Seasonal declines in inventory, slowing sales, and high mortgage interest rates have softened the Central Oregon housing market a bit this fall, creating some opportunities for buyers. Those opportunities are relative to the hot market of the last few years, although the recent positive news regarding inflation sent the stock market soaring, bond yields crashing, and pushed mortgage rates down. While the national average for a 30-year fixed-rate mortgage this morning is 7.4%, more good news from the Producer Price Index report today could help push rates down even more. The consensus from a financial industry on the edge of its seats waiting for a pivot is that the Fed will no longer need to consider rate hikes, and some optimistic analysts are predicting several rate decreases in 2024. One report I read estimated a 50 basis point drop in July! After three consecutive months of rising inflation, before yesterday's news, the question remains whether that was a blip on the way down or a pause before regaining steam. Either way, conditions today for home buyers are as good as they have been all year.
If you believe the market is improving and rates will decrease significantly in 2024, buying at today's prices with a seller credit towards a rate buy-down would be a smart play. If mortgage rates drop rapidly, pent-up buyer demand will likely put upward pressure on home prices and increase competition. Currently, buyers are pulling back, and sellers are motivated. Combine those factors with the modest improvement in mortgage rates, and the cumulative impact is significant. Remember that a 2-1 mortgage interest rate buy-down would bring the first-year rate down 2% and the second-year rate down 1%. A refinance at the end of that term to a locked-in lower rate would prevent paying the total rate at year three through the loan term. Also, remember that the median sale price year-to-date is -3.6% for single-family homes in Deschutes County. If home prices, through the peak of the spike in mortgage rates, only decreased by 3.6%, what do you think prices will do if mortgage rates are near 6%?
While homes in Central Oregon might be "on sale," just like the stores promoting Black Friday deals, selection is limited. This morning in Deschutes County, there are 792 single-family homes for sale, the lowest since June. Forty-three pending sales in Deschutes County this week is the fewest since January. The median pending sale price this week dropped considerably to 615k. Considering that the median sale price year-to-date is 660k, all indications show that conditions for buyers are the best they have been in nearly a year. I do not expect conditions to tighten over the next several weeks, as many buyers focus on Thanksgiving and the rest of the holiday season. Welcome to your "Central Oregon Black Friday Home Sale!"
Inventory in Crook County is up three units and down by the same number in Jefferson County. Two of the three pending sales in Crook County were in the Brasada Ranch Golf Resort at Powell Butte. With so few transactions in Prineville proper and an increasing inventory, the Prineville Black Friday Home Sale is even bigger than Deschutes County. If you have been waiting for an opportunity to purchase in Crook County, there is little doubt that conditions are leaning more in the buyer's favor than at any time in the last year.
Regarding favorable buyer conditions, Jefferson County had zero sales this week for the first time since I started tracking the data in July of 2022, and likely much further back than that. There were two pending sales in the County at an average price reduction of 8.84%. The average pending sale price was just under 340k. Jefferson County is home to much of the north part of Crooked River Ranch, Metolius, Madras, and the desirable Yarrow subdivision on the east Madras foothills. If any of these areas, or the Three Rivers Recreation Area near Lake Billy Chinook, are on your radar, now would be a great time to revisit what is for sale.
I encourage buyers to speak with a local lender about the recent rate changes, particularly the myriad rate buy-down options. If you decide to make an offer, I have extensive knowledge about structuring a contract to maximize the terms to help your situation.
For sellers considering listing, my market analysis and price opinions are second to none, and I am happy to help you decide if now is the right time for you. Contrary to popular belief, the off-season is a great time to list a home for many reasons. However, correct pricing is imperative for a quick sale unless you want to use the winter to test the market at a higher price. Considering the near-peak pricing for many homes in Central Oregon, sellers will not leave much on the table to come down and reasonably price to entice buyers.
Don't confuse my analysis with the tired trope in real estate: "It's a great time to buy AND a great time to sell!" Without question, buyers face higher costs to become owners, and sellers often struggle to draw in buyers in the current economic environment. Real estate is local and relative to the recent past. We likely will not see a retreat to prices from several years ago, and the opportunities that present themselves are not always easy to see. But, if you view real estate with an extended timeframe, your chances of success are considerably higher.