While the number of homes listed for sale in all three counties of Central Oregon ticked up slightly this week, prices are also up compared to this week in 2022. The average listing price of a single-family home in Deschutes County this morning is nearly $1.1M, compared to 739k this week last year. The pending sale average price this week is 865k, up from 650k last year, and the sold homes this week had an average price of 782k, up slightly from 752k last year. The slight increase in available homes is nowhere near enough to soften prices, even more so when you divide the inventory by all the different communities in Deschutes County. After filtering by home size, price, and other desired features, most buyers realistically have only a handful of options.
This time of year is typically active as buyers look at the best opportunity of the year, and sellers are motivated to close by year's end. However, as some sellers become realistic about price and make adjustments, knowledgeable buyers are wasting no time scooping up the deals. Now is not the time to drag your feet if you see a price drop on a home that suits your needs. I would encourage any serious buyer to make an offer and negotiate rather than wait for further price drops. Many buyers are not messing around with holidays and winter weather quickly approaching!
As mentioned last week, I expect interest rates to stay elevated through spring 2024 and another rate hike from the Fed next week. However, rates have been relatively stable over the last few weeks. Yesterday afternoon, the average for a 30-year fixed-rate mortgage was 7.25%. We have witnessed significant changes in rates either motivate or stall buyers, and the recent stability has calmed the market somewhat. However, there is no question many buyers are either priced out of the market with historic unaffordability due to rates or are waiting for a correction. A correction this year is extremely unlikely without a significant increase in available homes, and new listings have started the seasonal decline. This year, the low inventory point in Deschutes County was 485 homes listed on March 1, with the high today at 909, up two from last week.
Waiting for more inventory and suitable homes may be the best strategy for some buyers, although I do not anticipate buying conditions improving significantly. Even with reduced sales, motivated buyers are snapping up the great homes. The pent-up buyer demand creates a frenzy when excellent properties hit the market, with buyers jumping at the opportunity. If waiting is the best move for you, I encourage you to stay engaged with the market and not waste any time when you see a home you like. It will be evident if the economy falters, creating a more significant issue. Otherwise, I expect our competitive market to continue.
Significant improvement for buyers may not be on the horizon, but neither are escalating prices. Mortgage rates will likely peak over the next several weeks and remain high for the foreseeable future. The analysts I follow are calling for flat home prices through 2024, making a repeat of conditions this year the likely outcome.
Many buyers today face the problem of waiting or buying a home that isn't necessarily their first choice. In many cases, there isn't much variety of available homes. Readers of these reports know I always recommend a long-term view of homes, especially in what could be flat pricing over the next year. However, a compromise to make Central Oregon home might be better than delaying months or even years waiting for the perfect property. No matter your decision, that is a highly personal choice that only you can make. Whatever suits you, I am always available to help you sort through the options.
Year-to-date, there have been 2,309 sales of single-family homes in Deschutes County, and I expect ~2,800 total sales by year-end. For comparison, there were 3,090 year-to-date sales in 2022, 33.8% more than this year, with similar inventory levels throughout the year. The comparison between sales and inventory illustrates how few sellers are active today, likely with low mortgage interest rates as motivation to sit out the market. There is likely as much pent-up seller demand as buyer demand. What might entice more sellers into the market remains to be seen but likely revolves around interest rates. Buying at higher rates today and using a rate buy-down until a refinance makes sense could be the best strategy, as lower rates will most likely set off a frenzy of activity that will keep prices firm.
Last week, I mentioned investors pulling back and short-term vacation rental underperformance as potential contributors to increased inventory and lower prices. There is little doubt those could contribute to a change in the housing market, but a lot would need to happen all at once to make a significant impact. If I could predict those events accurately, I'd likely not be working as a real estate agent! While I am current on economic affairs and the Central Oregon housing market, my prediction abilities only project a few months into the future. As always, I welcome the insight of my clients and your experiences outside of Central Oregon. How are things in the communities you currently call home?