As mortgage rates continue to climb, it is important to understand why they're rising so sharply. After an extended period of relative stability, especially in the overnight Federal Funds Rate, new Fed Chairman Kevin Warsh raised rates by 25 basis points. That in itself wasn’t such a big deal, but Warsh said this is the first of another three or four increases. That policy shift and impending rate increases have the markets scrambling to adjust. The mortgage market prices are anticipatory, not reactive, and with further rate increases coming from the Fed, lenders are adjusting for what lies ahead. The good news is that if the Fed raises rates at the next meeting, which is likely, mortgage rates are unlikely to change much from where they are. However, we are still in a transition period, and rates haven't settled and are still rising. Seasonally, sellers are more open to negotiations than at any time of year in Central Oregon, with many already making significant price drops on their listings, and rate buydowns are more relevant than ever.
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Deschutes County inventory decreased by 27 this week to 1,382 single-family listings. Fifty-eight pending sales are down 3 from last week, and 37 of those listings have lowered their asking price by an average of 7.44% before securing a contract. Seventy-nine closed transactions are up by 8 from last week, with 48 of those listings reducing their asking price by an average of 6.42% before securing a buyer. The sold-to-original-list-price ratio was 94.33%.
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Crook County supply decreased by 6 this week to 263. Twelve pending sales are up by 3 from last week, with half of those listings reducing their asking price by an average of 7.85% before securing a contract. Three closed transactions this week are down by 1 from last week, with all three reducing their asking price before securing a buyer by an average of 6.69%. The sold-to-original-list-price ratio was 93.7%.
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Jefferson County inventory remains stable, with 1 more single-family listing from last week, bringing the total back to 153. Seven pending sales this week are up 2 from last week, with 3 of those listings reducing their asking price by an average of 8.36% before securing a contract. Closed transactions increased by 1 from last week to 4, with only 1 reducing the asking price by 10%.26% before securing a buyer. The sold-to-original-list-price ratio was 97.31%.
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Broadly speaking, the average closed sale price is holding steady. But on an individual basis, some deals are available. Seller concessions aren't always apparent in the sales data, but they can be extremely helpful for buyers. Two-one rate buydowns are particularly helpful: the seller prepays interest, giving the buyer a 2% rate reduction the first year and 1% the second, with the remaining 28 years of the mortgage at the quoted rate when locked in. The premise behind these mortages is that buyers get immediate relief in their monthly payment, and can refinance when rates decrease in the future. The biggest question today is when rates will decrease, and nobody has an answer. Your lender can tell you which lending product is the best fit, and now is the time to keep that line of communication open. I am also available if you need help with a personalized market analysis for your specific needs.
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