My Weekly Central Oregon Real Estate Blog

Seasonal declines in inventory, slowing sales, and high mortgage interest rates have softened the Central Oregon housing market a bit this fall, creating some opportunities for buyers. Those opportunities are relative to the hot market of the last few years, although the recent positive news regarding inflation sent the stock market soaring, bond yields crashing, and pushed mortgage rates down. While the national average for a 30-year fixed-rate mortgage this morning is 7.4%, more good news from the Producer Price Index report today could help push rates down even more. The consensus from a financial industry on the edge of its seats waiting for a pivot is that the Fed will no longer need to consider rate hikes, and some optimistic analysts are predicting several rate decreases in 2024. One report I read estimated a 50 basis point drop in July! After three consecutive months of rising inflation, before yesterday's news, the question remains whether that was a blip on the way down or a pause before regaining steam. Either way, conditions today for home buyers are as good as they have been all year. 

If you believe the market is improving and rates will decrease significantly in 2024, buying at today's prices with a seller credit towards a rate buy-down would be a smart play. If mortgage rates drop rapidly, pent-up buyer demand will likely put upward pressure on home prices and increase competition. Currently, buyers are pulling back, and sellers are motivated. Combine those factors with the modest improvement in mortgage rates, and the cumulative impact is significant. Remember that a 2-1 mortgage interest rate buy-down would bring the first-year rate down 2% and the second-year rate down 1%. A refinance at the end of that term to a locked-in lower rate would prevent paying the total rate at year three through the loan term. Also, remember that the median sale price year-to-date is -3.6% for single-family homes in Deschutes County. If home prices, through the peak of the spike in mortgage rates, only decreased by 3.6%, what do you think prices will do if mortgage rates are near 6%? 

While homes in Central Oregon might be "on sale," just like the stores promoting Black Friday deals, selection is limited. This morning in Deschutes County, there are 792 single-family homes for sale, the lowest since June. Forty-three pending sales in Deschutes County this week is the fewest since January. The median pending sale price this week dropped considerably to 615k. Considering that the median sale price year-to-date is 660k, all indications show that conditions for buyers are the best they have been in nearly a year. I do not expect conditions to tighten over the next several weeks, as many buyers focus on Thanksgiving and the rest of the holiday season. Welcome to your "Central Oregon Black Friday Home Sale!"

Inventory in Crook County is up three units and down by the same number in Jefferson County. Two of the three pending sales in Crook County were in the Brasada Ranch Golf Resort at Powell Butte. With so few transactions in Prineville proper and an increasing inventory, the Prineville Black Friday Home Sale is even bigger than Deschutes County. If you have been waiting for an opportunity to purchase in Crook County, there is little doubt that conditions are leaning more in the buyer's favor than at any time in the last year.  

Regarding favorable buyer conditions, Jefferson County had zero sales this week for the first time since I started tracking the data in July of 2022, and likely much further back than that. There were two pending sales in the County at an average price reduction of 8.84%. The average pending sale price was just under 340k. Jefferson County is home to much of the north part of Crooked River Ranch, Metolius, Madras, and the desirable Yarrow subdivision on the east Madras foothills. If any of these areas, or the Three Rivers Recreation Area near Lake Billy Chinook, are on your radar, now would be a great time to revisit what is for sale. 

I encourage buyers to speak with a local lender about the recent rate changes, particularly the myriad rate buy-down options. If you decide to make an offer, I have extensive knowledge about structuring a contract to maximize the terms to help your situation. 

For sellers considering listing, my market analysis and price opinions are second to none, and I am happy to help you decide if now is the right time for you. Contrary to popular belief, the off-season is a great time to list a home for many reasons. However, correct pricing is imperative for a quick sale unless you want to use the winter to test the market at a higher price. Considering the near-peak pricing for many homes in Central Oregon, sellers will not leave much on the table to come down and reasonably price to entice buyers. 

Don't confuse my analysis with the tired trope in real estate: "It's a great time to buy AND a great time to sell!"  Without question, buyers face higher costs to become owners, and sellers often struggle to draw in buyers in the current economic environment. Real estate is local and relative to the recent past. We likely will not see a retreat to prices from several years ago, and the opportunities that present themselves are not always easy to see. But, if you view real estate with an extended timeframe, your chances of success are considerably higher. 

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Fall and winter are a great time to update your home in Bend. Whether you are planning to sell it in the Spring or Summer and want to increase your resale value before it hits the market, or you simply want to invest in your home to enjoy it more, these are some of the top projects homeowners can do to update their homes during the colder months.

Fireplace Upgrades

If your home in Bend has a fireplace, consider how you might update it. While an updated fireplace is not essential to successfully sell your home, if the aesthetic of it is obviously outdated it may cause some buyers to reconsider.

There are a variety of ways you can address an outdated fireplace facade, opting for something more timeless or a design that better blends with the rest of the home. If you plan to sell your home in Bend soon, consider reaching out to a local real estate expert like us to find out what buyers want to see and what will attract your ideal buyer in the area.

Kitchen and Bathroom Renovations

A kitchen or bathroom remodel is always a good choice when you are considering a renovation that will increase your resale value. Updated kitchens and bathrooms are a major selling point for buyers in Bend, and because of that have some of the best ROI of all home improvement projects.

These two projects can often be completed during the colder months because they will generally involve only interior work, so any weather changes should not impact the project timeline.

Even if you don't have the time or budget for an entire remodel, consider updating the kitchen or bathroom with smaller projects like these:

• Refinishing cabinets
• Updating faucets and cabinetry hardware
• New flooring
• Upgraded light fixtures

Home Organization

A home that is efficiently organized is more comfortable, and may be easier to sell in the future. Wintertime is a great season to consider adding custom, built-in home organization systems to your home.

Here are some popular ideas that can make your home in Bend more functional and beautiful:

• Built in bookshelves or cabinets
• Closet organization systems
• Custom pantry and kitchen cabinet organization
• Built-in workshop space in the garage or basement

Home Maintenance

While maintenance may not be considered a home improvement project, many homeowners need a reminder to keep their homes in good condition. Fall and winter are a great time to make sure your home is set up to last as long as possible and maintain its value as much as possible.

Some of the home maintenance projects you might tackle during the fall and winter in Bend include:

• Changing HVAC filters
• Checking doors and windows for gaps, and filling with weatherstripping where needed
• Upgrading attic insulation
• Keeping gutters clear
• Fireplace cleaning and repair
• Drain and refill the water heater

Considering Your Unique Home in Bend

If you plan to tackle some home improvement projects on your home this fall and winter, you may want to get the professional perspective of a local real estate expert who can tell you where your time and money will be best invested. Each home has unique features and needs, and each community has specific items that are commonly found on buyers' wish lists.

We can give you a free estimate of your home's value and a list of recommended projects to boost your resale value. If you want to know more about living in Bend or get ready to sell a house in Bend, contact us any time. We are here to help.

Now that it is getting darker earlier, it feels like winter, and the holiday season is just around the corner. As expected, sales volume has decreased, with the active inventory in Deschutes County dropping another twelve to 801 this morning. Crook County ticked up two units to 143, and Jefferson County was up two to eighty-seven. Crook and Jefferson County had three pending sales each this week, with Deschutes County at forty-four. While this volume is down slightly across the board from last week, it is near the levels for this week last year. Seeing Crook and Jefferson County's inventory hover near these levels might indicate the bottom for this year and will be something to keep an eye on heading into spring. 

In Jefferson County, the inventory low-point last year was at the end of May, with sixty-four active listings. The volume of active listings in smaller Jefferson County this year closely followed last year's trends, so nothing in today's data is very revealing. However, the median pending sale price for this week in Jefferson County was 425k, up from 345k last year. Year-to-date sales show 178 sold homes at a median of 377k compared to 290 sales at 400k year-to-date 2022. Considering the sales volume dropped 38.6%, it is interesting that the median sale price only decreased 5.75%.

Crook County didn't see the inventory low point until the end of April this year when it hit 107. This week's median pending sale price in Crook County is 375k, up from 362k in 2022. Year-to-date sales are 319, down from 387 in 2022, a 17.6% decrease. The median year-to-date comparison of 469k in 2022 and 445k this year is a 5.1% decrease. 

Deschutes County saw the inventory low in the third week of April this year at 333 active single-family listings. Unlike the smaller Crook and Jefferson County markets that maintain inventory better through the winter, Deschutes typically sees a steep drop in homes for sale, an increasing trend over the last few years. The pending sale price in Deschutes County this week was a whopping 725k, up from 599k this week in 2022. Sales year-to-date are 2811 compared to 3724 last year, down 24.5%. However, the median sale price is only down 3.6%, now at 660k thus far in 2023. 

The last time Deschutes County had fewer than 3000 sales of single-family homes in a year was between 2007-2009. Before that, sales were below three thousand from 1997 (the oldest data I can access) through 2002. For perspective on the low sales volume, in 2002, the population of Deschutes County was 122,794 compared to the 2022 population of 206,357, a 68% increase! There is no getting around the fact that sales have dropped substantially this year. 

I've read a dizzying number of contradictory articles about what housing prices will do in 2024. Saying there isn't consensus is a massive understatement. One real estate marketing company recently wrote a report telling buyers that home sales are not crashing and "all is well." Other industry pundits have pointed to the recent GDP numbers and CPI as proof that the economy is strong, inflation is under control, and the Fed will pivot to lower rates, bringing buyers to the market and putting massive upward pressure on home prices. Considering that the Bureau of Labor Statistics has adjusted eight out of eight of the last quarterly reports downward, it seems a stretch to be that optimistic. And, of course, there are the internet arguments about whether we are in a recession, entering a recession, navigating a soft-landing (mild recession), or a "no-landing, which would be no recession. There are no hard and fast rules about whether a recession brings down home prices so that part of the equation is likely less important. However, looking at the extremely low inventory levels in Deschutes County, there isn't any current data that indicates a steep drop in prices. The housing market this year has been remarkably balanced considering everything. 

The modest price drops in 2022 show that cash buyers may have benefitted from sitting on the sidelines. Assuming those cash buyers can find a suitable property without inventory. Despite the recent spike in mortgage interest rates, the 30-year fixed rate this morning is 7.46%, up approximately 30 basis points from this time last year. Not only are many sellers reducing asking prices, but many also include generous seller credits towards buyer closing costs like rate buy downs. Whether a seller includes a credit in the marketing of a home is irrelevant, as I have had no issues getting those terms accepted in an offer. A 2-1 buy down would bring rates down 2% in the first year and 1% in the second year of the mortgage. While interest rates may not drop back to historic lows in two years, there is every reason to expect a refinance to something close to 6% by the end of an introductory rate buy-down loan. Whether sellers are inclined to be as accommodating with prices and terms in the future is far less likely.

Over the last few years, a lot has happened, and Central Oregon's popularity is only increasing. The overall economy has some big questions, but the factors driving growth in this part of the state have not diminished. Anyone shocked by the price acceleration that started in the second half of 2020 and anticipated a price reversal has been seriously disappointed. Prices will likely fluctuate over the coming years, but it is increasingly unlikely that a crash in Central Oregon prices is on the horizon. If a crash is coming, the first indication would be a significant increase in inventory. Not only has inventory not increased, but I anticipate the low number of homes for sale to continue for several years.

TL:DR: What does it all mean? First, while prices are down slightly, today's data show no sign of home prices collapsing. For many buyers, the biggest hurdle is finding a suitable home in our low-inventory environment. If you qualify today, are looking to relocate or move within Central Oregon, and can find a property you love, now is a great time to negotiate! Many sellers are hungry to make a deal. As inventory declines further and the potential for rates to increase continues, we will likely see one of the year's better opportunities. However, fall and early winter are always great times to be a buyer.

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Central Oregon has seen major development in recent years thanks to rapid growth as more people realize what an amazing place this is to live. Thanks to this local growth, there are many new construction homes for sale in Bend that provide the opportunity to live in a brand new house while enjoying a charming and established community.

Buying a brand new home is exciting, offering the opportunity to customize your living space and enjoy modern amenities in a vibrant and scenic location. However, before finalizing the purchase of a new construction property, it is essential to ask the right questions that can help you make an informed decision.

We are always here to partner with you as you buy a new construction home in Bend, so contact us any time. Let's start with making sure you are ready to make a confident decision about your new build. From understanding the builder's reputation to exploring the neighborhood's amenities, here are several key questions to ask before buying a new construction home in Bend.

Builder Reputation

The builder you choose will make a major impact on your experience. Find out as much as you can about the builder you are considering with questions like these:

• What is the builder's track record in the local real estate market, and what are their previous projects in Bend? We can help you by letting you know what their reputation is among our clients and/or colleagues.
• Can the builder provide references or testimonials from previous clients who have purchased homes from them?
• What is the builder's experience in constructing homes that align with your desired specifications, design preferences, and quality standards?

Home Warranty and Post-Construction Support

Most new construction homes will come with some level of warranty. It is not uncommon for a problem with construction to be discovered shortly after moving in, and does not necessarily mean the builder did something wrong. There is an expected margin for error and this is what the warranty is there to cover.

For your peace of mind, ask these kinds of questions:

• What type of warranty does the builder provide for the new construction home, and what does it cover in terms of structural components, appliances, and systems?
• How does the builder handle post-construction support and address any potential issues or concerns that may arise after the purchase of the property?
• Are there any specific terms or conditions associated with the home warranty that you should be aware of before finalizing the purchase?

Customization and Upgrades

If the home you are buying is not an already complete spec home, you will likely be able to customize it to some degree. Find out what this will look like by asking:

• What customization options are available for the new construction home, and how can you personalize the design, layout, and interior finishes to suit your preferences?
• What are the costs associated with various upgrades and additional features that you may want to incorporate into the home during the construction process?
• Are there any limitations or restrictions on customization options that you should consider before making any final decisions?

Construction Timeline

The expected completion date and the construction process are not entirely predictable, but you can get better information by asking these kinds of questions:

• What is the estimated construction timeline for the new home, and when is the expected completion date for the property?
• How does the builder manage potential delays or unforeseen circumstances that may impact the construction schedule, and what measures are in place to ensure timely completion of the project?
• Can the builder provide regular updates and progress reports on the construction process to keep you informed and involved throughout the development stages?

Neighborhood Amenities and HOA

Most new construction homes in Central Oregon will be located in an HOA-managed community that features some level of amenities. To learn more, ask:

• What are the key amenities and community features available in the neighborhood, such as parks, recreational facilities, schools, and shopping centers?
• Are there any planned developments or future projects in the area that may affect the overall appeal and value of the new construction home?
• How does the location of the new construction home contribute to the overall lifestyle and convenience of residents in the neighborhood, and what are the local attractions and points of interest nearby?
• Is the new construction home part of a homeowners' association, and what are the specific rules, regulations, and fees associated with the HOA membership?
• What services and amenities does the HOA provide, and how does it contribute to the overall maintenance and management of the community's common areas and facilities?
• Are there any restrictions or guidelines set by the HOA that may impact your ability to customize or use the property according to your preferences and lifestyle?

Financial Considerations

There are some unique financial factors in buying a new construction home that you need to understand. Make sure you have the full picture by asking:

• What are the total costs associated with purchasing the new construction home, including the base price, upgrades, and closing costs, and how do these expenses fit within your overall budget and financial plan?
• Are there any incentives, discounts, or promotional offers available from the builder or the developer that can help reduce the overall cost of the property or provide additional financial benefits for the homebuyer?
• What are the financing options and mortgage rates available for the new construction home, and how do they compare to other lenders or financial institutions in the area?

Remember, we are always here to work with you and guide you through the complex building process. Ready to learn more or begin the search for your new build in Bend? Contact us any time.

This morning in Deschutes County, there are 813 single-family homes listed for sale, twenty-five fewer than last week and nine fewer than this week last year. In today's report, I will take some time to compare this week year-over-year and our sales to date year-over-year, as there are some interesting comparisons. As we approach the holiday season, sales will decline, and inventory, so today's data is very revealing in comparing the last two years.

For the week ending at the beginning of November 2022, there were 474 price drops at a median of -6.35% and a median list price of 688k. This week shows 450 price drops at a median reduction of -4.77% and a median list price of 775k. Sixty-nine pending sales this week last year and eighty-three sold homes at a median of 649k and 639k seemed like a slowdown from the pace of the first half of 2022. However, this week shows fifty pending and fifty-eight closed sales, forty-four fewer total transactions. The median pending sale price of 750k and closed price of 692k are significant increases over this week last year. 

One week isn't enough to show a trend, although the changes from last year are significant, especially considering the national average for 30-year fixed-rate mortgages is 7.88%, up from 7.2% this week last year. 

Through November 1, 2022, there were 3,670 sales in Deschutes County ,with 1,092 price reductions, which reflected 29.7% of sales. This year's total shows 2,755 sales and 1,125 reductions, 40.8% of total sales. The year-to-date median sale price is 660k, down from 685k in 2022, or -3.65%.

The large percentage of price reductions gives the impression of cooling prices. However, many asking prices this year anticipated another significant increase over 2022, which did not materialize. Today's reductions are not the deep discounts many assume, although nearly 41% of the sales taking a cut is enormous. Appropriate pricing is the key to making a sale in this economic environment. 

I do not anticipate large changes in the numbers above with the short, holiday-interrupted time remaining in 2023. The floor on prices this year was unquestionably set by fewer listings, not increased buyer demand. All indications point towards another winter of decreasing inventory, with the low point likely in March. How low inventory drops and how long it stays depressed will set the tone early for pricing in 2024. Remember that just a few years ago, there would have been twice as many homes listed for sale as in the recent past. The other factor will be mortgage interest rates, which are likely near peak for the coming months. That doesn't mean rates won't breach 8% again, so keeping in close contact with your lender is imperative in today's price-sensitive market. 

Lower inventory in Central Oregon will likely persist for the foreseeable future, making it more challenging to find the right property for your needs. When the right property comes along, price should be less of a consideration than suitability if making Oregon home is your goal. Waiting for significant price drops only opens the door for another buyer, and so far, those buyers haven't missed a beat. As inventory has tightened, many homes looked over in the past are getting snatched up. If new construction fits your needs, several options are available throughout Central Oregon, but the best options always move quickly.

Whatever your budget or timeframe, I am always available to help you sort out your options and help strategize. 

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Winter time in Central Oregon is beautiful, but it can wreak some havoc on your home if you haven't prepared properly. Whether you are preparing your home in Central Oregon for sale or you own a home you love in the Bend area, we have some tips to help you keep you winterize your home this fall to prepare for the colder months.

1. Check your attic insulation

A well-insulated attic is one of the best things you can do for an efficient home, maximizing the efforts of your HVAC system. Consider hiring a professional to assess the condition of your current insulation to determine whether upgrading it might be beneficial for your home.

When you are considering your insulation, pay attention to R-value. The higher the R-value of your insulation, the more efficient it is. Talk to a local professional about the recommended R-value range for your location and consider investing in your home to get it within that range.

2. Seal air gaps

Air gaps are a common source of inefficiency in a home. Whether your home is older and has settled a bit, or simply wasn't perfectly sealed when it was built, sealing up these gaps can do wonders for keeping your home warm and cozy (as well as saving you wasted money on heated air that is leaking out of windows and doors).

Some leaks will be easy to identify yourself, by inspecting doors, windows, and the spaces behind your stove and dryer. If you'd like to be sure about the leaks in the home, consider scheduling a building pressurization test. This test involves a professional lowering the air pressure in the home by using a fan to blow air out of the house. All obvious holes (doors, windows, chimneys, etc.) will be closed so that any air escaping will be more easily identifiable.

3. Clean your dryer vents

Dryer vents should be routinely cleaned, but we know not everyone keeps up with them. Before winter begins, make sure you have cleaned yours out to avoid fire hazards and inefficient drying from the machine. Cleaning these vents out will also help prevent pests and critters from deciding they are a cozy place to call home this winter.

4. Test your smoke detectors

It's best to check your smoke detectors all year long, but they are particularly important during the winter. Check that the batteries in your smoke detectors are fresh and run a test to make sure they are working properly.

During the colder months, you may be cranking up your heater, lighting a fire in the fireplace, using a space heater, or turning on your stove and oven more often. There are increased risks during the winter because of these, so give yourself the gift of peace of mind by making sure your safety mechanisms are working as they should.

5. Replace HVAC filters

An easy winterizing task you can check off your list is replacing your HVAC filter. Before your furnace enters its busy season, make sure airflow will not be obstructed by an old filter. Efficient airflow will help keep your home more comfortable and keep your bill lower too.

6. Insulate your pipes

If you live in an older home, your pipes may not yet be insulated. This is what puts pipes at risk of bursting due to below-freezing temperatures, hence the old advice to leave faucets dripping when you go out of town during the winter. If your pipes are insulated, you won't have to worry about this.

Consider adding foam insulation to your pipes, especially those located in exterior walls. This is a relatively quick and affordable home improvement project that can save you some major headaches and expense in the future.

7. Clean your gutters

Your gutters will be much easier to clean before the temperatures drop below freezing. Clear gutters are essential to keep frozen water away from the house, helping you avoid flooding and other issues that can be created by this common problem.

8. Drain and shut off exterior water

Before the first freeze, make sure to drain and shut off and water sources outside the home. Blow out the irrigation system, shut off the water source to it, and pay attention to any other water outside that might be in landscape features or pools.

9. Check your roof and chimney

Hire a professional to check on the condition of your roof, and your chimney if you have one. While we don't get much snow in Bend compared to some places, a roof in poor condition can still be aggravated by even a small snowstorm.

For the health and safety of your family, your chimney should be inspected before you begin using your fireplace again for the year.

If you would like to learn more about living in Central Oregon or search for houses for sale in Bend, we can help. Contact us any time.

The sale price of homes in Central Oregon has been remarkably resistant to falling off in the face of higher interest rates due to the balance between the volume of buyers and available inventory. While the total sales volume of single-family homes in Deschutes County thus far in 2023 is 2,861, nearly one-thousand fewer sales than in 2022 (3,858), the median sale price is down only 3%, so far this year at 645k. Although, with yesterday's national average for a 30-year fixed-rate mortgage at 7.9%, we are beginning to see segments of the market disproportionally impacted by the high cost of credit, in addition to tighter lending practices. The Central Oregon housing market is increasingly bifurcated roughly above and below the median sale price. 

The outlying areas of Central Oregon are showing the impacts of higher borrowing costs, with inventory increasing by four homes in Jefferson County and four in Crook County. At the same time, Deschutes County had another drop, now at 838, down sixteen from last week. Jefferson County now has eighty-three active listings, and Crook County has 148.

Pending sales in Jefferson County were a typical four homes last week, with the median sale price a robust 538k. However, the median sale price of the three closed transactions was 290k, with the median price reduction of those sales at 3.15%. With so few transactions in Jefferson County, it would be a mistake to draw too much from the weekly numbers, although a median sale price below 300k is something to note. Total sales year-to-date in Jefferson County are down 39.86%, the most significant drop of the three counties of Central Oregon, with the median sale price down 6.3% at 375k so far this year. Other than some larger farm properties, most of the inventory in Jefferson County are lower-priced single-family homes and higher mortgage interest rates disproportionally impact the lower price points. 

Crook County year-to-date sales are down 15.2%, the smallest drop of the three counties of Central Oregon, but the median sale price of 445k is a 6.3% drop from last year, the biggest of the Central Oregon Counties. While the mix of available properties in Crook County is more diverse than in Jefferson County, the golf community of Brasada Ranch, located in the county, skews the data significantly. The only pending transaction this week was in Brasada Ranch, at $1,625,000 at a -1.52% drop from the original list price. Our MLS data will reveal the negotiated price of this transaction once the transaction closes. Five transactions closed in Crook County last week at a median price of $570,600, but two of those transactions were in Brasada Ranch. Removing the Brasada properties from the list drops the median closed price to $302,665. 

Deschutes County's declining inventory contrasted with fifty-six sales and sixty-one pending transactions. The median price of pending sales was $750,000, and the closed median sale price was $668,374. Year-over-year sales to date show the median price down only 3%. Two weeks ago, that number was 4.6%, and the decrease was above 5% a few weeks ago. Here is where the bifurcation becomes readily apparent, as the price gap closing is due to fewer sales below the median and a bigger percentage of more expensive properties selling relative to total sales. The median sale price year-to-date in Deschutes County below $1M is down 4.8% at 599k, while the median above $1M is up one thousand dollars, basically flat. These comparisons are not stark but are glimpses into how the market is evolving in the face of higher (for longer) interest rates. 

The lower-priced properties in Crook and Jefferson Counties and many homes outside of the Bend City Limits are the most likely to reduce the price before a sale and more open to a lower-priced offer than at any time during the last housing price increase cycle. If your focus is on properties below the median sale price, now is a great time to keep current on the market and specific properties that catch your eye. 

The real estate industry churns out a lot of ridiculous propaganda encouraging buyers to dive in; the water is fine! One of those narratives revolves around the flood of buyers likely to hit the market when interest rates retreat. While it is reasonable that lower rates will make life easier for buyers, I do not anticipate a rapid turn in rates and a correspondingly robust economy, all timed in such a way as to push home prices up at the first sign of lower rates. There is little doubt that a strong economy, qualified buyers, and lower rates will put upward pressure on prices. Still, it isn't easy to imagine all of that happening below the median sale price in the next several months. 

Most metrics of years past would indicate a recession today, but the definitions have changed, and the "experts" call our current environment a "technical recession." Without going too deep into the machinations of the Federal Reserve, they do have an almost perfect record of missing every recession before it hit. Looking back to the nonsense narrative about transitory inflation is the most recent missed prediction of the Fed, which seems least likely to predict the outcome of their policy decisions accurately. Jamie Dimon, CEO of JPMorgan Chase, recently chastised the Fed's policy decisions and lamented the markets driving interest rates with current bond yields soaring. Dimon predicted the Fed would need to chase the market to give the impression they were not losing control of interest rates and predicted an overnight rate of over 7% compared with today's 5.25% rate. Priya Misra, a portfolio manager at JPMorgan Asset Management, said that despite not being able to point to specific data indicating a recession, "A hard landing is sort of our base case scenario."

Some of you will think of me as Chicken Little, but keeping an eye on more than just the housing market gives insight into where we might be heading. Being cautious in this market will never hurt, but making assumptions that everything is fine could. There is little question that owning real estate for the long haul will be a smart move, and I continue to remain bullish on Central Oregon. However, I strongly caution anyone in the market today to avoid any short-term scenarios that rely on significantly lower interest rates to be viable. Central Oregon real estate is incredibly diverse, and there is little doubt that some areas will be more resistant as the next chapter of the housing market unfolds. Many of my clients are looking at our community from outside Oregon, and I encourage you to reach out with questions about specific properties and locations. I am intimately familiar with the communities of Central Oregon and have tracked the data for years. I may not have a crystal ball, but I do have reams of data I have collected that help paint a picture of what is likely moving forward. EnjoyBendLife.com has myriad options for researching Central Oregon properties and trends, but my personalized reports go even further. Do not hesitate to ask for a detailed analysis tailored to your specific needs.

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Bend has become an increasingly popular destination for both tourists and real estate investors in recent years. Its stunning natural beauty, recreational opportunities, and vibrant community make it an attractive location for those looking to purchase an investment property.

If you are considering an investment property in Bend or other communities in Central Oregon, we can help. Contact us any time to learn more about real estate in Central Oregon, and keep reading for more information about finding the right investment property for you.

Why Bend for an investment property?

There are many reasons Bend is a great option as you consider where to invest in real estate. Often referred to as the "Outdoor Playground of the West," Bend property owners benefit from a steady stream of tourists and incoming residents that represent demand for both short and long term rental properties. Bend's tourism industry has been on the rise, attracting visitors from all over the country and the world. Known for its outdoor activities like hiking, biking, skiing, and fishing, as well as its craft breweries, Bend offers year-round attractions. As a result, the city has a strong demand for vacation rentals, making it an ideal market for potential investors.

There is also a steady demand for houses for sale in Bend, meaning this can be a great place to flip homes. Bend's real estate market has seen steady appreciation in property values over the years. While past performance is not indicative of future results, this trend suggests the potential for long-term investment growth.

It is reasonable to expect that demand for housing, and thus property values, will continue to increase in the coming years. Bend consistently ranks as one of the best places to live in the United States. Its excellent schools, low crime rate, and access to outdoor amenities contribute to a high quality of life. These factors make Bend a desirable location for both residents and vacationers.

Bend's economy is diverse and robust, with a growing job market and a business-friendly environment. The city has seen significant growth in various industries, including technology, healthcare, and tourism. A stable job market and healthy economy are favorable conditions for property investments.

What type of investment property is right for you?

There are a variety of ways you can get into real estate investing, and diverse properties to choose from in the Bend area. Take some time to consider why type of property is going to the be the right fit for your goals.

You can choose to buy a condo, single family home, townhome, or other property and lease it to long term tenants. There is steady demand for this type of property in Bend, in addition to many of the surrounding areas. A long term rental property will generally require less maintenance and ongoing work from you in comparison to a short term rental, and can be a more predictable source of rental income.

Another option is to purchase an investment property that you will renovate and sell for a profit, often called a "flip." Both in Bend and many of the surrounding areas, you can find real estate that is ready for some TLC. If you have the funding, expertise, and time to put into this type of project, it can be a great way to turn a significant profit in a relatively short period of time.

Short-term rentals are another strategy you might choose, and have become increasingly popular in recent years. Central Oregon has become a popular destination for tourists, offering access to abundant outdoor recreation opportunities without begin too far from the impressive restaurant scene and amenities in Bend. Short term rentals can be quite lucrative, but require more ongoing maintenance and property management.

There is no one best way to invest in real estate in Bend, but choosing the type of property you want to invest in will help guide your search.

Tips for Finding the Right Investment Property in Central Oregon

After you have defined your investment goals and narrowed down the type of property you are looking for, it's time to start looking for your ideal property. Here are some tips to help:

• Work with a local real estate expert who can guide you to the right properties, possibly even connecting you with homes for sale before they hit the market. Contact us any time to find out more about how we can help you reach your investment goals in Bend.
• Choose a location in Bend that makes sense with your objectives. Bend offers a variety of neighborhoods and communities, each with its own appeal and potential for investment. Consider factors like proximity to recreational amenities, schools, and commercial areas when choosing a location for your investment property.
• Familiarize yourself with Oregon's landlord-tenant laws, property tax rates, and any local regulations that may apply to your investment.
• Before finalizing your purchase, conduct a comprehensive inspection of the property. Identify any necessary repairs or maintenance, and factor these into your budget. A well-maintained property is more likely to attract tenants and appreciate in value.

Ready to learn more about homes for sale in Bend or Central Oregon real estate? Contact us any time.

In December 1990, the national average for a 30-year fixed-rate mortgage broke below the 10% barrier for the first time since October 1974. During Paul Volcker's tenure as the Fed Chairman, rates peaked at 18.45% in October 1981 to gain control over spiraling inflation. In March 2009, rates dropped below 5% for the first time in the modern era of mortgages and stayed below that threshold until April 2022. Since breaking through 5% mortgage interest rates in April last year, rates have increased dramatically, with yesterday's rate at 7.92%. While rates have been higher in the past, the price of homes today, even adjusted for inflation, puts affordability at historic lows. The average home buyer paying 18% in the 1980s was not looking at $775,000 homes. Today's median list price in Deschutes County is 775k, the equivalent of 229k in 1981. The furthest back my data goes for Deschutes County is 1997, when the median sold price was 133k for a single-family home. 

Depending on your perspective, the above numbers are discouraging or enlightening. While it is correct that real estate appreciates over time, the question today is whether a price crash is on the horizon. The catalyst for a significant price correction is missing from the equation with the inventory of homes for sale at all-time lows. This week, the median price reduction for sold single-family homes in Deschutes County was -4.92%, a far cry from a correction many anticipate. 

With many potential sellers sitting on mortgages near 3%, the lack of new listings drives today's trends more than the record buyer demand of the previous cycle beginning in mid-2020. Year-to-date sales for 2023 are 2624, down from last year's 3521. Last year's inventory for this week was 890 homes, while this morning, there are 854 homes listed. Pending sales for this week last year were fifty-six, with fifty-four this week. As mortgage rates increase, fewer sellers list houses, and the balance of homes versus buyers remains intact. The median sale price year-to-date 2022 was 690k for Deschutes County; this year, it is 660k. 

While further modest declines in home prices could occur, any significant moves are unlikely without an increase in homes for sale and days listed. However, pent-up buyer demand will undoubtedly increase buyer competition when rates eventually decline. Timing the market is not recommended, but there will surely be a "sweet spot" between falling rates and home prices. Nevertheless, it is likely easier to purchase at a lower price and refinance than to try and accomplish both simultaneously. Also, with seller credits towards a buyer's closing costs and rate buy downs, it is common for buyers today to lock in a first-year interest rate 2% below today's national average.  

Like many desirable parts of the country, housing supply in Central Oregon is lacking relative to the in-flow of new residents. Many of my clients are more challenged to find the right home than by prices. When the right property is available, waiting for better pricing only to lose out to another motivated buyer is devastating. The more specific your needs, the more challenging it can be to find the right home. How long will you put your dream of Central Oregon on hold?

No matter what type of property you seek, using a long-term focus is best when looking at your return on investment. Every property owner wants to make a good decision, and using online calculators to estimate value can be fun in a rising market. But calculating intermittent unrealized gains holds little importance unless you want to sell. Buy and hold is where the magic of real estate shines, and looking back to the median of 133k in 1997 for Deschutes County is a perfect example! The median buyer in 1997 who put 20% down on a 30-year fixed-rate mortgage has approximately three years left to pay off the loan at a monthly payment of $750. As high as today's prices seem in comparison, does anyone believe homes will be cheaper than they are today in twenty-five years? Granted, most homeowners do not stay in the same property for the life of a 30-year loan, but the power of time works on every owner's behalf.

Whatever your strategy, contractions in the economy do not last long. If you are waiting for the bottom of the market, staying current on trends and pricing is imperative. The same is true for those of you targeting unique properties in Central Oregon. In many ways, it is more work to monitor the market for change than diving in, and that is why I write these reports every week! As always, if you are interested in a specific neighborhood or metric, let me know, and I will be happy to create a personalized report that fits your needs. 

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Conventional 30-year fixed-rate mortgages improved nearly 20 basis points yesterday to 7.62%. However, with rates touching 8% earlier in the week and no relief in sight, it is no surprise that the housing market is slowing. All three counties in Central Oregon saw inventory increases at a time of year when active listings are generally in decline. Although with Jefferson County at eighty-eight, an increase of three, Crook at 148, up four, and Deschutes at 865, up nineteen, the rise was not dramatic. The year-over-year change for Jefferson County was two, and in Crook County, only one over this week last year. Deschutes County increased a robust nineteen listings, now at 865, but still considerably lower than last year's count of 908.

Rather than an increase in sellers, the absence of buyers drives the current trend. The year-to-date sales in Deschutes County illustrate this, with 3428 sales in 2022 compared to 2562 this year. For the first time since 2007-2009, it appears there will be fewer than 3,000 sales of single-family homes in Deschutes County. Even if the total sales break 3k, it will likely be well short of the 4128 total sales in 2022. 

With sales declining as home affordability hits all-time lows, inventory growth will set the price trend as the year winds down and 2024 begins. On April 20, 2022, there were 333 single-family homes listed, an inventory low that Deschutes County will most likely not surpass this spring. There is a good chance the Fed will not raise rates for now, but "higher-longer" has sunk in for investors. With the Bond market in freefall and yields on the 10-year Treasury spiking, the markets are picking up where the Fed left off. Cash or well-qualified buyers are increasingly seeing anxious sellers ready to negotiate. The way the market is shaping up should soften prices further. If you still need to talk with your lender about seller credits towards a rate buydown, now is an excellent time to get familiar with this helpful strategy.

The year-to-date median sales price in Jefferson County decreased 20k (-5%) from last year, now at 375k. Crook County's decrease was 30k (-6.3%) to a median of 445k. In Deschutes County, the percentage decrease from last year to date was -4.6%, with the median sale price at 660k. Assuming prices will decline further as we close out the remainder of 2023 is reasonable. 

As the housing market changes, opportunities appear in the outlying communities before the heart of Bend. For example, in La Pine, the price of single-family homes has decreased by 9.8% from last year, with manufactured homes on land decreasing by 5.1%. If La Pine is on your radar, watch the spread between single-family and manufactured home sale prices. The median manufactured home sale price in La Pine this year is 336k, with many of these properties on an acre or more. Interest rates may be a hurdle, but prices for manufactured homes should decline with so few buyers able to qualify for a loan. 

Conversely, Bend single-family home sales above $2M are down 18.9% from last year, but the median sale price increased $7,500, basically flat.

Staying on top of whichever market segment you desire will reveal opportunities if the current headwinds continue. If you find these comparisons helpful, reach out and put me to work tracking a specific part of Central Oregon for you!

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