We are nearing the peak of the real estate selling season in Bend, Oregon and it looks like it is shaping up to be a good one.
Inventory is already out-pacing last year’s numbers which is a good thing but it appears demand is still pressuring prices upward. In Bend we have just under four months’ inventory (3.7 in May) of homes for sale. Most real estate market watchers believe four to six months of inventory indicates a healthy market. When inventory dips below four months the market favors sellers because demand from buyers is so strong. The Bend real estate market has only had more than four months of inventory during three of the previous 27 months.
That strong demand for Bend, Oregon homes has led to a 13% rise in the average cost per square foot of homes sold over the last year. In May, the average price per square foot for homes sold was $172. Despite the healthy gains in home prices it appears many sellers want more.
One trend we at Preferred Residential have noticed lately is a lot of price reductions. (See graphic at right.) That many price reductions every day means that sellers aren’t getting their homes priced right when they hit the market. Sellers are pricing their homes above the market and hoping that the market will catch up to their price. If the goal is to sell your home quickly then it needs to be priced right from the beginning. When homes are priced right sellers should see a solid offer in less than a week. We had three listings in May that went pending within a week of hitting the market.
Another indicator that sellers are pricing their homes too high is a comparison of sales price to original list price. Last year in May homes were selling for 97% of original list price but this year they are selling at 95% of original list price. While a 2% drop in that ratio may not seem like much it is significant. When a houses are selling for 97% of the original list price it is usually a result of negotiations. When the sales/list price ratio falls below that number it indicates that sellers are having to reduce their prices at least once to get the home sold.
Each price reduction means more days on the market and more questions from buyers about why there was a price reduction and why the house has been on the market so long. If time is of the essence then pricing a home right to begin with is the best way to go.