Every Wednesday morning, when compiling the data from the previous week, my preconceived notions of where the market is heading are challenged. While looking at homes and evaluating our inventory daily, I also read a lot of national news about data trends and speculation about the economy. Like most, the information influences my opinions, and it is easy to believe the market is moving in directions that do not align with reality. Unlike the information I present, which is accurate in real-time, most of the national data on real estate is thirty to forty-five days old. I am keenly aware that the national data is stale, and I prepare myself for the local data I pull from our MLS to challenge any beliefs I may have taken on during the week. This week, I believed signs of the market slowing with higher mortgage interest rates could develop. The data shows my assumption to be completely inaccurate.
Jefferson County's inventory of single-family homes dropped by two, now at seventy-three, while Crook County increased by seven to 156. Deschutes County has 861 single-family homes listed, an increase of one. This week last year, there were 957 single-family homes listed in Deschutes County, with two more weeks of increased inventory before the seasonal decline. The inversion of inventory numbers year-over-year has only increased, putting pressure on buyers waiting for relief. This week's median pending sale price in 2022 was 660k. Despite higher mortgage interest rates, the median sale price for the previous seven days was 710k. While yesterday's national average for a 30-year fixed-rate conventional mortgage was 7.04%, rates through this year have fluctuated between 6-7%. The rate volatility has been head-spinning, but the range has been remarkably consistent. Nonetheless, buyers have seemingly embraced higher rates, with ninety-four pending sales in Deschutes County this week, the highest since late August 2022.
Speaking of rates, I believe the Fed will raise another twenty-five basis points today. I also expect another twenty-five basis point hike before year-end. Beyond that is anyone's guess.
The high sales volume and low inventory have combined to create firm prices despite higher mortgage rates. A $50,000 increase in the median pending sale price is not insignificant. I expect strong sales through Labor Day as any buyers biding their time are now taking action on the available inventory. In this market, I have often been evaluating what a property might sell for today, only to see the home be placed under contract before a client can make an offer. Questioning prices is a healthy exercise with value, but conditions today leave little time to ponder. Presenting low-ball offers in today's market can backfire when other buyers are more than willing to offer the asking price.
With market conditions still strongly favoring sellers, knowing how many buyers are evaluating a particular home is impossible. It is also difficult to predict potential sale prices with so many willing buyers chomping at the bit to secure a property. When a property that fits your needs comes up, presenting an offer in the early days of a new listing is a great first step. In many cases, coming in under asking isn't a dealbreaker, but ideally, the price would elicit a counteroffer. Unfortunately, offers so low that a seller rejects them completely don't give any insight into a seller's temperament. Begging back after a rejected offer requires a price and terms that might be even higher than what could have been negotiated by starting closer to the asking price. For reference, the pending sales in Deschutes County this week had a median price reduction of -6.13%. There is no question some properties have aggressive price tags and may take more significant cuts, but that is the exception, not the rule.
With the unaffordability crunch at all-time highs, it is understandable that buyers are having difficulty wrapping their heads around prices. Testing the market with lower offers is not a bad strategy, but in my experience, buyer fatigue sets in rapidly, as nobody likes multiple rejections. Regular readers of my reports can guess that this is where I espouse the benefits of a long-term view of housing. With equal amounts of reporting predicting a solid economy and catastrophic doom, it is impossible to figure out what comes next. The recent strength in the equity markets seems to be thumbing its nose at the likes of Peter Schiff predicting doom. At the same time, I enjoy reading "Dr. Doom's" analysis, but living like Chicken Little can be exhausting.
Our economy and the housing markets have become increasingly complex. While there may be issues of concern, having the stars align perfectly to create a significant drawdown in home prices has proven elusive. I recently read that there are 60% more short-term rental properties than homes for sale nationwide. Conditions in the large west coast cities are not improving, and the exodus to areas like Central Oregon continues. With commercial properties in San Francisco seeing nearly 30% vacancy rates and work-from-home here-to-stay for high-income employees, buyer demand has not subsided. Whatever your long-term view of real estate, none of these factors will significantly impact home prices in 2023. Many analysts are predicting further home price increases in 2024. Over the last several years in Central Oregon, waiting has proven costly.
The flip side of strong buyer demand is a strong seller's market. However, accurate pricing is imperative to maximize your sale. The tools on EnjoyBendLife.com are second to none but are not a replacement for my local knowledge. If you are considering selling your home, allow me to run a detailed market analysis to see if my price opinion aligns with yours. I am available and always happy to share my perspective.