Energy, food, and producer costs play an outsized role in inflation numbers on the eve of the September report, available tomorrow. Some analysts predict a .5% core inflation increase, all but assuring the Federal Reserve raises rates again in November. With the 30-year fixed-rate mortgage national average at 7.14% and expected to continue climbing, the housing market is reacting with fewer sales and more price reductions. As is typical, the smaller communities further from Bend are slowing first, with only one home pending in Jefferson County last week and two sold. In Crook County, eight homes were placed in contract, with four sold, although these numbers aren't too far from how the market has performed over the last several weeks in Crook County. Of the four sold homes in Crook County, the most expensive sale went at the full asking price of $1,595,000. The next, listed at $549,900, sold for $554,625, followed by a home listed at $354,000 that sold for $340,000, and lastly, a home listed for $299,000 closed at $270,000. These sales illustrate the uneven market we are experiencing throughout Central Oregon. Sellers in lower price points are lowering the asking price and negotiating with buyers, while sellers in higher price points can hold relatively firm.
Home prices are elevated even with a steady stream of price drops and negotiations ending below the asking price. Consequently, how long you believe the Fed will turn the screws on inflation and keep rates high will directly impact how low you anticipate home prices dropping. However, July 1-October 12, 2021, and 2022 show how elevated prices are. For example, in Deschutes County in 2021, there were 1661 sales at a median price of $615,000 (average of $754,010) and 315 price changes of -4.51%. In 2022, there have been 1190 sales at a median of $689,950 (average $850,942), with 472 price changes at a median of -6.13%. Despite more and deeper price changes, homes are still selling for significantly more than last year. The inventory of homes listed in Deschutes County was unchanged from last week at 908.
For the buyers reading this with no urgency, waiting will, in all likelihood, bring lower prices. Whether that is true across all market segments remains to be seen. Nevertheless, for those motivated to buy now, the opportunity to negotiate the price increases the closer we get to the winter holidays, and the more rates increase. With a long-term focus and purchasing a home you can afford, there is little reason to worry about how the market fluctuates after moving in. Homes appreciate over time, and that dynamic will not change over the long term. Although with the current volatility and the Fed now reversing their mandate of keeping unemployment low to one of actively pursuing tactics that will crush business growth, it would be foolish to brush off potential further price decreases.
The quote attributed to Will Rogers still applies, "Buy real estate and wait, don't wait to buy real estate."
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