Over the past several days, there has been considerable discussion about the president declaring a "housing emergency" and its potential implications. The debate centers around exempting building materials from tariffs, decreasing closing costs, and other ideas under discussion. Treasury Secretary Scott Bessent also mentioned these ideas in conjunction with the Federal Reserve making cuts to the overnight rate, "which will help bring housing prices down." Considering that lower rates increase prices, today's inventory is higher than in several years, and prices have softened, I disagree with Bessent's speculation on the result of Fed rate cuts. In fact, during the rate cuts of 2024, when the Fed lowered the overnight rate a total of 100 basis points, mortgage rates increased. And any tariff exclusion or closing cost decreases will be minor at best. Interestingly, Bessent hasn't reached out for my opinion on the matter.
Housing prices increased dramatically during the COVID years as the country experienced a once-in-a-lifetime demographic shift, along with the Treasury Department increasing monetary supply (M2) by an unprecedented 26.9%, coinciding with PCE (Personal Consumption Expenditures) rising to nearly double-digits. Since then, M2 has decreased, along with the rate of inflation, but we have not experienced deflation. In other words, the increase in prices are locked in. For many buyers, housing is unaffordable, and lower rates seem to be the logical answer. However, rates and prices are not directly correlated; lower rates attract more buyers, which in turn puts pressure on prices and decreases supply. The short answer is that timing the market doesn't work, and "waiting" has historically been a poor strategy. I won't speculate on what may happen in the future, but I can confirm that conditions today favor buyers more than at any time in several years. Milton Friedman is probably rolling over in his grave over some of the modern-day discussions about monetary policy!
Listings of single-family homes in Deschutes County decreased by 24 this week, now at 1,428. Pending sales remain steady with 80 homes placed under contract this week at an average list price of $877,728, and an average reduction before finding a buyer at -7.58%. Eighty transactions closed this week at an average sale price of $813,711, and an average decrease below the list price of -7.89%. Don't assume that the price reductions for pending and closed transactions are stacking to equal 15% reductions over the asking price in every case. Still, there is no question that some properties are selling at deep discounts from the original asking price.
Year-to-date sales in Deschutes County are at 2,304, an increase of 48 from 2024, with the median sale price at $698,384, an increase of $5,825 from 2024. The average sale price YTD is $881,472, an increase of $24,206 from 2024. The YTD numbers indicate that sale prices are flat, with the price decreases prevalent in today's market reflecting sellers returning to reality rather than collapsing prices.
Inventory in Crook County remains stable, with 235 single-family homes listed, a decrease of four from last week. There are six pending sales, averaging $450,483, with a modest price reduction of 4.35% for three of the sales before securing a buyer. There were also six closed transactions and three that negotiated a lower price by an average of -3.78%.
Jefferson County inventory shows 133 single-family homes listed, a decrease of ten from last week. Seven pending sales indicate a strong week for the county, with three that reduced the asking price by an average of -3.27%. Eight closed transactions averaged $483,168, with only one negotiating a lower price. The sold-to-original list price percentage for the closed transactions was 100.21%.
The next seasonal milestone for Central Oregon real estate will be Thanksgiving, clearing the runway for one of the busiest times of the year. With increased selection, decreased mortgage interest rates, and sellers willing to negotiate to secure a sale before the end of the year, conditions are moderately in favor of buyers. While the Fed might reduce the overnight rate in the mid-September meeting, the likelihood of mortgage rates changing significantly is low. The conditions and trends in place today will hold for the next several weeks, before the market adjusts to winter in Central Oregon. What do you think the trends will be for spring and summer 2026?
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