The sale price of homes in Central Oregon has been remarkably resistant to falling off in the face of higher interest rates due to the balance between the volume of buyers and available inventory. While the total sales volume of single-family homes in Deschutes County thus far in 2023 is 2,861, nearly one-thousand fewer sales than in 2022 (3,858), the median sale price is down only 3%, so far this year at 645k. Although, with yesterday's national average for a 30-year fixed-rate mortgage at 7.9%, we are beginning to see segments of the market disproportionally impacted by the high cost of credit, in addition to tighter lending practices. The Central Oregon housing market is increasingly bifurcated roughly above and below the median sale price.
The outlying areas of Central Oregon are showing the impacts of higher borrowing costs, with inventory increasing by four homes in Jefferson County and four in Crook County. At the same time, Deschutes County had another drop, now at 838, down sixteen from last week. Jefferson County now has eighty-three active listings, and Crook County has 148.
Pending sales in Jefferson County were a typical four homes last week, with the median sale price a robust 538k. However, the median sale price of the three closed transactions was 290k, with the median price reduction of those sales at 3.15%. With so few transactions in Jefferson County, it would be a mistake to draw too much from the weekly numbers, although a median sale price below 300k is something to note. Total sales year-to-date in Jefferson County are down 39.86%, the most significant drop of the three counties of Central Oregon, with the median sale price down 6.3% at 375k so far this year. Other than some larger farm properties, most of the inventory in Jefferson County are lower-priced single-family homes and higher mortgage interest rates disproportionally impact the lower price points.
Crook County year-to-date sales are down 15.2%, the smallest drop of the three counties of Central Oregon, but the median sale price of 445k is a 6.3% drop from last year, the biggest of the Central Oregon Counties. While the mix of available properties in Crook County is more diverse than in Jefferson County, the golf community of Brasada Ranch, located in the county, skews the data significantly. The only pending transaction this week was in Brasada Ranch, at $1,625,000 at a -1.52% drop from the original list price. Our MLS data will reveal the negotiated price of this transaction once the transaction closes. Five transactions closed in Crook County last week at a median price of $570,600, but two of those transactions were in Brasada Ranch. Removing the Brasada properties from the list drops the median closed price to $302,665.
Deschutes County's declining inventory contrasted with fifty-six sales and sixty-one pending transactions. The median price of pending sales was $750,000, and the closed median sale price was $668,374. Year-over-year sales to date show the median price down only 3%. Two weeks ago, that number was 4.6%, and the decrease was above 5% a few weeks ago. Here is where the bifurcation becomes readily apparent, as the price gap closing is due to fewer sales below the median and a bigger percentage of more expensive properties selling relative to total sales. The median sale price year-to-date in Deschutes County below $1M is down 4.8% at 599k, while the median above $1M is up one thousand dollars, basically flat. These comparisons are not stark but are glimpses into how the market is evolving in the face of higher (for longer) interest rates.
The lower-priced properties in Crook and Jefferson Counties and many homes outside of the Bend City Limits are the most likely to reduce the price before a sale and more open to a lower-priced offer than at any time during the last housing price increase cycle. If your focus is on properties below the median sale price, now is a great time to keep current on the market and specific properties that catch your eye.
The real estate industry churns out a lot of ridiculous propaganda encouraging buyers to dive in; the water is fine! One of those narratives revolves around the flood of buyers likely to hit the market when interest rates retreat. While it is reasonable that lower rates will make life easier for buyers, I do not anticipate a rapid turn in rates and a correspondingly robust economy, all timed in such a way as to push home prices up at the first sign of lower rates. There is little doubt that a strong economy, qualified buyers, and lower rates will put upward pressure on prices. Still, it isn't easy to imagine all of that happening below the median sale price in the next several months.
Most metrics of years past would indicate a recession today, but the definitions have changed, and the "experts" call our current environment a "technical recession." Without going too deep into the machinations of the Federal Reserve, they do have an almost perfect record of missing every recession before it hit. Looking back to the nonsense narrative about transitory inflation is the most recent missed prediction of the Fed, which seems least likely to predict the outcome of their policy decisions accurately. Jamie Dimon, CEO of JPMorgan Chase, recently chastised the Fed's policy decisions and lamented the markets driving interest rates with current bond yields soaring. Dimon predicted the Fed would need to chase the market to give the impression they were not losing control of interest rates and predicted an overnight rate of over 7% compared with today's 5.25% rate. Priya Misra, a portfolio manager at JPMorgan Asset Management, said that despite not being able to point to specific data indicating a recession, "A hard landing is sort of our base case scenario."
Some of you will think of me as Chicken Little, but keeping an eye on more than just the housing market gives insight into where we might be heading. Being cautious in this market will never hurt, but making assumptions that everything is fine could. There is little question that owning real estate for the long haul will be a smart move, and I continue to remain bullish on Central Oregon. However, I strongly caution anyone in the market today to avoid any short-term scenarios that rely on significantly lower interest rates to be viable. Central Oregon real estate is incredibly diverse, and there is little doubt that some areas will be more resistant as the next chapter of the housing market unfolds. Many of my clients are looking at our community from outside Oregon, and I encourage you to reach out with questions about specific properties and locations. I am intimately familiar with the communities of Central Oregon and have tracked the data for years. I may not have a crystal ball, but I do have reams of data I have collected that help paint a picture of what is likely moving forward. EnjoyBendLife.com has myriad options for researching Central Oregon properties and trends, but my personalized reports go even further. Do not hesitate to ask for a detailed analysis tailored to your specific needs.