Mortgage rates backed off of recent highs, with the 30-year average for a fixed-rate conventional loan at 6.89% yesterday afternoon, unchanged from Monday. This week is bereft of new data, with the Fed in a blackout period ahead of next week's meeting and the CPI numbers coming out on Tuesday. As a result, I expect mortgage rates to remain stable through the week, an anomaly for the last year.
Single-family homes for sale in Deschutes County increased by thirty-six to 722 listings 922, including manufactured homes on land, condos, townhouses, and fractional ownership properties. Our inventory is still slightly ahead of last year's week, while the median listing price is higher, and the pending and sold price is marginally lower. Comparing the weekly median price of the active inventory is valuable, but the pending and sold numbers change dramatically weekly. Using a more extended timeline helps to smooth those numbers, and the median closed sale price for the year-to-date 2022 was 695k, compared to 635k this year. I expect the active inventory volume and possibly the median sale price to invert from last year's numbers by July. Still, sales volume is down significantly, primarily due to higher interest rates. Year-to-date sales volume for 2022 was 1914 for single-family homes compared to 1216 in 2023, a decrease of -36.5%. You may recall that last week's median sale price was $718,750, slightly less than last week in 2022, illustrating the significant changes in those numbers week-to-week. However, pending sales last week rebounded to eighty-five, fourteen more than last week and two more than this week in 2022. We will unlikely surpass total sales from last year, but the gap is narrowing as the year progresses. Considering the sharp decline in activity through the second half of 2022, I expect the year-over-year comparisons to narrow.
It would be understandable to attribute the reduced sales price to less expensive homes or significant price reductions, but the median price drop of sold homes last week was -4%, the same as last year. Interestingly, the sales below 500k are only down -6% year over year, with sales above $2M down -27.4%, both better than the total market comparisons. While the median sale price below 500k dropped slightly to 430k, a drop of 19k, the homes sold over $2M show an increase in the median sale price of 150k, now at $2.5M. However, the middle of the market shows radical sales volume reductions from last year, with the 500k-$1M segment down -40% and the $1M-$2M segment down -48%. Neither the run-up in prices starting in 2020 nor the reduction in sales volume this year has impacted our market evenly. Also, likely attributable to the demographics relocating to Central Oregon, home prices in the high-end are firm. Constrained supply is another contributing factor to high prices.
By all accounts, the Fed is most likely to pause on rate hikes next week, although the signals are more complicated to predict than at any point since they began hiking rates last year. There is a chance of another 25 basis points hike, albeit a small one. However, if the CPI prints higher than expected, there is a strong chance that more hikes will happen before the end of the year. It is important to remember that increases in the overnight rate charged between banks do not directly correlate with mortgage rates. There are also many different rate buy-down options and strategies to keep mortgage rates closer to 6% than seven, or even less. Interest rate buy-downs fund with pre-paid interest often comes from a seller credit at closing. Whether you employ this tactic or pay the buy-down costs out of pocket, working closely with your lender to calculate the timeline for a return on your buy-down investment is essential. If the ROI is ten years out, it is likely not worth the up-front costs since there is a strong chance most buyers will either refinance in that time or even sell. If this sounds complicated, contact me or call your favorite lender to learn how these tools could benefit you.
One more factor to remember is the rapid pace of the market today. Pending sales last week had median days on the market of fifteen and sold properties of ten. Multiple offers are increasingly common, and being pre-approved by a local lender is essential to giving yourself a chance. I have also noticed more desirable listings coming to market purposely priced low to create a bidding competition. In these situations, time is of the essence, and it is vitally important to work with an agent that knows the market inside and out to help determine the maximum price appropriate. You won't find many agents more bullish on Central Oregon than me, but paying too much without a long timeline of potential ownership is never fun. My knowledge of our market is always current, and I act quickly! On the flip side, if you are looking at a property that has lingered on the market, now is a great time to make a lower offer. Whatever the case, I have experienced it and have the local knowledge to help you make ownership in Central Oregon a reality.
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