With only a handful of days remaining in 2023 and the holidays in full swing, the 2024 housing market begins today. A key metric to watch heading into the new year will be available inventory, so let's dive in!
This week, I will break down the past year in Redmond, but first, a look at the Central Oregon County data.
In Deschutes County this morning, there are 688 single-family homes for sale, down two from last week and six from this week in 2022. Thirty-six homes are pending at a median of $657,498, with thirty-four sales at a median of 691k. Sales and pending sales were down from last year's week of thirty-seven and forty-five. The inventory levels are a valid comparison, but sales and pending sales during the holidays are subject to so many variables that I wouldn't read too much into the reduced activity.
Crook County has 120 active listings, down one from last year's week and eight from the previous week. The median list price this week is just shy of 600k. Removing the nine listings in Brasada Ranch drops the median list price in Crook County to 515k. County-wide, seven pending sales, at a median of $525,555, and four closed transactions, at a median of $699,250, made for a solid week of activity. One sale and two of the pending sales were in Brasada Ranch, which has shown robust activity throughout the year.
Jefferson County inventory remains at 80, the same as last week and one less than this week last year. There were two pending sales in the county at a median of $374,450 and five closed transactions at a median of $401,424 to round out the week's housing activity.
This morning in Redmond, there are 169 active single-family listings at a median asking price of $599,900 and seventy-nine days on the market. In the last week, nine homes in Redmond went under contract at a median of $499,900 and fifty-one days listed. Three homes closed in Redmond this week at a median of $532,400 and ninety-six days on the market. There were 932 year-to-date 2022 sales in Redmond at a median of $532,750 and only ten median days listed. This year, as of this morning, Redmond has had 684 sales at a median of $502,250 and twenty-four days listed. Sales in 2023 are down 26.6% from 2022, with the median home price down 5.7%. Redmond is a rapidly growing community, reflected by new subdivisions and plenty of new construction, with sixty-five of the 169 single-family listings constructed in 2022 or later! With a charming downtown and a more laid-back vibe than Bend, Redmond appeals to many people looking to put down roots in Central Oregon.
On December 19, 2022, the national average for a thirty-year fixed-rate mortgage was 6.31%, compared to this morning's rate of 6.64%. Last year, uncertainty about the housing market ruled the day, as well as how high mortgage rates would go. On October 16, 2023, rates peaked for the year at 7.94%, a high not seen since May 2000 when rates were 8.43%. The rate peak in May 2000 preceded a twenty-year decline in rates that set the stage for the 2008 housing crash and finally bottomed out at 2.69% in December 2020. The Dot Com crash in the early 2000s, overseen by Fed Chairmen Alan Greenspan followed by Ben Bernanke, brought on an era of cheap credit that has inflated home prices ever since. Today, historic home unaffordability is a home price problem far more than an interest rate problem.
Whether it was Ben Bernanke in 2008 telling Congress that there was "no recession in sight," Janet Yellen commenting that quantitative tightening would be "like watching paint dry," or current Fed Chairman Jerome Powell spinning on his heels to proclaim the Fed is considering rate pivots in 2024, the one clear thing is the Fed seems to be the last to recognize a coming recession. Wall Street seemed immune to Powell's forward guidance about "higher-longer," always looking towards the pivot. Yet, the champagne corks started popping based on his recent statement about a pivot, Powell's remarks akin to a hostage statement. In the days following Powell's rapid change of heart, several Fed Governors took to the press to walk back the doveish comments. Still, the mainstream media and many in the real estate industry have reacted as if a pivot has already happened, proclaiming a new landscape for the 2024 housing market.
First, today's lower rates are a boon to buyers and something to take advantage of if you are actively looking. Many lenders suggest rate locks, and there is an unquestionable opportunity to secure a loan at a considerably better rate than just a few weeks ago. Combine an interest rate buydown with today's lower rates for loans well below the bare rate.
Second, if you are going to listen to Powell's talk of a pivot, you also need to listen to the rest of his statement. Cherry-picking what you want to hear is not a sound strategy. Powell and his Governor's batting clean-up reiterated that data indicating inflation consistently heading towards the target needed to precede a pivot. Much of the inflation comparisons written about in financial reports and presented by the mainstream media have used year-over-year comparisons, while month-over-month inflation has risen. The Fed relies heavily on Core Inflation numbers, which back out volatile food and energy costs, while the media has been touting lower energy costs as a sign of lower inflation.
Unfortunately, you can't have your cake and eat it, too. Also, unfortunately, the recent turmoil in the Red Sea will likely cause inflation for the costs of goods shipped and energy. Putting all the massaging of numbers by the Bureau of Labor Statistics aside, the year-over-year inflation comparisons in the coming months will likely look far less encouraging. You might recall that Jerome Powell touted the increase in bond prices, doing some of the heavy lifting for the Fed, in essence, tightening monetary policy. The positive impact has diminished since bond prices have fallen, making the pivot Powell so cavalierly mentioned less likely anytime soon. However, a pivot based on political motives remains a possibility. But the Fed isn't political! In a few short days, it will be an election year, and the pressure by an incumbent administration on the Fed has been equally applied by both sides of the aisle, one of the biggest wild cards of the coming year.
Home purchases should have a long-term focus, especially in a market like we are experiencing today. Lower rates today are great, and this time of year creates fantastic opportunities relative to peak season pricing. In the long term, Central Oregon is a tremendous investment. Currently, nationwide inventory is up, while Central Oregon inventory is down, a strong indication of buyer demand for our region. I am not bearish on Central Oregon but a realist regarding the financial realities. Be cautious moving forward. A pivot in rates and monetary policy will likely bring home prices up. Whether you want to call that appreciation or a bubble is up to you. However, Jerome Powell claims that appropriate economic indicators are essential before a pivot, and to date, those indicators have not materialized.
Next week, I will highlight another city in Central Oregon as I continue my year-end reporting on the Central Oregon housing market. Who knows? I may get into the weeds on the repo, reverse repo, and commercial real estate markets to reveal more of the issues I see percolating beneath the standard reporting.
Merry Christmas! I am working through the holiday, so feel free to reach out if you need anything.