Before I pulled the MLS data this morning, I prepared to write about cracks beginning to appear in the housing market based on stubbornly high mortgage interest rates. My speculation about a slowing market originated from an early week spike in inventory and my incorrect assumption that buyers would not step up to absorb all of the new homes. Normally I do not get caught up in the data between my Wednesday reports since so much can happen in seven days. I've found that analyzing the data once per week gives a better representation of the market than getting into the weeds daily, even though I am looking at new listings all week long. There is a reason I do not pre-write these reports, and this morning's data is a perfect illustration of why preconceived notions cloud reality.
There are twenty-three more listings today in Deschutes County single-family homes than last Wednesday, totaling 762. However, pending sales were eighty-nine, and closed sales were seventy-four, both highs for 2023. The median pending sale price is up from this week last year by 5k to 700k, and the closed price is up 15k to 665k. There were twenty-six more pending sales this week than this week in 2022. Inventory of available homes dropped four from this week in 2022. Considering that I have been calling for an inversion in the year-over-year data, this development should not have surprised me. With some doom-and-gloom reporting in the national outlets, I was shocked by how robust our buyer demand is in Deschutes County.
Crook County inventory increased by thirteen to 146, with seven pending sales at a median of $476,500, while Jefferson County inventory only increased by one to seventy-one single-family homes. Jefferson County also had seven pending sales, with a median of $399,900. However, of the five sold homes, one in Camp Sherman listed for 499k sold for 670k! Camp Sherman is wonderful, sought-after, and only has one active listing, making for a competitive market. But, these scenarios play out all over Central Oregon for extraordinary properties and show that it is hard to know what a home will sell for in some cases. My reports are a great weekly snapshot of the overall market, but they do not replace individual analyses of homes and neighborhoods.
Where do we go from here? Since last week, the national average for a 30-year fixed-rate mortgage dropped slightly to 6.87%, and anything below 7% appears to be providing very little (if any) drag on buyer demand. Just one month ago, rates were 7.05%, exactly when many of the sales reported today would have gone under contract, with rates comparable to today ~six weeks ago. Further, twenty-five of the seventy-four sales in Deschutes County were cash, from 400k to $2.5M. While the volume of cash sales is significant, 25% of sales coming from cash buyers is not out of the norm. The financed sales included conventional, FHA, VA, and USDA loans.
While the Fed has intimated that another 50 basis points in rate hikes are likely before the end of the year, markets seem to be looking past that towards easier credit ahead. Although, there is still a chance that market conditions will prevent more rate increases. Also, the fear of even higher rates may pull some buyers forward. Although, it is safe to say the bulk of rate increases are in the rearview mirror. Seven percent rates have brought a significant affordability crunch to many potential buyers, even if the Central Oregon housing market seems to be shrugging that off.
Without significantly rising inventory and growing days on the market, there are unlikely to be any meaningful price reductions. And, considering the days listed for pending sales in Deschutes County last week was ten, down from twelve this week in 2022, our market appears to be heating up, not cooling down. I've heard of some properties not appraising to the contract price, which is not unheard of in a hot, supply-constrained market. High contract prices not appraising could indicate multiple offers bidding above the list price or a lack of comps. Either way, those scenarios are best addressed case-by-case and do not indicate collapsing prices.
Whether you are looking for multi-family investments, single-family homes, vacant land, or horse property, I regularly research these properties for clients. I am knowledgeable about Central Oregon and eager to help you achieve your goals! Please feel free to reach out to me anytime.