Preliminary Numbers Show Signs of Stability

The housing market in Bend may indeed be finding its footing. 94 closed sales of houses on less than 1 acre have been reported so far in June. May's final number came in at 106 closed sales. I would suspect we'll see at least a few more closed sales for June logged over the next few days.

Prices too seem to be leveling off after months of decline. The median price of a home in Bend on less than 1 acre sold in June was $315,000 with 1916sf. In May, the median sold price was $302,500 and had 1954sf. So we actually saw the $/sf price increase from $154.8 to $164.4.

I'll report back next week to see how the final numbers turn out.

Interest Rates Jump

Interest rates for mortgages have moved significantly higher over the last 30 days, as investors have been spooked with fears of inflation.

We've talked about the correlation between mortgage rates and 10 year treasury yields before and that relationship is evident in the graph above.

As higher food and energy costs begin to be felt worldwide, and with Fed chair Ben Bernanke now talking about supporting the dollar against other currencies, investors are beginning to anticipate higher rates in the future. This expectation drives the value or price of fixed income securities, like 10 year treasuries, lower and their corresponding yields higher. This in turn leads to higher rates for mortgages.

High Rates Mean Less Purchasing Power

In the last 60 days, rates on 30 year fixed rate loans have increased from around 5.6% to near 6.25%. For a loan of $300,000, this means about $125 more per month, an increase of 7%.

Another way to look at this is that a payment of $1850 at 5.6% would buy you a $321,732 loan. Now that same $1850 buys only $300,000.

Is Now The Time To Buy?

Though I don't expect home prices to increase quickly anytime soon, I do think we'll see higher interest rates going forward. And as rates increase, your purchasing power decreases. So even if home prices continue to go down, higher mortgage rates may cause your monthly payment to remain the same or even increase.

So if you've been considering buying a home, now is a good time to get out and look; there are lots of houses to look at and rates are still historically low.

May Sales Numbers Show Increase In Activity, Prices

Sales of stick built homes on less than 1 acre in the Bend/Tumalo/Alfalfa area showed an increase in both sales volume and sales price in May from a month earlier.

103 houses were reported sold in May, with a median sales price of $305,000. This compares to April's sales figures of 92 houses with a median sales price of $273,500.

Price paid per square foot of homes sold in May increased as well to $155.5/sf compared to April's median of $154.3/sf.

Prices Hold Steady

Preliminary numbers indicate that the price per square foot for houses on less than an acre sold in May held steady from April at $154.6/sf.

While this is down from a year ago, when the price per square foot was $197.6, it is another sign that we may be bumping bottom on prices.

Closed sales also held fairly steady in May, with 97 reported sales versus 91 in April. Then again, sales typically pick up in late spring and through the summer.

With 15+ months of inventory available, there is a great selection of houses to choose from. Give me a call if you're interested in seeing what's out there.