Pre-recession prices, not a pre-recession market
When home prices in Bend, Oregon, approach or exceed the prices seen before the housing market imploded a decade ago, a common reaction seems to be skepticism or concern, a sense of foreboding that another steep drop in the housing market must be imminent.
Such a mindset is probably understandable. The market crash and subsequent recession produced many regrettably unforgettable experiences and memories. But there are
considerable differences in the Bend housing market between now and then, and although no one can rule out another precipitous drop in prices, many of the conditions present in 2007 and 2008 are not evident now.
One result of the housing crisis was strengthened regulations on borrowers. It is not nearly as easy to get a home loan as it was 10 or 11 years ago. Far fewer home loan applicants with substandard credit scores are being approved, and the average credit scores of borrowers now are higher than in 2007.
As Curbed.com notes, “[T]he riskiest mortgages—the ones with no down payment, unverified income, and teaser rates that reset after two years—are simply not being written at anywhere close to the same volume.”
Data specific to Oregon shows that borrowers are staying current with their mortgage obligations. CoreLogic, a data and analytics provider, said that in June, Oregon was second-lowest among all states in the percentage of mortgages 30 or more days delinquent (behind Colorado’s 2 percent).
Diving down even more locally, the Bend, Oregon, housing market differs starkly from that of 2007 and 2008. In 2007, the average number of active listings in Bend each month was more than 1,350. For the last 12 months (September 2017 to August 2018), Bend has averaged fewer than 500 active listings per month.
The population of Bend in 2007 was about 75,000, and it’s about 90,000 now, so there are fewer active listings per resident than in 2007.
A related data point is the inventory of homes. For the first eight months of 2007, the minimum inventory was a little more than 12 months. That is, at the pace of sales during those first eight months, it would have taken more than a year for all the homes on the market to have been sold. (This comparison stops after August 2007, because beginning in September 2007, inventory exceeded 20 months for most of the next two years).
Looking at inventory in 2018, the maximum has been 5.5 months, with a low of 2.4 months.
To summarize, compared with 2007, we have fewer homes on the market (decreased supply), more residents and more sales activity (increased demand). Economics 101 tells us that is a blueprint for a continued robust market.
Again, no one can safely say there will never be another fall-off in the housing market and home prices – in Bend or anywhere else. But some of the underlying conditions present before the housing crisis aren’t evident now. Backed by my knowledge of the Bend housing market and my experience in the real estate industry, I can work confidently on your behalf as you move toward a real estate solution. Whether you are in the market for a home or considering selling your current residence, I can be of assistance. Please contact me at (541) 383-1426 or visit Bend Property Search to connect with me through my website.