Pending home sales in Deschutes County in the previous seven days jumped to eighty-nine, an increase of twenty from the week starting August 24, on par with the more significant weeks for new contracts this summer. Not surprisingly, for the season, the active inventory of single-family homes decreased to 893 from 929. Inventory seasonally decreases heading into winter as sellers are less active, and buyers interested in closing before the end of the year start to look in earnest. Five-hundred-four of the actively listed homes have reduced the list price by a median of -5.41%, and the median days on the market continue to increase, now at fifty-nine days. An example of correct pricing in this environment is that the median days on the market for the sixty-five sold homes this week was twenty-two. The median sale price was 730k, and twenty-eight of the sixty-five sales agreed on a price below the list price. The median price reduction of sold homes last week was -7.28%.
Mortgage rates continued to climb, with the national average rate for a 30-year fixed-rate mortgage now at 6.25%. A whopping 40% (26) of the sixty-five sales in Deschutes County last week were cash deals. The odds of the Fed lowering rates this spring are growing increasingly long, and there is little doubt that higher mortgage rates are impacting buyers, particularly in homes below the median sale price. Although, with a limited, decreasing inventory, home prices have remained firm, albeit down from the highest highs in 2021. For buyers actively engaged today, there are many opportunities to have an offer below the list price accepted. While the economy is waving many red flags, inventory will be the most significant variable heading into 2023. Without an adequate inventory, buyers will still be competing over a small number of properties that will keep prices high. Likewise, the stagflation plaguing the rest of the economy will impact housing prices without a significant number of new listings.
Unfortunately, I do not expect housing stagflation to be even across all areas and price points. Typically, sellers of higher-priced homes retreat or hold firm during slowdowns, while homes below the median sale price must adjust for higher mortgage rates and lower affordability for buyers. With the housing affordability index in steep decline and real wages, those in charge seem to be engineering a "Wall Street vs. Main Street" scenario that punishes those below the median home price. I do not pretend to have any special skills in predicting financial markets, although the reports I am reading don't paint a particularly rosy picture. So how do these economic conditions change the scenario for a typical home buyer or seller? Of course, every situation is unique, but with even tighter conditions in the rental market and rising rents, buying still makes sense for those with a long-term focus. For sellers with a solid plan after the sale, prices remain elevated, and buyers are stepping up. Waiting for better buyer conditions may pay off, although, in this environment, the devil you know may be a better option than the devil you don't!
Whatever your goals in real estate in Central Oregon, it never pays to work in generalities or to follow reports in the mainstream media. Every person is in a unique situation, and I am well versed in Central Oregon real estate and evaluating different buyer and seller scenarios. Please feel free to contact me anytime so I can help to give you a clearer picture of your unique options.