THE STATE OF REAL ESTATE
LADD’S PERSPECTIVE
As I navigate the third decade as a real estate broker, builder, developer and investor, I am again reminded of the value of having a trusted partner by your side. It is the reason I have built a team of highly qualified individuals, each bringing a different skill set to the table, to help guide our clients at the highest level. I truly believe we are better together. I am incredibly proud of the team we have built and the service we can provide, and we would be honored by your trust as we navigate your personal housing journey together.
-Brian Ladd
LATE 2024 UPDATE
As we start to dive into the trends, market stats, and even explore some expectations for the months and year to come, we think it is important to also provide a little distance and a broader view from the outside. The saying “seeing the forest for the trees” comes to mind as a very appropriate way to approach the market and current conditions. All too often there are alarmist headlines that can have an impact on consumer sentiment and cause someone to lose focus on the reason they were exploring a move. The reality is that housing really boils down to supply and demand and both are driven by fundamental reasons like the need for more space, less space, new jobs, and the like. It is our hope that we can deliver the following information in a way that allows you to make the most informed decisions and position yourself for long term success.
ELECTION IMPACT
Every four years we enter an election cycle that has people pondering their futures and the future of the country. As you may have guessed, we won’t be speculating on political outcomes or impacts of who ends up winning. However, we do think it is important to address historically what happens in the months leading up to the election and in the year following one. The truth is that more times than not, elections do not change the price trend that is already happening. However, they do tend to cause a pause in the buy cycle immediately before and after the election itself, but then lead to an increase in activity shortly thereafter.
Historically, there is a seasonal drop in new home sales volume of about 9.8% from October to November, but in election years, the drop is 15%. This shows that there is uncertainty surrounding the outcome and how that might play into someone’s purchase or sale and so often a large number of them sit on the sidelines. However, the number of sales actually increased in the year following the election in 9 of the last 11 cycles. And what do you think happens when sales tick up, there is more buyer demand and prices have historically increased. See Chart 1. This tells us that although there is some buyer uncertainty surrounding the election, they are not saying that “I’m nervous and never want to buy,” but rather “I’m nervous, let’s just wait to see how things play out.”
INFLATION AND RATES
For the past few years, all eyes have been on inflation. The low interest rates of the pandemic years fueled excessive buying which had the effect of prices increasing across the board. The Federal Reserve has been watching carefully and adjusting bank lending rates (not mortgage rates) to try to curb this rapid increase in inflation. Overall, inflation is headed in the right direction, See Chart 2, but the Fed has been very cautious about celebrating too early. They have delayed lowering the rates, and this has caused bond rates and ultimately mortgage rates to remain high. They have set their sights on 2% inflation, and when we start hovering in that range, they will loosen up and we should see some shifts in spending, bond yields and mortgage rates. Even with interest rates settling in around the 7% mark, locally we are still seeing on average roughly 70% of the purchases being made through the use of financing. Given this, it is no wonder why mortgage rates have commanded so much attention and had such an impact on activity. Although we shared this in the last edition as well, we think it is important to show just how much of an effect changes in mortgage rates can have on market activity. Looking at Chart 3, it becomes clear that as rates come down, sales activity picks up. So what do experts think will happen to rates over the next year? Although the experts have been wrong before (mostly in how quick and how much), as you can see from the chart, the general expectation is that rates will continue to trickle lower. Assuming this is true, if the pattern continues, we would venture to say an uptick in existing sales would be expected as well. If the election expectations from the last section hold, and this pattern holds as well, that would offer two pretty strong indicators that the market could be busier next year. So should buyers/sellers wait, that is a deeper and more personal discussion, but good news, we are ready for it, give us a call.
PENDING SALES AND INVENTORY
There is no question that the headline about sales dropping and inventory rising can be alarming. In the last State of the Market report from earlier this year, we discussed how at least a portion of the sales missing from this year, actually took place in the pandemic years as people rushed to make the move sooner than expected. However, with affordability at 30 year lows, it is true, there are many people that are sitting on the sidelines or temporarily out of the market. Looking at Chart 4, we can see that the peak number of pending sales from this summer is down about 40% from the averages in the years leading up to the pandemic. If we still had the same number of homes available, but saw a 40% drop in pending sales, this would be alarming, but the fact is, we also saw about a 33% drop in the number of available homes for sale. See Chart 5. It is not surprising that after seeing the highest sales volume in history followed by the steepest mortgage rate increase in history, we would see some
normalization. The fact that the metrics that we are tracking are moving together should help soften some of the concern about what we have been seeing. It is the balance between buyers and sellers that is what we need to watch, and right now, they seem to be still in line, although shifting slightly in the favor of the buyer.
PRICES
So what does all this mean for prices? Well, the fact is that prices have remained relatively strong and stable. As you can see from Chart 6, the average price in Deschutes County is sitting at or near an all time high. So how is it that with rates as high as they are and with the number of available homes growing, that prices continue to increase? We would point out a couple of things. First, it is worth noting that with many fewer sales taking place, activity on one end of the market can have a drastic impact on the overall averages. For instance, in Deschutes County, in the first half of 2024, there were 36% more sales above $1.5M than there were in 2023. With that many more homes changing hands in this price point, it is no wonder the data has skewed higher. Also, just because there are fewer sales taking place, it does not mean that buyer demand has disappeared. Although many buyers are often being incredibly patient, they are still here. How do we know this? We would point to two factors. Despite prices remaining stubbornly high, we are still seeing roughly 25% of the Pending sales taking place within a week of listing and closing prices tend to be right in the historical average near 98% of asking price. If demand was waning, both of these data points would be shifting lower.
FINAL THOUGHTS
Although we often spend the majority of this piece dissecting the data and discussing trends and patterns, the truth is that the stats are just a piece of the puzzle. What is most important to us is helping you achieve your goals, and in order to do that we need to hear why you’re considering a move and what is most important to you. At the end of the day, more often than not, the discussion of a move is driven by something other than finances and comes down to a fundamental desire for something different. It is our job to combine the data with the fundamentals to help you get where you need to go. We would be honored to have the opportunity to do just that.
-Steve LaCrosse
STATISTICS
RESOURCES
THE DIFFERENCE IS EXCELLENCE
What’s unique about the Ladd Group is that our team is built around making sure you achieve your goals in a seamless and effortless manner. Our team covers it all, with in-house experts in marketing, videography, transaction management, operations, and sales.
OUR WHY
To help smart people meet their personal and financial goals through strategic real estate investment.
OUR PROCESS
To streamline home buying and selling by supporting clients at every stage with a dedicated team of experts.
OUR RESULTS
A proven history of selling homes faster and for more money, and guiding buyers through successful purchases.
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AVERAGE LIST PRICE IN 2024
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REFERENCES:
https://www.mortgagenewsdaily.com/data/existing-home-sales#chart-existing-home-sales-vs-30yr-rate https://tradingeconomics.com/united-states/existing-home-sales https://coar.stats.10kresearch.com/infoserv/s-v1/oPRx-i6Z https://coar.stats.10kresearch.com/infoserv/s-v1/oP8w-YT8 https://coar.stats.10kresearch.com/infoserv/s-v1/oPEE-lKQ
https://coar.stats.10kresearch.com/infoserv/s-v1/oPyT-Sls https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/economists-outlook-allcash-type-of-home-buyer-bar-graph-02-23-2024-1300w-762h.png?itok=6fY8mgdF https://ixact-static-images.s3.amazonaws.com/TheRiskofOverpricing2.jpg https://cdn.nar.realtor//sites/default/files/documents/2021-real-estate-in-a-digital-age-10-05-2021.pdf?_ gl=1*8gk441*_gcl_au*MjA0NTM1MDg4Ni4xNzIyNDA1Njk2
THE 2024 HOME BUYER
PROFILE
BUYER’S CORNER
The landscape of home buying is continuously evolving, and 2024 brings its own set of trends and characteristics for the average home buyer. Understanding these changes can provide valuable insights for buyers as they navigate the market.
LENGTH OF SEARCH
In 2024, the average home buyer spends 8 to 12 weeks searching for a home. In Central Oregon, this period is often longer, especially for relocation buyers who may spend over a year researching. The duration varies based on home style and inventory. Despite using advanced tools and virtual tours, finding the perfect home still requires significant time and effort.
NUMBER OF HOMES TOURED
Buyers typically tour 10 to 25 homes, both in-person and virtually, before deciding. Virtual tours help narrow choices efficiently, but physical visits are crucial for assessing a property’s feel and condition. While at one point during the height of the pandemic, CNBC reported that 47% of buyers who purchased a home in the previous two years made an offer on a home without physically touring the property. “Sight Unseen” offers are much less common today, and when they do occur, are typically driven by a major life change.
SEASONAL PREFERENCES
Spring and early summer remain the most popular times for home buying due to increased inventory and favorable weather conditions. However, the fall season is also gaining traction as a strategic time to buy, often offering less competition and better deals. Buyers in 2024 are more flexible, considering year-round opportunities to capitalize on market shifts and personal timelines rather than focusing on the typical school cycle.
THE 2024 HOME SELLER PROFILE
ROOM FOR NEGOTIATION
Negotiation remains a key aspect of the home buying process. In 2024, buyers are likely to engage in moderate to significant negotiation. On average, buyers might negotiate around 2% to 5% off the listing price, depending on factors such as market competitiveness, property condition, and seller motivation. As shown in Chart A, the final sale price to list price in Bend was over 100% during the height of the market in 2021, but it dropped to 95% (5% off the price) before starting to level out this year.
A)
FINANCIAL CONSIDERATIONS
As we discussed in the main article, cash buyers have consistently represented about 25-30% of buyers locally for the past few years. These numbers are relatively consistent with those reported by the National Association of Realtors for the nation as a whole. More interestingly, Chart B shows the matrix of cash to financed deals based on buyer type.
SELLER’S CORNER
In a market that remains in transition, informed sellers have the best chance to navigate the process successfully and avoid costly mistakes. Key characteristics of the average home seller this year include a focus on thorough preparation, effective use of technology, and strategic pricing. Understanding these trends can help sellers present their properties attractively and negotiate effectively for the best outcome.
PREPARATION TIME
In 2024, the average home seller spends about 3 to 6 months preparing their home for the market, both before and after selecting a broker. This period includes decluttering, making repairs, investing in minor upgrades, staging, and landscaping. Sellers know a well-presented home attracts more buyers and can command a higher price.
USE OF TECHNOLOGY
Sellers in 2024 understand the value of leveraging technology in their sales. High-quality virtual tours, drone photography, and 3D floor plans are common tools to showcase properties online. These technologies attract a wider audience, including out-of-town buyers who rely on virtual viewings before visiting in person. The technological capabilities offered by a brokerage often play a pivotal role in a seller’s choice.
PRICING STRATEGY
Accurate pricing is more critical than ever in 2024. Overpricing can lead to extended time on the market, resulting in a more vulnerable position and a lower final sale price. Sellers aim to balance attracting buyers and maximizing returns. Chart C highlights the risks of overpricing and its correlation with days on the market.
C)
NEGOTIATION
Sellers in 2024 are prepared for moderate negotiation on both terms and price. Buyers will likely hold an inspection, request repairs, or ask for concessions toward closing costs or other fees. On average, sellers might expect to negotiate around 2% to 6% off the listing price in Central Oregon (see section in Buyers’ Corner for this data). Being open to negotiation can facilitate a smoother transaction and quicker sale.
MARKETING AND PRESENTATION
Effective marketing is a priority for sellers. In addition to traditional methods like open houses and print advertisements, digital marketing plays a significant role. Social media campaigns, targeted online ads, and real estate platforms are essential for reaching potential buyers. Engaging features in a listing can attract buyers, with digital advertising driving them toward the listing itself. Home staging and professional photography are also standard practices to present the property in the best light. See Chart D for a full breakdown.
COMMISSION ADAPTATIONS
The recent National Association of Realtors lawsuit will bring increased transparency for both buyers and sellers in how commission fees are managed. While commissions have always been negotiable for both buying and listing brokers, these new rules compel sellers and their advocates to establish compensation structures upfront and require buyer’s broker agreements to be in place before any showings. The conversation about who is paying commissions and how much will continue to evolve, and we’d love to dive into the details with you to help bring clarity and understanding.
-Erin Martin
-Erin Martin
(Chart B)
D)
$925,118,249
First time home buyer with 0 knowledge of what to expect with this process. I worked with Steve LaCrosse and thought he was excellent every step of the way. -Jonas Kempf
I can highly recommend Stormy Clark! From the start she was both professional, friendly and knowledgeable. Stormy provided accurate house pricing and handled coordinating all inspections, repairs etc. - Kerry Veal
A great experience working with Bryan Hilts and his team. Efficient, responsive, and thorough. Not one detail fell through the cracks. A very satisfied seller! - Sam Ruda
Had a great experience. Worked with Erin Martin, she was very helpful, professional and was easy to communicate with. She also had multiple open houses which was very helpful with the sale as well. - Kelly Andrews
Taylor was absolutely awesome to work with. I was an out-of-town seller, and a bit nervous about leaving my home vacant, but Taylor stayed on top of things, and ensured that it was always in a state of readiness to show, she was always responsive to my needs. - Lee Davis
Jaclyn Oakland is one of the most resourced people I know, always sending referrals to help her friends and clients. Her professionalism and generosity of spirit is without question. - Cindy Maricle
Erik Chapin was invaluable during our home-buying journey. We met him in October 2022, and he showed us houses in Bend that fit our budget and preferences, helping us prioritize what mattered most. - Tajr Hull
If you are looking for the best realtors in Central Oregon to help sell/buy your home, look no further than Ladd Group Real Estate. They will provide you with exceptional media coverage, newspaper exposure, beautiful brochures AND the best customer service available. . - Chris and Barry Evensen
TAKING COMMUNITY INVOLVEMENT TO NEW HEIGHTS.
The Ladd Group is committed to elevating Central Oregon through dedicated engagement and impactful giving. These are just a few of the many ways in which we are honored to serve our community.
