Last month we talked about the potential of there being a psychological barrier to would-be home buyers created by rising interest rates. After looking at Central Oregon real estate market activity during January that may not be the case. The year-over-year drop in sales during December and now January appears that it may have been more a result of a warm, dry weather during November and December than it was resistance to higher mortgage interest rates.
Hoodoo Ski Resort didn’t open until February 7th and though Mt. Bachelor opened Thanksgiving weekend it was with limited lifts and barely three feet of snow. Mt. Bachelor didn’t have more than four feet of snow until two weeks ago. Much of what drives the real estate market in Bend and Central Oregon during the winter is tourists. People who come over for a weekend of skiing, snow shoeing, snowmobiling or just to watch the snow fall from a nice warm vacation rental have a surprising impact on home sales in and around Bend.
That impact can be seen in the chart above. I had to go back to April 2009 in the midst of the Great Recession to find a month when there were fewer than 201 homes sold in Central Oregon. Can you guess how many homes were for sale in Central Oregon that month? If you guessed 4092 you would be correct. Are you surprised by that number? So was I. That is 2.5 times more homes for sale than were for sale during January of this year.
What is the right or best or optimal amount of homes for sale? Generally, four to six months of inventory is considered a healthy market. Back in the spring of 2009 there were 21 months of inventory. That means at the rate of sales for any given month it would take 21 months to sell all 4092 homes that were for sale. Since December 2011, the Central Oregon real estate market has been operating in that four to six month range. That is, until January when it spiked to eight months of inventory.
As noted above, it would seem that January was an anomaly. The number of pending home sales that month are right on track with historical figures and could be pointing to a strong Spring Selling Season.
*Sales data courtesy of Bend MLS