Published December 6, 2023

December 2023 Market Update

Written by Ryan McGlone

December 2023 Market Update header image.

DECEMBER MARKET UPDATE: PENDING HOMES DROP 18% YEAR OVER YEAR AS INTEREST RATES RISE, THEN FALL.

BEND HIGH LEVEL MARKET RECAP

Bend's median sales price held steady at $728,000, which was somewhat unexpected considering the recent surge in interest rates since early September. This marks a 4.5% increase compared to last year—a positive trend considering prices had experienced a decline of approximately 10% during fall/winter 2022.

However, it's worth noting that the median list price for 'Pending' homes did decrease in November, signaling a potential forthcoming decrease in December's figures. With interest rates picking up significant momentum in the latter part of October, we anticipate continued downward pressure on prices through January's results.

On a brighter note, there's a recent silver lining as rates have started to decline, dropping nearly 1% over the past three weeks. This could potentially provide some relief in the market moving forward

MONTHS OF SUPPLY

The months of inventory remains at 3 months, persisting compared to the trend observed over the last few years where we typically witness a reduction in months of supply through Q4. However, due to the notably low number of pending homes in November, we anticipate that the months of supply will likely remain elevated as we approach the end of 2023.

NEW LISTINGS

After last month's surge in listings, we observed a return to the trend we've consistently witnessed over the past several months regarding the number of new listings. As of November 1, there has been a 21% decrease year over year in new listings overall, with the majority of this decline occurring in the first half of 2023.

HOMES PENDING BY MONTH (RECENT DEMAND)

In November, pending units experienced a significant decline of 18% year over year. This notable decrease is likely attributed to the spike in interest rates. It's noteworthy that November saw the highest inventory in the last three years, which could have contributed to this shift in pending units.

AFFORDABILITY TRACKING FOR A MEDIAN PRICED HOME

Our affordability gauge, which considers the median mortgage price using Federal rate data alongside the median home price, revealed positive developments for homebuyers. With rates reverting to 7.22%, there has been an improvement, resulting in a reduction of over $200 per month in mortgage payments for buyers.

THOUGHTS FOR SELLERSThe unexpected 1% drop in interest rates comes as a positive surprise. Such a rapid shift was unforeseen, but it brings good news for both Buyers and Sellers alike. Based on the recent communications from the Fed and insights shared by mortgage professionals, it's anticipated that rates will remain steady at these levels throughout 2024, with the possibility of even greater relief in the latter part of the year. However, these projections are not definitive.

We recommend sellers to consider listing early in 2024 to capitalize on the current low inventories and the most recent rate reduction. While this rate drop may not necessarily warrant adjustments to listing prices, it does provide an added incentive to enter the market sooner, benefiting from the currently more favorable rates.

THOUGHTS FOR BUYERS

The recent drop in rates is indeed a positive development! While this rate adjustment might prevent significant market declines, we anticipate that inventories will likely remain above 3 months of supply, particularly considering the 18% decline in pending homes observed in November. As we progress through the remainder of 2023 and early 2024, prospective buyers are encouraged to exercise patience while navigating the market.

It's worth noting that inventories typically reach their lowest point in January, often leading to increased demand as we transition from winter to spring. If rates continue to decrease, we anticipate this shift to have a notable impact.