"Home price trends tend to lag 9 to 12 months behind sales trends..."

This quote is from a Business Week article, "How Bad Will the 2007 Property Market Be?"

Predictions are for the hottest markets (Vegas, Florida, Arizona) to sink the farthest.

"Since trends in housing starts echo price movement, it goes without saying that new home construction is headed for a major slump in 2007. Nationally, total housing starts will slide 13.2% to 1.576 million, according to the National Association of Home Builders (NAHB) in Washington. The last time the nation saw a downturn of this magnitude was in 1991, when starts dropped 15% year-over-year."

If prices really do lag sales trends by 6-9 months, Bend is headed for near term trouble, as sales topped here in June 2006. Months-of-inventory has gone from around 1.5 months in Jan 2006 to over a year of inventory now. Absolute inventory numbers are falling, be demand has falling far more, so months-inventory is near all-time highs. There is much evidence that many Bend builders are cutting prices to sell, putting many homeowners who bought at frenzied peaks far underwater and unable to sell at anything close to their purchase price.

The bubble in Bend real estate has clearly stopped growing. Has it burst, or will it burst? Time will tell, but sales trends seem to indicate that Bend, like other hot US housing markets, is headed for a steep fall.