The past several months have been ones filled with uncertainty, fear, scarcity and a host of other emotions; all of which had a huge impact on the markets. The stock market tumbled, the real estate market experienced a massive downturn in new inventory and pended transactions, unemployment skyrocketed and the political divide over COVID-19 and civil rights raged—with the latter two of the aforementioned, ongoing.
After months of writing about the uncertainty of the market, it's a pleasure to share some good news. With the surprise news that contradicted the forecasts on job loss, and instead showing 2.5 million jobs gained in May, the Dow, S &P and Nasdaq all responded with upward gains at close of market on June 5. As of the morning of June 8, the market was continuing to trend upward.
The good news not only reflects in the behavior of Wall Street, but the mortgage markets showing increased activity as well. Freddie Mac's chief economist said "...all signs continue to point to a solid recovery in home sales activity heading into the summer as prospective buyers jump back into the market." The Mortgage Bankers Association reported that purchase applications have increased for the seventh week in a row with an 18% spike over 2019; likening the increase to "pent up demand from home buyers returning to the market."
Windermere Real Estate's chief economist, Matthew Gardner, released his forecast on mortgage interest rates, stating that rates should continue to remain low and hover around 3% through 2020 and possibly 2021. This too, fuels an active and robust real estate market.
In addition, the rate of residential mortgage loans in forbearance is beginning to slow week over week. While it has increased slightly, the overall trend is a dramatic slow state by state, as the states begin to reopen their economies. Again, all signs of the beginning of economic recovery from the COVID-19 shutdown.
Locally in Central Oregon, we are seeing signs of the market heating up. While inventory remains low, at a two-month supply, we've seen an increase from the number of new listings in April. Each week the market is seeing more and more new listings. In April we experienced a 33% drop in new listings. May showed a 16% gain on that number. While new inventory is still 16% less than typical for this time of year, the listing inventory is trending upward. The median home price in Bend for the month of May 2020, holds at $445,000 and Redmond at $334,000.
The number of closed sales decreased significantly in May; a 41% decrease from May 2019. This drop is a direct reflection in the "pause" and decreased amount of inventory in April 2020. As the inventory increases, I expect this number to increase dramatically as well.
A statistic that is particularly notable is the extreme decrease in days on market. In March 2020, the average days on market was 74 days; May shows a drastic decrease to 16 days on market. This is a direct correlation with the lack of inventory. With less inventory to choose from, buyers are acting quickly to secure a home in an extremely competitive market. As an example, of the transactions I personally have worked on in the last 30 days, 85% of them involved full-price offers.
All in all, things are trending upward with the real estate market and economy as a whole. As the summer season officially kicks off in Central Oregon, good news abounds for the real estate markets.