As the Fed put the brakes on the excess in the marketplace under the cover of inflation, it was obvious that housing was going to be tip of the spear. Affordability has dropped dramatically as mortgage pricing has soared relative to the rock bottom levels of the past.
There’s a lot of speculation out there on the extent to which housing will suffer. Sometimes its good to just use common sense and look at the data.
Enter Bend, Oregon. This resort town saw a similar boom to other resort towns such as Park City, Lake Tahoe, Breckenridge, etc.
Here’s a luxury home, 4 bedroom / 4 bath brand new construction on the west side of town (a desirable part):
And here’s what they builder is going through. You will have to read upwards from the bottom of the two pictures below.
Ouch. Talk about desperation. A 27% cumulative price cut from the initial listing.
That said, this home would likely have sold for far lower in 2018 let alone 2012. All is to say, in some pockets, the excess is quickly flowing back out to sea. How far we will go in the other direction is anybody’s guess.