Now that it is getting darker earlier, it feels like winter, and the holiday season is just around the corner. As expected, sales volume has decreased, with the active inventory in Deschutes County dropping another twelve to 801 this morning. Crook County ticked up two units to 143, and Jefferson County was up two to eighty-seven. Crook and Jefferson County had three pending sales each this week, with Deschutes County at forty-four. While this volume is down slightly across the board from last week, it is near the levels for this week last year. Seeing Crook and Jefferson County's inventory hover near these levels might indicate the bottom for this year and will be something to keep an eye on heading into spring.
In Jefferson County, the inventory low-point last year was at the end of May, with sixty-four active listings. The volume of active listings in smaller Jefferson County this year closely followed last year's trends, so nothing in today's data is very revealing. However, the median pending sale price for this week in Jefferson County was 425k, up from 345k last year. Year-to-date sales show 178 sold homes at a median of 377k compared to 290 sales at 400k year-to-date 2022. Considering the sales volume dropped 38.6%, it is interesting that the median sale price only decreased 5.75%.
Crook County didn't see the inventory low point until the end of April this year when it hit 107. This week's median pending sale price in Crook County is 375k, up from 362k in 2022. Year-to-date sales are 319, down from 387 in 2022, a 17.6% decrease. The median year-to-date comparison of 469k in 2022 and 445k this year is a 5.1% decrease.
Deschutes County saw the inventory low in the third week of April this year at 333 active single-family listings. Unlike the smaller Crook and Jefferson County markets that maintain inventory better through the winter, Deschutes typically sees a steep drop in homes for sale, an increasing trend over the last few years. The pending sale price in Deschutes County this week was a whopping 725k, up from 599k this week in 2022. Sales year-to-date are 2811 compared to 3724 last year, down 24.5%. However, the median sale price is only down 3.6%, now at 660k thus far in 2023.
The last time Deschutes County had fewer than 3000 sales of single-family homes in a year was between 2007-2009. Before that, sales were below three thousand from 1997 (the oldest data I can access) through 2002. For perspective on the low sales volume, in 2002, the population of Deschutes County was 122,794 compared to the 2022 population of 206,357, a 68% increase! There is no getting around the fact that sales have dropped substantially this year.
I've read a dizzying number of contradictory articles about what housing prices will do in 2024. Saying there isn't consensus is a massive understatement. One real estate marketing company recently wrote a report telling buyers that home sales are not crashing and "all is well." Other industry pundits have pointed to the recent GDP numbers and CPI as proof that the economy is strong, inflation is under control, and the Fed will pivot to lower rates, bringing buyers to the market and putting massive upward pressure on home prices. Considering that the Bureau of Labor Statistics has adjusted eight out of eight of the last quarterly reports downward, it seems a stretch to be that optimistic. And, of course, there are the internet arguments about whether we are in a recession, entering a recession, navigating a soft-landing (mild recession), or a "no-landing, which would be no recession. There are no hard and fast rules about whether a recession brings down home prices so that part of the equation is likely less important. However, looking at the extremely low inventory levels in Deschutes County, there isn't any current data that indicates a steep drop in prices. The housing market this year has been remarkably balanced considering everything.
The modest price drops in 2022 show that cash buyers may have benefitted from sitting on the sidelines. Assuming those cash buyers can find a suitable property without inventory. Despite the recent spike in mortgage interest rates, the 30-year fixed rate this morning is 7.46%, up approximately 30 basis points from this time last year. Not only are many sellers reducing asking prices, but many also include generous seller credits towards buyer closing costs like rate buy downs. Whether a seller includes a credit in the marketing of a home is irrelevant, as I have had no issues getting those terms accepted in an offer. A 2-1 buy down would bring rates down 2% in the first year and 1% in the second year of the mortgage. While interest rates may not drop back to historic lows in two years, there is every reason to expect a refinance to something close to 6% by the end of an introductory rate buy-down loan. Whether sellers are inclined to be as accommodating with prices and terms in the future is far less likely.
Over the last few years, a lot has happened, and Central Oregon's popularity is only increasing. The overall economy has some big questions, but the factors driving growth in this part of the state have not diminished. Anyone shocked by the price acceleration that started in the second half of 2020 and anticipated a price reversal has been seriously disappointed. Prices will likely fluctuate over the coming years, but it is increasingly unlikely that a crash in Central Oregon prices is on the horizon. If a crash is coming, the first indication would be a significant increase in inventory. Not only has inventory not increased, but I anticipate the low number of homes for sale to continue for several years.
TL:DR: What does it all mean? First, while prices are down slightly, today's data show no sign of home prices collapsing. For many buyers, the biggest hurdle is finding a suitable home in our low-inventory environment. If you qualify today, are looking to relocate or move within Central Oregon, and can find a property you love, now is a great time to negotiate! Many sellers are hungry to make a deal. As inventory declines further and the potential for rates to increase continues, we will likely see one of the year's better opportunities. However, fall and early winter are always great times to be a buyer.