Average sales price is up 26.9% from last year and homes for sale are down near 78% from this same time last year. Our average price per square foot is up 16.5% and the percentage of list sales price is 100.5% - in other words Home’s are selling above list price.
So why are prices rising?
1. Record-Low Mortgage Rates
· Mortgage interest rates once again have done what seemed impossible before the pandemic. This last week, they dropped to an all-time low—for the 10th time this year.
· Interest Rates fell to a new all-time low of 2.81% in the week ending Oct. 15, according to Freddie Mac, which has been tracking rates since 1971.
· One of the bright spots for home buyers and owners in 2020—a year marred by a pandemic, economic recession, social unrest, wildfires, hurricanes, and a highly polarized presidential election—has been rock-bottom mortgage interest rates.
· When the coronavirus hit the strongest U.S. economy, many assumed another great recession was coming and would bring rock-bottom home prices along with it. Instead, home prices defied these assumptions—and did just the opposite.
· The record-low mortgage interest rates put homeownership within reach for the many more consumers.
· Which shaved a considerable amount off of monthly mortgage payments, allowing buyers to stretch their budgets further and qualify for a home.
· An interesting fact is that even though home prices are higher, people are paying less money on their mortgage payments than they were last year for a median-priced home.
· Many people who have been thinking about purchasing a new home or a second home are in a hurry to do so now before rates go back up.
2. More buyers than before...
· With major protests and unrest in many of our countries larger metropolitan areas people want out to live or have a second home in more rural areas.
· Because of the Pandemic Tele-commuting has opened up to millions more employees around our country.
· People want and need large home offices and bigger backyards, room to home school children and many want more land.
· That's ratcheted up demand just as the number of homes for sale has fallen to historic lows
3. Much Lower Inventory – (# of Homes for sale)
· Homeowners simply aren't as eager to sell during a global pandemic.
· Inventory was down 78% compared with the same time last—this crush of buyers has ratcheted up the competition. Comparing this to a nationwide inventory being down 38%.. we find ourselves in a very busy market.
· That combination of what are the lowest mortgage rates of our lifetimes, has created a desperate rush of buyers and resulted in median home list price hitting new records. Average list prices in Bend are 26.9% higher than this same period last year
· Homes are selling within a day or two of going on the market and are going for more than asking price, If a buyer wants to win the bid on a home, they nearly always have to offer above asking price.
· Freddie Mac's chief economist, Sam Khater says "It's unprecedented for us to get a massive run-up in home prices during a recession, It's clear that [mortgage] rates matter even more than unemployment rates.”
· How does this make sense? Purchasing a median-priced home today, at about $350,000, people are paying about $80 less than if they had bought a median-priced home of $315,000 last year at the higher average rate of 3.69%.
· The affordability goes up, so people are willing to take on greater debt because the payment is still in their wheelhouse….The only real limiting factor then is the down payment because It does require more down payment as prices go up.