My Weekly Central Oregon Real Estate Blog

Inventory of homes for sale in Deschutes County increased by one to 553 this week, indicating we may have witnessed the low point for 2023. While it is likely that the number will bounce around for the next several weeks, an inventory low in late January is more in line with typical years, another sign that the pandemic buying frenzy is behind us. Interstingly, the days on the market for sold homes dropped considerably to 26 from last week's 65. The drop in days a home sits before securing a contract indicates that sellers have priced their homes correctly and buyers are stepping up to purchase. However, the median price reduction of the sold properties last week was -11.14% showing that sellers were willing to accept offers below asking at the end of 2022. Contrast that with the pending median price reduction of -4.61% this week, and it appears sellers made more minor concessions.

Mortgage interest rates hit a recent low earlier in the week before increasing slightly to 6.21% for the 30-year fixed-rate national average yesterday. This week's data shows sellers returning to the market, most likely because of more moderate interest rates and solid buyer demand. Although, for buyers, a growing number of homes for sale could help keep prices in check, particularly if the market slows. Although buyers have been reasonably active to date, well-priced homes are selling. As I've mentioned, the next several weeks will set the tone for the summer. To date, all the data points towards solid buyer demand, and the recent mild weather makes viewing properties easy. However, while sellers may see a strong market, there are considerably fewer buyers to start 2023 than in 2022. Since the first of the year, there have been 111 sales of single-family homes in Deschutes County compared with 233 for the same period last year. The decrease in sales impacts the inventory of available homes more than anything and will be something to keep an eye on. 

Wednesday, February 1, the Fed is projected to raise rates again by 25 basis points, equal to the smallest increases since rates started rising last year. The mortgage markets may react to a more significant increase, but even a 50 basis point increase is unlikely to impact mortgage rates much. Not surprisingly, the best word describing mortgage rates this year is volatile, and keeping in close contact with your lender is critical as you navigate the home-buying process. I anticipate rates below 6% as we approach peak season and, in turn, reasonably strong buyer demand. Understandably, many buyers have felt the pinch of unaffordability from higher rates, but many loan programs can help. 2023 is shaping to be a more balanced year for Central Oregon real estate, but it still requires diligence to stay on top of prices and find the right home. Conditions will likely stay the same, and any home that is a good fit is worth considering, especially for unique properties in great locations. 

Website Update: For those actively searching properties on EnjoyBendLife.com, you might have noticed some minor changes or glitches. I've been working on a rollout of the newest version of my site to streamline your home searching experience. Once the new site is live, you'll notice some market data visible on property search pages, a cleaner format, and easier access to the data you need. Also, everything will be optimized for your mobile phone, making it easy to search from any device. Like my recent designation of Principal Broker, updating my website is part of my ongoing effort to improve the service I provide continuously. I know you have many options in the real estate industry, and I am honored that so many of you rely on my website and weekly report to stay on top of the market. Please reach out to me at any time for all of your real estate needs!

Where to Eat and What to Eat in Bend 

It's not often that you find a city the size of Bend with a restaurant scene this impressive. Bend is a community of about 100,000 people, experiencing significant growth but maintaining that small mountain town charm. One of the reasons people love living in Bend is the way it offers a little bit of everything. Enjoy all your favorite outdoor recreation with access to the beauty and tranquility of the surrounding rugged terrain, without sacrificing access to restaurants that are on par with what you would find in a major urban core.

Interested in learning more about living in Bend or investing in your ideal Bend real estate? We can help. Contact us any time to learn more.

Next time you are deciding where to eat out in Bend, consider one of these local gems.

Zydeco Kitchen & Cocktails

Offering Northwest cuisine with a fun Southern twist, Zydeco Kitchen & Cocktails is a fun place to plan a night out. Their convenient downtown Bend location features a hip, yet welcoming, ambiance. The menu focuses on locally sourced, organic ingredients from providers in the region, including lunch and dinner options as well as handcrafted cocktails. Zydeco is also the perfect place to stop by if you eat gluten-free, with a full menu of gluten-free options that won't skimp on flavor.

Bos Taurus

Looking for an upscale restaurant perfect for a special occasion in Bend? Look no further than Bos Taurus. The restaurant will welcome you with a chic, industrial ambiance. Choose from the best cuts of beef in the world, like A5 from wagyu from Japan, wagyu from Australia, or carefully selected steaks from North American ranchers. This is a steakhouse experience you will never forget.

The Blacksmith Restaurant

Located in a 1923 historic blacksmith shop in the heart of downtown Bend, The Blacksmith Restaurant is a trendy steakhouse with a cozy vibe. Distinctive, bold cuisine is combined with a laid back, welcoming atmosphere that makes for the perfect date night. Leather booths, brick walls, and ambient lighting make for a rustic and romantic setting. Stop by for happy hour in the lounge or get a reservation for a satisfying steak dinner. Their menu also features house made pastas and delicious seafood for those looking for an alternative to red meat.

Pine Tavern Restaurant

One of the oldest restaurants in Bend, Pine Tavern Restaurant was founded in 1936 and continues to be a  local favorite. The menu of classic American dishes includes their famous homemade scones with honey butter, as well as comfort foods like fish and chips, meatloaf, and baby back ribs. Head over to their location at the foot of Oregon Avenue and bring a hearty appetite. You can dine in the Garden Room, featuring two massive Ponderosa Pines for that classic Bend appeal.

Spork

Spork is a Bend restaurant that displays the best parts of this city's personality. Locally sourced ingredients are transformed into upscale food, in a casual and comfortable setting. The restaurant grew from the chef-owner's food cart out of his vintage Airstream trailer. Slowly building a following, he eventually opened what has become one of the top restaurants in Bend. Spork is known for putting their delicious personal twist on classic global street food, perfect for adventurous eaters looking for new flavors to explore.

To learn more about what it is like to live in Bend, or to begin the search for your next home, contact us any time.

Of the famous sayings in the real estate business, "real estate is local" is right up there in using the fewest words to convey a truism. This week, a respected industry analyst I follow spoke of rising inventory nationally and mortgage interest rates near 7%. While I follow the national real estate news, I am intimately familiar with Central Oregon statistics, which I access through our MLS. I can report unequivocally that the local numbers are bucking the national trends. For example, the inventory of Deschutes County single-family homes dropped again, now at 552, a decline of twenty-one from last week. According to Mortgage News Daily, and verified by a local lender, rates yesterday were at 6.17% for 30-year fixed-rate mortgages. So if you were to listen to the national media on real estate, you would likely be sitting out the best buying opportunity in the last couple of years. 

Pending Sales in Deschutes County were a solid fifty-one over the previous seven days, down one from last week. Crook County had ten pending sales, the highest number since September 14, and Jefferson County had four, the most since late November. The median days on the market for the pending properties in Deschutes County was sixty-five, balanced by ninety-two days for the active inventory. Fifty percent of the actively listed homes have reduced the asking price by a median of -5.46%. While no doubt asking prices have moderated, the median sale price in Deschutes County remains stable at 674k. However, the high asking prices of many properties are beginning to line up with reality. 

While the decline of homes for sale might not be as dramatic as last year, the volume is decreasing. You may recall that I reported a low in Deschutes County for 2022 in April of 333 single-family homes. Whether we reach that number and for how long inventory declines are unknown. Although mortgage rates, while still volatile, have settled in at the low 6% range. The heavily manipulated CPI has indicated a reduction in inflation. While the Fed is likely not finished with rate increases, many analysts speculate that Jerome Powell will waive the white flag on inflation and shift to easing monetary policy to fight the battle against a looming recession. Those factors combine to indicate that mortgage interest rates are likely to moderate rather than continue their climb into decade highs. I have already witnessed enough buyer activity at current rates that I am comfortable predicting increasing sales activity if mortgage rates dip below 6%. As I have often said, home purchases should have a long-term focus. A home that is an excellent fit for your needs is worth a second look. There are no guarantees that a similar home will be available later this year at a lower price. 

One area where similar homes are readily available lies in new construction, a segment of our market that has seen the deepest price cuts of late. Builders have sharp pencils and are intimately familiar with their costs. New home builders also have the incentive to clear inventory from their books and know that getting ahead of the market regarding price is critical to making a sale. As a result, in light of recent deep price cuts, I wouldn't expect new home builders to continue dropping prices through the summer, making now a great time to consider those options while there is a reasonably large selection. Keep in mind that waiting out the last cycle of real estate activity has not improved much for buyers. 

Lastly, whether a significant price drop materializes remains to be seen, but the chances of severe price reductions still need a rising inventory and reduced buyer activity. The next several weeks will strongly indicate prices for the rest of 2023. Suppose inventory continues to decline, along with steady or declining mortgage rates. In that case, I expect prices to remain firm, making my prediction of a 9% appreciation for Deschutes County for the year likely. On the other hand, a crashing economy, decreased buyer demand, rising inventory and days on the market, and interest rates above 7% would all have a deflationary impact on home prices. So far, the second scenario has yet to play out, although the year is still new. 

Whatever your views are on our real estate market, I am available to provide up-to-the-minute analysis, and help you plan your strategy, no matter your timeframe. 

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With the holidays behind us and halfway through the first whole week of business days of 2023, it is apparent that buyer demand in Deschutes County remains strong. Pending sales from the previous seven days were fifty-two, up from the twenty-nine sales over the New Year's interrupted week. During the same period, sales increased by nine to thirty-seven. Active inventory decreased to 573 from 612 last Wednesday. Remember, active inventory in 2022 reached the bottom in April and hit a low of 333 homes for sale in Deschutes County. 

I have written extensively about the volume of homes for sale indicating price trends, still one of the best leading indicators. When and how quickly the inventory of actively listed properties builds will be a telling sign. In the years passed, between the bottom of the sub-prime lending housing crash and pre-pandemic, the volume of homes for sale typically began to rise in late January. With the volume of homes for sale still significantly lower than pre-pandemic, all the early indication shows sluggish growth of actively listed properties. The 30-year national average fixed-rate mortgage yesterday was 6.21%, as rates have moderated recently. While the Fed continues to telegraph raising rates to combat inflation, analysts believe the subsequent increase will be 25 basis points, half of the last increase and a third of most increases in 2022. If 25 basis points are the number, I expect mortgage interest rates to shrug that off and remain stable or rise slightly. However, a bearish view on inflation from Jerome Powell and a higher-than-expected increase could spike mortgage rates. The predictability of the Fed and forward guidance assumptions have everyone on their toes in this crazy economic cycle. Buyer demand may be lower than in the last couple of years, but higher mortgage interest rates keep sellers on the sidelines. No matter the reason, lower inventory helps keep home prices firm. This fact is illustrated by the median sale price in Deschutes County last week of 720k, up from 557k the previous week. 

Central Oregon has a highly diverse pool of home types and styles, and there is more to the picture than just Deschutes County. For example, the inventory of homes for sale in Crook County increased last week by six to one-hundred-thirty. Jefferson County inventory increased by two to seventy-seven homes for sale. During the previous seven days, there were seven sales in Crook County and three in Jefferson County. For any buyers looking for a bargain, the outlying areas and smaller communities of Central Oregon could be an option. Remember that a change week-over-week is only a blip in the data, not a trend. 

I would caution buyers and sellers to take the national media reporting on home sale activity with a grain of salt:

1. Most of the data the mainstream media rely on is outdated and lags behind our current situation.
2. Heavily populated areas have an entirely different dynamic than Central Oregon, and significant changes in places like Phoenix skew the national numbers.
3. I'm sure most of you have heard of rising inventory and falling prices, but for those following my weekly reports, you know that is not the case locally. 

I've recently witnessed a large discrepancy between the prices of comparable homes. A thorough analysis of the trends and our current inventory is the best way to calculate prices that reflect our market. I put my research and tracking of the market against anyone and would be happy to run an analysis for your specific needs.

Over the last several weeks, I've studied to become a principal broker and passed the exam last Wednesday. My goal is to provide my clients with the best possible service, and the principal broker designation is another step in that never-ending process. The title will keep my day-to-day activities the same but shows my continued commitment to the highest service I can provide. Please feel free to call me today if you have any real estate needs or questions.

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Happy New Year! Can you believe it is 2023? At the start of last year, many thought 2022 would be a reprieve from the madness of 2021. Of course, whether that is true depends on your perspective, but there is no doubt that the year ahead will be unpredictable in real estate and economics.

Single-family homes for sale in Deschutes County declined over the previous week to 612 from 669, a trend that is likely to continue through spring and early summer. One of the big questions on everyone's mind is what home prices will do in 2023. Since low inventory keeps prices firm, so far, the early indicators show stability in pricing. However, that is easier to quantify by looking back over the last couple of years. 

In recent history, the last "normal" year was 2019, with 4248 sales at a median sale price of 425k. The median price reduction in 2019 was -3.65%. 2020 was a mix with pandemic restrictions taking effect in the spring, followed by a month of slow sales, before taking off in unprecedented fashion. 2020 ended with 5326 sales and a median price of 465k, a 9.4% increase from the previous year. Price decreases in 2020 were modest at -2.7%. 2021 was all about skyrocketing prices, with sales barely lagging the last year at 5256. The median sale price in 2021 was 603k, with the corresponding median price decrease at -3.82%. However, most sellers were getting their asking price, or in many cases, much more, reflected in the 29.7% increase from the last year! Finally, 2022 ended with a more typical sales volume of 4122 and a median price decrease of -5.14%. Price appreciation was still robust at 12.77%, although well below the astronomical increases of 2021.

What do these numbers show for the year ahead? First, of course, another factor to watch is mortgage interest rates. The 30-year national average for fixed-rate mortgages stands at 6.45%, more than 3% higher than one year ago. The rate spike undoubtedly played a role in fewer sales for the year, but buyer demand remains at pre-pandemic levels. Moreover, since the climb in interest rates, sellers have adjusted with price reductions and, in some cases, accepted offers below their asking price. Although, even with price reductions, prices were up over the previous year. The national reporting mentions rising inventory. However, in Central Oregon, that has yet to be the case. Whether the economy has improved or inflation is under control remains to be seen. The resilient home-buying public has adjusted and remains engaged in the market. Without a significant drop in buyer demand and a corresponding increase in homes for sale, there will be little downward pressure on home prices. We also are at a point where mortgage rates are relatively stable, even if they increase slightly over the next few months. Many buyers have accepted today's rates and have resigned to paying more until rates decline in the future when they can refinance. A healthy volume of cash buyers, immune to rate increases, remain in the market.

While I've mostly ignored home price appreciation predictions for 2023, I'm prepared to offer my own Central Oregon prediction after analyzing the numbers above. I anticipate a 9% appreciation in 2023 over 2022, in line with pre-pandemic trends. While it is possible homes for sale remain low and push that number over 10%, my gut tells me interest rates will keep appreciation in check. If available homes for sale increase significantly, I will adjust my prediction to 7%. Considering all of the information in this report, my predictions are hardly groundbreaking or putting me on a limb. Suppose all the factors slowing the housing market continues, and the economy falters. In that case, my long-term assumption points toward less appreciation in 2024, but that is too far out to predict, considering how the market has been behaving lately! 

For all of the new readers of this report, I give my take weekly on Central Oregon real estate statistics, primarily focused on Deschutes County. Of course, I also track Crook and Jefferson County, but Deschutes is the largest pool of data that provides the most insight into developing trends. So stay tuned for hyper-local information, and feel free to reach out anytime you need a hands-on analysis tailored for you. Also, check out my Testimonials page to see what my past clients have to say!

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Hopefully, everyone had a relaxing Christmas weekend! I wish you and your family a happy and prosperous New Year!

Some real estate activity in the last week is noteworthy between eggnog, family dinners, and football games. First, the inventory of single-family homes for sale in Deschutes County dropped to 669, down twenty-five from the previous week. Second, the median days on the market for actively listed homes increased to ninety-one, up five from last week. While the inventory might follow the previous year's trends, the number of days a home is on the market before acquiring a buyer is up significantly. As we head into 2023, days on the market will be a telling indicator of buyer demand. Twenty-one homes closed last week, less than half of the previous week, which isn't surprising due to the short holiday week. Many listing contracts have year-end expiration dates, and I expect another drop in inventory by next week. Still, home prices of re-sale homes (not new construction) have stayed firm.

The sales of new construction listed with the year built as 2022-2023 tell a different story. Two hundred seventy-eight newly or under-construction homes are available between Crook, Deschutes, and Jefferson Counties, with corresponding median price reductions of -5.98%, -4.86%, and -4.93%. Admittedly, those price reductions are less than the active inventory of re-sale homes listed, but some digging reveals a different story. For starters, there were only seven pending new-construction sales last week and nine sold homes. One of those sales was in Jefferson County (Madras) and went for 309k, 10k above the asking price. The price increase was most likely related to an add-on by the buyer rather than a bidding war. Six new-construction sales were in Deschutes County at a median of 605k and 8.56% below the asking price. Finally, in Crook County, two homes sold in the MLS showed prices equal to the list price. However, those sales were 16.47% below the original list price. The avid readers of this report may recall that a new-construction home in Madras sold a couple of weeks ago for 23.44% below the asking price, so the recent Hayden Homes sales in Crook County are not a price reduction anomaly. New home builders are especially willing to make deals as we head into 2023, something to keep in mind as you evaluate your options.

The national average for 30-year, fixed-rate conventional mortgages increased to 6.5% yesterday. The next Federal Reserve, Open Market Committee meeting is at the end of January, and I am still looking for a particular insight into what Jerome Powell has in mind. However, based on the hawkish tone of Fed board members and Powell himself, it is reasonable to assume they will not hesitate to raise rates further if the data show persistent inflation.

The Case-Schiller House Price Index indicates four consecutive months of home price decreases and declines in all of the cities the index tracks on a month-to-month basis. Although, the index also reported an annual gain of 9.2%. For any Substack readers, check out the CalculatedRisk Newsletter for a regular report on the national numbers and some key cities. Central Oregon real estate operates under different conditions than major cities or heavily populated areas, so my hyper-local weekly reports are more on point than the national reporting. However, the national trends have an impact and eventually may reflect in our local data. 

Real estate as an investment works best with a long-term focus. The best indication that the time is right to buy is when you are ready, can afford the payments, and like what is available. Refinancing is always an option in the future should rates decline. There is little doubt that the higher interest rates of late have created pent-up buyer demand, and a significant drop in rates is likely to cause a surge in demand and prices. The housing market is always a balancing act. I can help by providing up-to-the-minute data and a deep knowledge of the available inventory. Whatever your needs, don't hesitate to get in touch with me anytime you need assistance!

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The national average for fixed-rate 30-year mortgages yesterday was 6.38%, up slightly from earlier in the week but down from a peak of 7.24% in mid-October. As always, check with your local lender, as many in Bend have lower rates than the national average. In addition, actively listed single-family homes in Deschutes County decreased to 694, in line with last year's inventory trend. However, last week's sales of forty-five homes are significantly less than the 119 sales for this week in 2021. There is little doubt that higher mortgage rates have slowed buyer demand, but the rise in rates may also be a factor in fewer sellers listing their homes. Whatever drives the data, declining inventory in Deschutes County keeps prices firm. The median sale price of homes sold last week compared with the same week one year ago was up marginally, although the median sale price week to week is dependent on the particular home sold and is too small a sample to show price trends accurately. 

In Deschutes County, sales year to date for 2021 were 5,157 with a median price of 602k, compared to 4,069 sales at a median of 680k in 2022. The last time yearly sales in Deschutes County were below 4500 was in 2014 when sales were 4,009. In 2006 sales were 4,002 before a steep decline due to the sub-prime lending fiasco triggered the housing crash. In 2007, sales dropped to 2,703, then to 2,043 in 2008. By 2009 sales rebounded to 2,844, and from 2010 through 2013, sales went from the low to the high three-thousand range. The recent sales history in Deschutes County shows robust activity today, despite higher rates. 

Mortgage rates in 1982 were 16.93% before steadily declining to ~7% through most of the 90s. In the new millennium's first decade, rates were in the 6% range before dropping to ~4% from 2010 through 2018. Rates below 4% first appeared in 2012, again in 2016-2017, and between 2019-2020. The below 3% rates of 2021 are an anomaly, not the norm. All of these numbers may make your eyes glaze over, but the history helps to give perspective on today's market. 

Whether all the data combine to drive home prices down remains to be seen. Although looking at the recent past, home sales are remarkably robust, inventory remains historically low, and prices are firm. Significant price decreases in the median sale price seem unlikely without rapidly rising inventory and decreased buyer demand. For example, in April 2022, there were only ~330 homes for sale in Deschutes County! As buyers grow accustomed to higher mortgage rates, I anticipate demand to increase, not decrease. 

Whether you are interested in talking about the data or need help navigating our market, I can help! Please feel free to reach out to me anytime.

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With eleven business days left in 2022, we see signs of what the housing market may look like in 2023. The November consumer price index increased by 7.1%, which applied downward pressure on mortgage interest rates, now at 6.28% for the 30-year fixed-rate national average. I'm old enough to remember when our target inflation was 2%, so the current inflation rate still seems astronomically high, even if the markets behave as if Christmas arrived early. In addition, analysts expect the Federal Reserve to raise rates today by 50 basis points, a reduction from the previous 75 basis points hikes from the past meetings of 2022. So, what are the signs showing for 2023? I'll start with Deschutes County:

This morning in Deschutes County, inventory declined further to 721 single-family homes listed for sale. The median sale price during the last seven days was $720,395, with forty sold homes. For comparison, this week in 2021, there were 140 sales at a median price of 615k. While a lot can happen over the next several weeks, the decline in active inventory will continue, and prices will remain firm, bolstered by lower mortgage interest rates. 

The definition of Inflationary Psychology is consumers spending more now because of the belief that prices will increase in the short term. There isn't any doubt that many home buyers feel this pressure, even if a percentage of the general public anticipates a crash in home prices. Unfortunately, the spending associated with Inflationary Psychology is a self-fulfilling prophecy that increases the velocity of money and boosts inflation. Even with a reduction in CPI (still 7.1% year-over-year), housing prices have not come down in Deschutes County. However, transactions have dropped significantly since 2021. As mortgage rates decline, buyers re-engage the market, applying upward pressure on already inflated prices. With the strong buyer demand from new residents coming from expensive out-of-town communities, there is a strong possibility Bend has been "found." The work-from-home dynamic has likely been a contributing factor. 

In Crook County last week, there were six sold homes at a median of $437,497, with five price changes at a median reduction of -4%. In 2021 there were twelve sales with the median sale price at $422,500 and four price drops at a median decrease of -2.73%. Crook County sees a different price dynamic than Deschutes County. Remember that the higher-priced homes in Brasada Ranch and Powell Butte significantly skew the median sale price in Crook County upward.

Jefferson County had three sales in the last seven days, with the median sale price at 344k, compared to the 2021 median of 304k and ten sales. There was one pending sale in Madras (Jefferson County) last week, a newly built home that reduced the asking price by -23.44% before getting an offer! The bifurcation in Central Oregon real estate between Bend and the outlying areas is apparent and likely to continue. While low inventory could begin applying upward pressure on home prices in the communities surrounding Bend, there appears to be a limit on what buyers can or are willing to pay. 

If I were to predict the real estate market for 2023, it would be low inventory and firm prices in much of Deschutes County, with a milder impact in Crook and Jefferson County. I completely understand your position for those who think more pain is on the horizon for home prices. However, real estate has typically been a solid investment in recessions, and the lack of distressed sellers today is reaffirming that scenario. Although, I reserve the right to be wrong! 

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Whatever your beliefs about housing, having a knowledgeable agent is critical in today's market. So contact me today for a real-time, personal evaluation of your options.

After a brief respite from previous highs, mortgage rates have again breached the 6% threshold. According to Mortgage News Daily, the national average of a 30-year fixed-rate mortgage is 6.37%. However, at a local lender's website, rates today show 6% and 6.168% APR, proof that shopping around is a wise decision. Additionally, after briefly peaking at over 7%, news of declining inflation has tempered rates considerably. Call me a skeptic, but I am hesitant to believe the heavily manipulated CPI numbers and have seen no sign of softening inflation in my grocery bill. Still, there is speculation that the Fed may raise rates next week by 50 basis points instead of the 75 basis points hikes of past meetings in 2022. Some have even speculated that the Fed will skip a rate hike entirely in January while the drum beats of recession grow louder. 

This week's active inventory dropped dramatically from 782 single-family homes in Deschutes County to 745. In addition, pending sales rebounded from the Thanksgiving week low, with 41 pending sales. Sold homes doubled the pace of the holiday week at 70. The combination of strong buyer demand, moderated interest rates, and declining inventory keep prices relatively firm, despite the wave of price reductions about which everyone seems to be talking. Another data point that might take the wind out of the sails of those crowing about declining inflation is the median sold price of single-family homes. This week in 2021, there were 96 sold homes at a median price of 587k and the sold-to-list price ratio at 100%. This week, sales volume dropped by 27%, with 34 price reductions at a median of -7.29% and a sold/list ratio of 97.99%. However, the median sale price was 642k! So much for price reductions.

The unfortunate drop in buyer affordability is real. Using the median-priced sale this week of 642k, a 30-year fixed rate mortgage rate of 6.168%, $3000 in property tax, and $1000 for homeowners insurance (PITI), the monthly payment would be $3,472. The same calculation for last year's median of 587k and 3.23% interest, the rate from Mortgage News Daily for this week last year put the PITI payment at $2,372. At our current rates, the purchase price of a home would need to be 420k to match the payment from a year ago. Even the biggest skeptics in the business are not predicting a drop in home prices of 35%. However, most industry analysts believe the spike in mortgage interest rates won't last forever, and refinancing to a lower rate in the future when rates decrease would save significantly on a monthly payment. Today, many sellers accept offers well below asking, with each property having unique circumstances. For those of you without a sense of urgency, waiting could improve your situation. However, as long as inventory declines and buyers remain engaged in the market, the chances of steep drops in home prices are unlikely. 

The best answer to today's market is to stay in close contact with your lender and real estate agent and to evaluate each option carefully. I am available anytime to run real-time numbers or make recommendations for local lenders who can help in these market conditions. Even with higher interest rates, waiting has proven to be the wrong strategy. 

The Will Rogers quote, "Don't wait to buy real estate. Buy real estate and wait." is just as applicable today as ever. Home purchases should be a long-term decision, and the likelihood of the market correcting back to previous levels is low. While it may be correct that prices will continue to soften, if rates drop dramatically, prices may rise as buyers flood the market. Contact me if you need assistance navigating this balancing act!

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Active listings of single-family homes in Deschutes County dropped to 782, the first time homes for sale have been below 800 since June. In addition, pending sales were down dramatically from last week at twenty-nine, with sold homes also down significantly at thirty-four. With Title offices closed on Thanksgiving, I read very little into the drop in sold and pending houses since we only had a couple of business days in the previous week. However, the next few weeks will be a good indicator of buyer demand with full work weeks. Additionally, between the Christmas and New Year holidays, some short weeks and personal vacation schedules make this time of year far slower than typical weeks. 

Mortgage interest rates have been steady with yesterday's 30-year fixed-rate national average of 6.65%. The Federal Reserve doesn't meet for another two weeks, so I'd expect the current mortgage rates to be relatively stable. In addition, many buyers are struggling with affordability because of the interest rate spike that started this fall. Still, the recent decline from previous rate highs combined with motivated sellers at this time of year could make for great buying opportunities. For example, in Crook County, each of the five pending sales reduced the asking price before going under contract. Four of the five sold homes in Crook County also reduced the price with the sold price to the original list price at 91.26%. 

For those of you waiting out the market, the best number to keep an eye on, other than mortgage interest rates, will be the volume of active inventory. In April 2022, the number of actively listed single-family homes in Deschutes County was 333, far below even today's low number. Many would-be sellers have mortgage interest rates well below the current level, keeping them on the sidelines. In the past few years, strong buyer demand kept inventory low; a steep reduction in new listings may create a dearth of inventory again this coming season. Either way, with very few homes listed for sale, prices tend to stay elevated. Although, even if our inventory stays near today's volume, there is every reason to believe mortgage interest rates will be higher than today and remain elevated through 2023. If mortgage rates rise and stay elevated, sellers will need to accept lower prices. While I have no way of knowing what mid-year 2023 will bring, I can confidently say that 6.65% mortgage interest rates, reduced prices, and motivated sellers make right now an opportunity many may look back on as the "good times" once 2023 starts rolling. Check out this video from August if you are looking for a reminder of how quickly things change!

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