the value of land dedicated or left unbuilt, the impact of changes in development standards and the “pure” cost of delay (defined as “the estimated cost that the delays of waiting for approval and complying with development regulations would impose in the absence of any other type of regulatory cost”).

Compared with the 29.8 percent increase in the cost of new homes in the last five years, disposable per capita income has risen 14.4 percent, according to the home builders assocation’s report. “In other words, the cost of regulation in the price of a new home is rising more than twice as fast as the average American’s ability to pay for it,” the report said.

The home builders release quotes Ed Brady, the chairman of the National Association of Home Builders, a home builder and a developer from Bloomington, Illinois. “Not only is it inhibiting builders’ ability to produce competitively priced homes in a still recovering housing market, but this regulatory burden trickles down to the consumer level and prices many would-be buyers out of the market.”

The NAHB report notes that regulations are enacted with the vision of realizing some benefit. The report states, however, “[N]o attempt is made to estimate such possible benefits here.”

 

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