I hope you all had a great Fourth of July! Whether that was an extended weekend or just a pause during a busy week, there is much to celebrate at the midpoint of another year. Independence means many different things to different people. Yet, in the context of my report, I've witnessed the freedom of people moving to Central Oregon to begin a life in an area that allows for abundant sunshine, recreation, and community. Whatever your vision for life in this corner of the world, I wish you every success.
From a real estate perspective, the Fourth of July marks the beginning of a shift in the market. In just two months, kids will return to school, and the peak of the selling season will be behind us. Over the next several weeks, price reductions will increase as sellers whose listings have lingered on the market adjust in hopes of finding a buyer before the end of the year. As always, if a home has been on the market for some time, now is a perfect time to make a lower offer.
At this time last year, the inventory of homes for sale began to increase significantly from extreme lows due to buyers' pulling back based on economic uncertainty. While the economy has been surprisingly robust, it hasn't been immune to changes. However, many of those changes have barely put a dent in the housing market of Central Oregon. The market is stronger today in many ways than last year. Whether that strength continues through the year's second half remains to be seen.
This morning in Deschutes County, there are 855 single-family homes listed, six more than this week last year. There were seventy pending sales the previous week compared to seventy-seven last year and seventy-eight sales compared to ninety in 2022. These numbers are very similar, considering how the market behaves during the holiday week. Although, some differences stood out, in particular prices.
First, the comparison to mortgage rates is striking. Last year, many buyers I spoke with were very concerned about rising rates. After years of extremely low rates, 5.68% for a 30-year fixed-rate mortgage on July 4, 2022, was shocking. That was a low point after a spike to 6.11% in June before a peak in October to 7.22%. The rates and corresponding uncertainty slowed buyer demand, and inventory began to increase. According to Mortgage News Daily, on July 3, 2023, the national average for a 30-year fixed-rate mortgage was 7.03%. Seeing activity that nearly matches last year when rates today are more than one and a quarter points higher is surprising. But, buyers seem to have adjusted to more expensive credit and continue snapping up homes.
If you only considered mortgage interest rates, it would be an easy assumption that home prices have fallen. However, the opposite is true. This week in 2022, the 849 active listings had a median price of 795k, 730k for pending sales, and 680k for sold homes. The median price reduction for sold properties during that week was -5.48%. This week, the 855 active listings show a median of 835k, 706k for pending sales, and 765k for closed sales, and the median price reduction of the closed sales is -4.41%. While the available inventory may be similar to last year, the levels are historically low and not enough to temper prices. View the Market Trend Reports on EnjoyBendLife.com for a chart showing how our current inventory measures up to years past.
Year-to-date sales for 2023 single-family homes in Deschutes County are 1520 compared to 2279 last year. However, all indications show that the gap is narrowing as the year progresses. If sales remain strong or increase, expect prices to do the same.
One factor influencing prices is the condition of homes for sale. Many buyers were willing to take on projects at lower interest rates and a calmer overall market. Today, many buyers are spending their resources up front, leaving little left for renovations. Not to mention that the contractors of Central Oregon are spread thin, making timelines for improvements hard to pin down. Material prices also play a role in the renovation equation. As you sort through the available homes for sale, it is clear that many of the properties lingering on the market have some challenges. It stands to reason that more turnkey homes will sell at a higher price, and this is not just a Central Oregon phenomenon. As older sellers choose to downsize or move on, I expect more properties to list that are dated or need significant repairs and improvements. As always, there is an opportunity for anyone willing or skilled at renovation projects!
Peak summer may not be a great time to find available contractors, but many builders and remodel experts have more time in the fall and winter. For buyers with the ability to delay moving into a home and the means of financing a renovation project, there are great opportunities available. Despite the challenges, the three keys to real estate are location, location, location, and homes in great places still sell quickly.
Of the seventy pending sales last week, the median days listed was fifteen, identical to this week last year. Not every home sells quickly, but in today's market, you need to assume that many buyers are considering every property available. Housing prices can be irrationally aggressive, so contact me anytime for a market analysis. I have deep knowledge of the inventory and Central Oregon housing market and can send you comps and a price range to help you determine a strategy. A knowledgeable real estate professional on your side is more important than ever!