This morning in Sunriver, the first snow of the year is on the ground! It may only be an inch, but all signs indicate a more significant winter than recent with a predicted La Nina weather pattern. As expected, active listings are down to 877, a decrease of thirteen from last week. Between winter weather, Thanksgiving right around the corner, and rising interest rates, the reduction of homes for sale is not surprising. What is surprising is that nationwide actively listed homes have increased. Rising inventory at this time of year could indicate lower prices this spring as fewer buyers are stepping up to purchase despite 503 price reductions in the actively listed homes. Last year there were one-hundred-twenty-three sold properties from October 19th through the 26th compared with fifty-two this year. Considering the inventory reduction, sellers seem to be waiting out the market rather than the decline attributable to solid buyer activity. With mortgage rates above 7%, there is little doubt that increased borrowing costs are taking a toll. Two unknowns as we wind down 2022 and look ahead to the 2023 real estate season will be mortgage interest rates and home prices. Many real estate analysts predict flat home price appreciation and reduced rents for next year.
For the buyers still actively looking for homes, price reductions and accepted offers under the asking price are becoming more prevalent. Staying in close contact with your lender is essential, as rate volatility is dramatic. Another thing to remember is the difference between property tax in different homes and its impact on closing costs. Keeping your lender updated on the house you are considering will prevent any unpleasant surprises at closing. Oregon property tax increases are capped at 3% per year unless you purchase new construction. Remember, property taxes quoted on new construction listings are based on the vacant land tax and will increase to the assessed value at closing. Therefore, a newly built home's property tax will likely be more than an older home at the same price. Ask your lender to run the numbers on specific homes you are considering to avoid surprises.
While rates are increasing borrowing costs, price reductions are helping to keep payments in check. For example, a home purchased at 600k, paying 5% in mortgage interest, has roughly the same payment as a home purchased for 550k at 6% interest or a 500k house at 7% interest. This morning there are 326 single-family homes listed in Deschutes County that are at or below 600k, giving you plenty of options! Mortgage interest rates may stay elevated for some time, but when rates decrease, a refinance could save you hundreds of dollars per month. In many cases, the opportunities to purchase a home well below the asking price offset higher borrowing costs. No matter what your price range, staying engaged in the market will give you a chance to find your perfect home at a reasonable price! Please do not hesitate to reach out if you are ready to tour properties and see for yourself.