In one week of the Fed bailing out banks with over $300B (that's a billion, with a "B"), half of the Quantitative Tightening over the last several months was wiped out. In a last-ditch effort to show he is committed to "fighting inflation," I expect Jerome Powell to announce a 25 basis point hike of the overnight rate today. With the 30-year national average for a fixed-rate conventional mortgage yesterday at 6.75%, there is every chance the mortgage rate could climb further. However, with the value of many banks' Held to Maturity assets (primarily bonds) in decline, the contagion spreading through banks will likely be the beginning of the pivot Wall Street has been waiting for. Admittedly, the Fed has no good options at the moment. Many analysts are predicting lower rates for the second half of this year, with inflation as entrenched as ever.
Long-term, more than just investors are looking to invest in hard assets, as we've witnessed with solid buyer demand in the Central Oregon housing market, despite high mortgage rates. Whether lower rates materialize remains to be seen, along with a significant increase in inventory. However, higher mortgage rates have kept many buyers on the sidelines, creating pent-up demand. If rates at or below 6% become available as the year progresses, I anticipate a flood of buyers and the potential for an even more competitive real estate market. If you have a long-term focus on Central Oregon and the means to purchase over the next several weeks, now might be an excellent opportunity to secure your home or investment.
A temporary rate buydown is a perfect strategy to lower your rate, with the benefit of any unused pre-paid interest returned to you when you refinance should lower rates materialize. On the other hand, a permanent rate buydown is a sunk cost most appropriate with a seller credit to the buyer at closing. I am happy to walk you through the basics of these programs, but the best advice I can offer would be some great local lenders that can guide you through the best approach for you.
Single-family homes for sale in Deschutes County increased again this week, now at 541, up fourteen from last week. In addition, there were nine more pending sales than the previous week, for a total of seventy-three. Total sales increased by twenty-four for a total of sixty-two. It looks like we are past the home inventory low for this year, which occurred on March first when there were 485 homes listed; Deschutes County median days on the market for pending sales decreased to ten this week, down three from last week, with a median price decrease of -3.45%. These numbers show strong buyer demand, especially for this time of year.
While paying attention to the economy is essential to position yourself properly as either a seller or buyer, a long-term focus is the best strategy for housing, with several tools available to navigate interest rates. When rates decline in the future, a refinance solves that issue. For example, with a lower mortgage interest rate, you could refinance into a 15 or 20-year mortgage and have the same payment as the higher rate. Housing price dips have been few and far between over the last century, but steady appreciation has been nearly constant. The S&P 500 peaked in December 2021, while housing nationally peaked in June 2022. That said, the factors driving buyers to Central Oregon are unique to our area and not always in step with national trends. However, there is no question our economy is increasingly volatile, and a more significant increase than my expected 25 basis point hike or a hawkish tone from the Fed for future guidance could roil markets. Also, with nearly 200 banks identified as troubled, the banking crisis could still add to the economic uncertainty. When the current volatility is in the rearview mirror, Central Oregon will still be a great place to live, and housing will still be in short supply relative to how many people want to live here.
Whether you need help finding a great lender, or an expert analysis on pricing your home for sale, I am here to help. So please reach out anytime, or jump on EnjoyBendLife.com and use the tools available 24/7!