On May 29, 2023, the national average for a fixed-rate 30-year mortgage was 6.9%. The high for this credit tightening cycle was late October at 7.13%. The rate yesterday was 7.04%. While rates have been stable recently, and the range above from the low to high only represents a difference of $74 per month on a 600k mortgage, the media has speculated that mortgage interest rates are the culprit for sluggish sales. Undoubtedly, higher rates have impacted many buyers, as well as tighter underwriting requirements. In addition, any upward rate movement seems to stall buyers, particularly threshold changes such as the recent break above 7%. I spoke to many would-be buyers waiting to see how the market will behave. There is consensus amongst a reasonably large percentage of buyers that the market is approaching a correction.
Predicting a price correction is difficult at best, and today it is easy to find contradictory information that proves either a robust economy or a looming collapse. The truth may lie in the middle, but economic reality isn't as easy as averaging extreme perspectives. Nevertheless, market changes take place rapidly and build momentum. This dynamic is the biggest reason to view real estate transactions from a long-term perspective. I have heard some analysts use five years as a minimum timeframe for ownership and longer is better. I encourage any buyer that can afford a purchase, likes the property in question, and has no plans to re-sell in a short time frame to consider any reasonable options strongly. The chances of a home purchased today declining in value over a longer timeframe are remarkably low. In today's economic cycles, downturns are compressed, with dips often lasting for short periods.
The demographic shift that is still occurring nationwide has Central Oregon on many people's radar. The dynamic has impacted many other mountain communities, resort towns, and desirable locations. The deterioration of many large cities and work-from-home have been significant contributors. A look at the state of commercial real estate gives some insight into the impact of work-from-home. The people I speak to working from home are adamant that they would change careers before returning to an in-office environment.
The points above may feel like a preamble to prepare you for a market shift, and in fact, there has been a change in recent trends. Whether this week's data portends a decline or a blip will become apparent in the coming weeks.
This morning in Deschutes County, there are 865 single-family homes listed, an increase of twenty-five since last week. Growing inventory at this time of year is not unheard of, but this significant increase bucks the recent downward trend. As I mentioned, mortgage interest rates have been remarkably stable, but the national news has not been shy about reporting above 7% rates, which may impact buyers. Another data point that could signal deteriorating consumer strength is credit card debt surpassing one trillion dollars for the first time. For reference, this week last August, there were 972 single-family homes listed, so our recent increase in homes for sale is still well below the recent past.
Over the previous week, there were seventy-six pending sales at a median of 633k and fifteen days on the market. This week last year, there were sixty-five pending sales at 795k and twenty-three days on the market—Sixty-four homes sold this week at a median of 647k, down five from last year. However, last year's median sold price this week was considerably higher at 765k. Week-to-week median sale prices are irrelevant since the mix of sold homes changes dramatically. However, the median sold prices from year-to-date 2022 were 695k compared to this year's 650k. Total sales to date in 2022 were 2713 compared to 2023's sales so far of 1904, a decrease of nearly 30%. Most people I speak to waiting for a market correction are hoping for more than a paltry -6.47% reduction in prices! Remember that the median price of actively listed single-family homes nationwide is 450k. Also, the median list price of actively listed homes this week is 835k, up considerably from last year when the median list price was 749k.
Home sales in 2023 below 1M are down -28.4%, while sales between 1M-2M are down -37.7%. Although sales over 2M are only down -18.5%, the median sale price above 2M has increased from $2,375,000 to $2,422,500. A recent Wall Street Journal article lamented the collapse of the high-end market nationwide, a phenomenon that isn't apparent in Deschutes County. I attribute the relative strength of our high-end market to the demographic shift mentioned earlier. The diversity of high-end properties has as much to do with the increase in median sale prices as market strength, although both factor in.
I have mentioned in reports this year that I expected the year-over-year comparisons to improve as 2023 progresses. While my opinion hasn't changed, in light of mortgage rates and historically high unaffordability, I am unsure whether we will close the gap entirely. I do not expect total sales to surpass last year without a significant switch in the market dynamics. Considering how hot the Central Oregon housing market was for most of 2022, today's numbers are still solid.
Presenting the data without spin is a priority, as well as addressing the concerns of many buyers I speak with. I am not bearish regarding Central Oregon housing in the least. However, some economic headwinds could shake up our market. Year to date, the data doesn't show any signs of dramatically increased inventory. Without building inventory and increasing the days listed, it is unreasonable to expect a collapse in home prices. With Labor Day just around the corner and winter weather coming sooner than I care to admit, I do not expect dramatic changes in home prices in Central Oregon this season. While there may be further increases from the Fed, markets are pricing in peak rates today. A pivot in Fed policy to decreasing rates has been pushed further into the future, but most increases are in the past.
Whether you are ready to buy or sell this season or looking years into the future, I can help you devise a strategy to navigate our market. Don't hesitate to contact me anytime for a personalized approach with up-to-date information you can trust!