As the economy continues its downward spiral, cracks in the housing market are beginning to show. This morning's CPI print for June came in at 9.1%, higher than forecast and the highest in more than forty years. According to Mortgage News Daily, the 30-year fixed-rate mortgage is 5.71%, after a relatively tame week for rates. Although, with this morning's higher-than-expected inflation number, expect rates to move after a quiet week. Inventory rose slightly to 887 single-family homes listed in Deschutes County, up thirty-eight from last week's report. The median days on the market across all price points is 35 for actively listed homes and, as the chart below shows, higher for the higher-priced properties.
Interestingly, no homes above $2M were pending over the last seven days, indicating that high net worth buyers are getting cold feet about the economy. Buyers of high-priced homes have many fantastic locations and houses to choose from, so maybe they are just on an extended fourth of July vacation? However, considering some of the unique properties on the market, that seems unlikely and is a significant change from the rapid sales pace over the last couple of years.
The most active price range happens to be a segment of the market ordinarily subject to buyer financing, homes priced between 500k-$749,999. Of the thirty sold houses in this price range, one was a VA loan, two were FHA, five were all-cash deals, and the remaining twenty-two were conventional financing. The median sale price of the range was 620k, and the median price reduction was -5.19%. So far, in 2022, there were 995 homes sold in this range, with a median price reduction of -2.91%.
There is a lot of speculation about where the market will go from here, with some expecting further home-price increases. But, candidly, our economy is in such a tenuous situation, with another 75 basis-point Fed rate increase expected later in July, it seems unlikely home prices will climb further. Forecasters also expect negative GDP for the second quarter of this year, which will make a recession official. In the short term, desirable homes priced correctly should continue to sell reasonably fast because of the time of year. But, as we approach fall, expect any homes that have lingered on the market for the summer to begin cutting the price or be open to offers below asking. As I have said for months, the key to downward pressure on home prices is rising inventory and increasing days on the market. It may take a few days for the recent economic shocks to settle in, but our current market supports prices within a reasonable percentage of today's pricing. Stay tuned to this report to be the first to know when the market shifts further.
Now is the time to utilize the Market Trend Reports on my website, and allow me to research any decision you are considering regarding housing in Central Oregon. Also, at the bottom of the Market Trend page, I have provided links to the Case-Schiller Home Price Index and other financial charts that are especially helpful for investors. Remember, housing is a long-term investment, and times like these create opportunity. Please do not hesitate to contact me if you have any questions!