September 2021 Update
A few key points about inventory before we get started:
- Inventory is not the number of homes to sell, but the number of homes to sell in relation to current buyer demand.
- 1 month of inventory means if we sold at our current pace and no other homes were put on the market, we would be out of inventory (or homes to sell) in one month.
- Inventory has long been a contributing factor to the “intensity” of the Central Oregon market and is a key indicator as to whether we are in a seller’s market, buyer’s market or neutral (healthy) market.
- Central Oregon typically operates around the 3 month level, although it is generally understood that 4-6 months is a healthier market.
- Dropping below our “normal” amount of homes to sell was a key factor in the market becoming so competitive.
So what does all this mean?
As you can see from the graph, inventory dropped quickly in the middle of 2020. This was mostly due to buyer demand staying constant, but the amount of new homes being put on the market dropped. Not all sellers felt safe listing their homes at that time.
As interest rates stayed low and buyer demand remained but new listings continued to decrease, we saw our inventory level drop to a record low of 0.3 month of inventory (or about 9 days of inventory), which is alarmingly low.
However, as our market is softening and we are heading toward healthier levels of inventory, the intensity for buyers and sellers is calming as well. We have seen a fairly steady increase of inventory over the last 4 months. We feel two of the main reasons for this are: 1) Newfound buyer reluctance to just pay whatever is needed to get a home and 2) The listing of new homes above their new 2021 market values. These exceptionally high list prices are just a byproduct of the intensity of the last year and sellers wanting to take advantage and get every dollar they can for their homes. However, this tactic is proving less than successful as of late, as homes are sitting on the market longer, more price reductions are occurring, and more homes are being pulled from the market after months of not selling – all of which were almost non existent just 6 months ago.
All that said, we are slowly going back to a more normal market, which is good for all of us. Normal means healthy, and healthy provides better, more stable conditions for both buyers and sellers.