My Weekly Central Oregon Real Estate Blog

The national average for fixed-rate 30-year mortgages yesterday was 6.38%, up slightly from earlier in the week but down from a peak of 7.24% in mid-October. As always, check with your local lender, as many in Bend have lower rates than the national average. In addition, actively listed single-family homes in Deschutes County decreased to 694, in line with last year's inventory trend. However, last week's sales of forty-five homes are significantly less than the 119 sales for this week in 2021. There is little doubt that higher mortgage rates have slowed buyer demand, but the rise in rates may also be a factor in fewer sellers listing their homes. Whatever drives the data, declining inventory in Deschutes County keeps prices firm. The median sale price of homes sold last week compared with the same week one year ago was up marginally, although the median sale price week to week is dependent on the particular home sold and is too small a sample to show price trends accurately. 

In Deschutes County, sales year to date for 2021 were 5,157 with a median price of 602k, compared to 4,069 sales at a median of 680k in 2022. The last time yearly sales in Deschutes County were below 4500 was in 2014 when sales were 4,009. In 2006 sales were 4,002 before a steep decline due to the sub-prime lending fiasco triggered the housing crash. In 2007, sales dropped to 2,703, then to 2,043 in 2008. By 2009 sales rebounded to 2,844, and from 2010 through 2013, sales went from the low to the high three-thousand range. The recent sales history in Deschutes County shows robust activity today, despite higher rates. 

Mortgage rates in 1982 were 16.93% before steadily declining to ~7% through most of the 90s. In the new millennium's first decade, rates were in the 6% range before dropping to ~4% from 2010 through 2018. Rates below 4% first appeared in 2012, again in 2016-2017, and between 2019-2020. The below 3% rates of 2021 are an anomaly, not the norm. All of these numbers may make your eyes glaze over, but the history helps to give perspective on today's market. 

Whether all the data combine to drive home prices down remains to be seen. Although looking at the recent past, home sales are remarkably robust, inventory remains historically low, and prices are firm. Significant price decreases in the median sale price seem unlikely without rapidly rising inventory and decreased buyer demand. For example, in April 2022, there were only ~330 homes for sale in Deschutes County! As buyers grow accustomed to higher mortgage rates, I anticipate demand to increase, not decrease. 

Whether you are interested in talking about the data or need help navigating our market, I can help! Please feel free to reach out to me anytime.

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With eleven business days left in 2022, we see signs of what the housing market may look like in 2023. The November consumer price index increased by 7.1%, which applied downward pressure on mortgage interest rates, now at 6.28% for the 30-year fixed-rate national average. I'm old enough to remember when our target inflation was 2%, so the current inflation rate still seems astronomically high, even if the markets behave as if Christmas arrived early. In addition, analysts expect the Federal Reserve to raise rates today by 50 basis points, a reduction from the previous 75 basis points hikes from the past meetings of 2022. So, what are the signs showing for 2023? I'll start with Deschutes County:

This morning in Deschutes County, inventory declined further to 721 single-family homes listed for sale. The median sale price during the last seven days was $720,395, with forty sold homes. For comparison, this week in 2021, there were 140 sales at a median price of 615k. While a lot can happen over the next several weeks, the decline in active inventory will continue, and prices will remain firm, bolstered by lower mortgage interest rates. 

The definition of Inflationary Psychology is consumers spending more now because of the belief that prices will increase in the short term. There isn't any doubt that many home buyers feel this pressure, even if a percentage of the general public anticipates a crash in home prices. Unfortunately, the spending associated with Inflationary Psychology is a self-fulfilling prophecy that increases the velocity of money and boosts inflation. Even with a reduction in CPI (still 7.1% year-over-year), housing prices have not come down in Deschutes County. However, transactions have dropped significantly since 2021. As mortgage rates decline, buyers re-engage the market, applying upward pressure on already inflated prices. With the strong buyer demand from new residents coming from expensive out-of-town communities, there is a strong possibility Bend has been "found." The work-from-home dynamic has likely been a contributing factor. 

In Crook County last week, there were six sold homes at a median of $437,497, with five price changes at a median reduction of -4%. In 2021 there were twelve sales with the median sale price at $422,500 and four price drops at a median decrease of -2.73%. Crook County sees a different price dynamic than Deschutes County. Remember that the higher-priced homes in Brasada Ranch and Powell Butte significantly skew the median sale price in Crook County upward.

Jefferson County had three sales in the last seven days, with the median sale price at 344k, compared to the 2021 median of 304k and ten sales. There was one pending sale in Madras (Jefferson County) last week, a newly built home that reduced the asking price by -23.44% before getting an offer! The bifurcation in Central Oregon real estate between Bend and the outlying areas is apparent and likely to continue. While low inventory could begin applying upward pressure on home prices in the communities surrounding Bend, there appears to be a limit on what buyers can or are willing to pay. 

If I were to predict the real estate market for 2023, it would be low inventory and firm prices in much of Deschutes County, with a milder impact in Crook and Jefferson County. I completely understand your position for those who think more pain is on the horizon for home prices. However, real estate has typically been a solid investment in recessions, and the lack of distressed sellers today is reaffirming that scenario. Although, I reserve the right to be wrong! 

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Whatever your beliefs about housing, having a knowledgeable agent is critical in today's market. So contact me today for a real-time, personal evaluation of your options.

After a brief respite from previous highs, mortgage rates have again breached the 6% threshold. According to Mortgage News Daily, the national average of a 30-year fixed-rate mortgage is 6.37%. However, at a local lender's website, rates today show 6% and 6.168% APR, proof that shopping around is a wise decision. Additionally, after briefly peaking at over 7%, news of declining inflation has tempered rates considerably. Call me a skeptic, but I am hesitant to believe the heavily manipulated CPI numbers and have seen no sign of softening inflation in my grocery bill. Still, there is speculation that the Fed may raise rates next week by 50 basis points instead of the 75 basis points hikes of past meetings in 2022. Some have even speculated that the Fed will skip a rate hike entirely in January while the drum beats of recession grow louder. 

This week's active inventory dropped dramatically from 782 single-family homes in Deschutes County to 745. In addition, pending sales rebounded from the Thanksgiving week low, with 41 pending sales. Sold homes doubled the pace of the holiday week at 70. The combination of strong buyer demand, moderated interest rates, and declining inventory keep prices relatively firm, despite the wave of price reductions about which everyone seems to be talking. Another data point that might take the wind out of the sails of those crowing about declining inflation is the median sold price of single-family homes. This week in 2021, there were 96 sold homes at a median price of 587k and the sold-to-list price ratio at 100%. This week, sales volume dropped by 27%, with 34 price reductions at a median of -7.29% and a sold/list ratio of 97.99%. However, the median sale price was 642k! So much for price reductions.

The unfortunate drop in buyer affordability is real. Using the median-priced sale this week of 642k, a 30-year fixed rate mortgage rate of 6.168%, $3000 in property tax, and $1000 for homeowners insurance (PITI), the monthly payment would be $3,472. The same calculation for last year's median of 587k and 3.23% interest, the rate from Mortgage News Daily for this week last year put the PITI payment at $2,372. At our current rates, the purchase price of a home would need to be 420k to match the payment from a year ago. Even the biggest skeptics in the business are not predicting a drop in home prices of 35%. However, most industry analysts believe the spike in mortgage interest rates won't last forever, and refinancing to a lower rate in the future when rates decrease would save significantly on a monthly payment. Today, many sellers accept offers well below asking, with each property having unique circumstances. For those of you without a sense of urgency, waiting could improve your situation. However, as long as inventory declines and buyers remain engaged in the market, the chances of steep drops in home prices are unlikely. 

The best answer to today's market is to stay in close contact with your lender and real estate agent and to evaluate each option carefully. I am available anytime to run real-time numbers or make recommendations for local lenders who can help in these market conditions. Even with higher interest rates, waiting has proven to be the wrong strategy. 

The Will Rogers quote, "Don't wait to buy real estate. Buy real estate and wait." is just as applicable today as ever. Home purchases should be a long-term decision, and the likelihood of the market correcting back to previous levels is low. While it may be correct that prices will continue to soften, if rates drop dramatically, prices may rise as buyers flood the market. Contact me if you need assistance navigating this balancing act!

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Active listings of single-family homes in Deschutes County dropped to 782, the first time homes for sale have been below 800 since June. In addition, pending sales were down dramatically from last week at twenty-nine, with sold homes also down significantly at thirty-four. With Title offices closed on Thanksgiving, I read very little into the drop in sold and pending houses since we only had a couple of business days in the previous week. However, the next few weeks will be a good indicator of buyer demand with full work weeks. Additionally, between the Christmas and New Year holidays, some short weeks and personal vacation schedules make this time of year far slower than typical weeks. 

Mortgage interest rates have been steady with yesterday's 30-year fixed-rate national average of 6.65%. The Federal Reserve doesn't meet for another two weeks, so I'd expect the current mortgage rates to be relatively stable. In addition, many buyers are struggling with affordability because of the interest rate spike that started this fall. Still, the recent decline from previous rate highs combined with motivated sellers at this time of year could make for great buying opportunities. For example, in Crook County, each of the five pending sales reduced the asking price before going under contract. Four of the five sold homes in Crook County also reduced the price with the sold price to the original list price at 91.26%. 

For those of you waiting out the market, the best number to keep an eye on, other than mortgage interest rates, will be the volume of active inventory. In April 2022, the number of actively listed single-family homes in Deschutes County was 333, far below even today's low number. Many would-be sellers have mortgage interest rates well below the current level, keeping them on the sidelines. In the past few years, strong buyer demand kept inventory low; a steep reduction in new listings may create a dearth of inventory again this coming season. Either way, with very few homes listed for sale, prices tend to stay elevated. Although, even if our inventory stays near today's volume, there is every reason to believe mortgage interest rates will be higher than today and remain elevated through 2023. If mortgage rates rise and stay elevated, sellers will need to accept lower prices. While I have no way of knowing what mid-year 2023 will bring, I can confidently say that 6.65% mortgage interest rates, reduced prices, and motivated sellers make right now an opportunity many may look back on as the "good times" once 2023 starts rolling. Check out this video from August if you are looking for a reminder of how quickly things change!

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Happy Thanksgiving! We have officially arrived at the holiday season, with Christmas and a new year just around the corner. I hope you and your family have a great day celebrating old traditions or creating new ones! Our weather has become considerably milder recently, bringing plenty of options for anyone with a long weekend ahead. Unfortunately, the mild weather has pushed back the opening of Mt. Bachelor a bit, and like me, I'm sure snow-sport enthusiasts are praying for snow! 

Mortgage rates also moderated from recent highs, with the national average for 30-year fixed-rate loans at 6.65%. While rates may have decreased from earlier in the fall, the housing market has slowed considerably, creating opportunities for buyers now. Holiday real estate sales always slow down; this year is no exception, with forty-two pending sales of single-family homes in Deschutes County and sixty-four sold. The sold number increased by three from last week, while pending homes are down eleven. More importantly, inventory increased by two properties, which is insignificant in terms of an increase but still bucking typical trends for the season. A high volume of homes available for sale works in favor of buyers, and an indication of that is the median price reduction of pending properties last week at -9.62%. Another factor helping buyers is the drop in the median price of pending properties to 535k, down from 685k the previous week. Thirty-four of the forty-two pending homes last week were listed for $1M or less, with just two pending properties above $2M. There were also two sales above $2M in the previous seven days.

Sales, in general, may have moderated, although the high-end market in Deschutes County shows continued strength with 120 sales over $2M year to date, compared with 115 for the same period of 2021. The median sale price above $2M increased slightly this year to $2,462,903 from $2.4M last year. However, the average price in this range decreased to $2,712,646, a drop of less than 40k from 2021 sales. 

The most significant change year-over-year shows up in sales equal to or less than $1M. In 2021, there were 4,062 sales in this range, with a median price of $558,480. Compare 2022 sales at 3,063 with a median of 625k, and more price reductions in our available inventory are likely. 

As you would expect, I will continue my weekly breakdown of the Central Oregon real estate market, along with a complete 2022 report, on the first Wednesday of January 2023. So stay tuned, and please reach out if there is anything I can do to help! I will be available throughout the holidays and the remainder of the year. 

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This morning's big news in real estate is that mortgage interest rates declined to 6.61% for the national average of 30-year fixed-rate loans. While that might not seem all that low, it is much better than the 7.22% rate just several days ago. For buyers that are fighting an affordability battle, every little bit helps! 

In other news, sales of single-family homes in Deschutes County remained steady, with fifty-three pending sales last week and sixty-one sold single-family dwellings. Since a decline in September, the price of sold houses has also remained consistent, with the previous week's median sale price at 620k. Of course, median sale price bounces around based on the specific properties sold, but until September, when mortgage rates spiked, the median price of sold properties was trending in the low 700s. 

Price reductions still comprise more than 50% of active and sold properties, a trend that should continue into the remaining days of 2022. Inventory declined, as expected, to 801 single-family homes in Deschutes County, with 450 of those listings reducing the price since becoming active. The median price reduction of the actively listed homes stands at -6.42%, although the number may vary depending on the particular property. 

I primarily rely on Deschutes County single-family listings and sales to follow the trends since that is the most extensive data set in Central Oregon. However, Crook and Jefferson Counties are bucking Deschutes County trends with a slight increase in actively listed properties. Jefferson County added seven listings this week (83 to 90), and Crook County added three, bringing the total this morning to 144. Prices in these counties have also moderated more than in Deschutes County, with the median sold-to-original list price in Crook County at 89.86% for seven sold houses. There was only one sale in Jefferson County last week, with the sold-to-original price showing a steep decline of 71.34%. For reference, the sold-to-original list price in Deschutes County was 93.65%.

It is hard to believe there are less than 30 business days between now and the end of the year. Any contracts from this point forward will most likely be closing in 2023, and just like that, we are wrapping up 2022! As many listed properties expire before year-end, some sellers withdraw their homes from the market until after the holiday season. Although, with many motivated sellers and a slight reprieve in mortgage interest rates, the next several weeks favor buyers the most in 2022. When the available homes are in short supply, prices tend to firm up, making the next few weeks an excellent opportunity for buyers. Watching how many homes hit the market in spring 2023 will be a strong indicator of home prices for the coming year. 

Now is a great time to utilize the Market Trend Reports on my website and the other available tools. Remember, market Trend Reports only show the active inventory of single-family homes and condos, with either category selectable by you. In addition, these reports do not include new construction, giving you focused insight into where the market is moving. If analytics are not for you, don't hesitate to contact me for a more user-friendly analysis of homes and neighborhoods pertinent to your needs. 

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Inventory of active single-family homes for sale in Deschutes County dropped by one in the previous week to 821, down one from the week before. Week to week, we are witnessing a gradual slowdown in sales and prices, although the changes are drastic compared to last year. For example, in 2021, during the Wednesday to Wednesday of the first week of November, there were 121 sold single-family homes at a median sale price of 635k, with 37.2% of the sold properties reducing the price to secure a sale. During 2022, there were 47 sold homes at a median of 570k, with 55% of those listings reducing taking a price cut to make the sale. Undoubtedly, a 30-year fixed-rate mortgage interest national average of 7.21% has significantly impacted buyers, along with overall costs increasing across the board. In addition, a healthy dose of winter weather may also influence buyers' purchase decisions. 

Last week, the median price change of the closed properties was -8.01% or $52,500 on the median sale price of $570,210. Coincidentally, that is the lowest median sale price since 2020, with all indicators pointing towards lower prices in the future. Lower prices are good news for buyers today despite higher mortgage interest rates. For buyers looking to purchase in the spring of 2023, the sales volume and sale price decrease are bearish for the coming year, although there is a strong chance mortgage interest rates will be higher than they are today. There is much talk about mortgage markets pricing in rate increases in advance of Fed overnight rate hikes, and relatively stable rates over the last several weeks may be indicative of that idea. Although, with inflation stubbornly high and a notably hawkish press conference with Jerome Powell after the previous FOMC meeting, don't be surprised if markets are caught off guard by future Fed policy. 

A long-term focus when purchasing real estate is the best approach, and a home you plan to own for several years that you can afford today should remain a consideration. However, for anyone with doubts about future income or a shorter duration of expected ownership, waiting to see where the economy and housing end up is a solid plan. For cash buyers, there is little doubt that you are in a strong position today and into the future. Any investors considering a purchase have a rental increase cap of 14.6% for 2023 to offset any concerns, with rentals still far fewer than applicants. 

As always, I can help, no matter your needs or concerns! I am intimately familiar with the Central Oregon real estate market and have tools you can use whether you plan to buy before year-end or well into the future. 

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Yesterday, Central Oregon received another dose of winter weather, indicating a great start to building an early snowpack. With daytime temperatures mostly above 30 degrees, the roads in Bend and Highway 97 weren't bad, with slush or wet pavement making up most of the day. Although, most of last week was mild, which may have contributed to robust activity in the housing market. Fourteen more houses were pending last week compared to the previous week at sixty-nine, while thirty-one more homes sold for a total of eighty-three. The median pending sale price was 649k, and the median sale price was 639k, increasing over the previous week.   Inventory across the country is rising, but in Deschutes County, the most significant drop in homes listed this year occurred, with current active listings of single-family homes at 822 compared with last Wednesday's 877. With the 30-year fixed-rate mortgage at 7.09%, an increase in pending and sold properties is bucking the national trends. As I have mentioned over the last few months, the inventory of homes listed for sale will be the best indicator of where home prices are heading.

Contrary to much nationwide reporting on the housing market, Deschutes County prices remain firm despite higher mortgage interest rates. Still, more than half the actively listed homes have reduced the price by a median of -6.35%. Even with the price reductions, home prices are up over last year. On April 20, 2022, there were 333 single-family homes for sale in Deschutes County. If the volume of homes for sale decreases that much this spring, expect Central Oregon home prices to buck the nationwide trends and stay firm. Although, with interest rates likely to climb further, there could still be a price correction that hasn't been readily apparent to date. 

Recently, I've read several reports that state inflation has peaked, deflation is on the horizon, and to expect declining rents. But, for those focused on Deschutes County, our local dynamics may differ regarding rents. For example, rent increases in Oregon cap on a percentage plus CPI, and the rate for 2023 is a whopping 14.6%. Contrast the maximum rent increase in Oregon with recent reports from Zillow and Redfin of rents declining by 5%, and it is easy to predict a different reality locally. In addition, since the rent cap law began in 2019, many landlords have increased annual rent by the cap amount, which was between 9-10% over the last couple of years. This reality should be a call to action for both renters and investors! Many renters face future rents that approach or exceed a mortgage, making homeownership wise despite rising interest rates. For investors, any fears of capped rent increases should be relieved knowing that the rate of increase is well above CPI, or property taxes which are limited to 3% increases per year. Potential home buyers taking action today can lock in a rate that might very well be lower than rates during 2023 and, at some indeterminate point in the future, refinance when rates decrease. Interest rate decreases down the road are almost inevitable, while a decline in home prices, considering our limited availability of homes and strong buyer demand, is no guarantee. If analysts touting our strong economy and employment numbers are correct, home prices could increase. Stating that we are in uncharted territory is the understatement of 2022! 

I strongly encourage anyone reading this report to take advantage of the tools available on EnjoyBendLife.com and contact me with any specific property questions. Home prices are impacted differently at the various price points, and not every neighborhood is experiencing increases. Consequently, it always pays to analyze the market segment that pertains to you. Data is your friend in today's market!

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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. 

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Last week I mentioned the inventory of single-family homes as a future indicator of home prices for the start of 2023. Since mid-October historically has been the peak of listed houses before tapering into winter, significant increases or decreases from this point until year-end are telling. For example, this morning, there are 890 single-family homes listed in Deschutes County, down from 908 last week. Some of the declines consist of sellers withdrawing from the market, although with fifty-six pending and eighty-four completed sales, the market is still reasonably active. Pending sales were in the seventies before the last significant jump in mortgage interest rates and even higher when rates were closer to 5%. With the national average for a 30-year fixed-rate mortgage at 6.92%, according to Freddie Mac, and 7.15%, according to Mortgage News Daily, there is no question that the increase in borrowing costs is impacting the market. The 505 price reductions out of the 890 actively listed houses indicate the effect of mortgage rates on home prices. This week, the sold homes had a median price reduction of -6.34%, while the pending sales median reduction was -7.85%! 

Calculating price decreases from total inventory sold doesn't account for variations in the mix of properties sold, but it does show the overall trends. While it might be easy to assume all of the recent price drops are making homes in Deschutes County more affordable, a look at last year's numbers reveals a different story. From January 1, 2021, through October 19, 2021, there were 4242 sales at a median sale price of $599,700. During 2022, there have been 3507 sold homes at a median of $690,000! Despite the recent price reductions, homes are still more expensive this year than last. A declining home market takes time to materialize. While rising mortgage rates and inflation have taken a bite out of affordability, enough qualified buyers remain in the market to keep prices firm. The "golden handcuffs" of a sub-3 % mortgage keep many would-be sellers on the sidelines, and the decreased inventory is another factor propping up home prices. 

A clear indication of the bifurcation of the real estate market shows in high-end home sales in 2022 compared to 2021. From January 1 - October 19, 2021, forty-nine sold homes over $2.5M with a median number of days on the market of seven, a median sale price of $3.1M, and eight price reductions of a median amount of -9.16%. In 2022 there have been fifty sales above $2.5M, with fourteen median days listed at a median sale price of $3.15M. Not only have sales of higher-priced homes increased along with prices, but the price decrease of the ten homes that took a price cut was only -5.33%! For anyone that has kept an eye on homes for sale above $2M, it is apparent prices have increased for excellent properties. 

As we navigate higher interest rates and inflation appears to be embedded, there is little doubt there will be impacts on the housing market. However, the outcome may not be what many are expecting. Comparing trends to the Paul Volcker era of the Federal Reserve may be more appropriate than the housing crash of 2008 when inventory ballooned, and buyers disappeared. Housing, viewed from a long-term perspective, typically provides the best outcome for buyers, and the market dynamics today have not changed that analysis. Waiting out the market is likely only to add time and frustration, as it is impossible to say how long it will take for all the current dynamics to work themselves out. 

Contact me for a thorough analysis of your options in the Central Oregon real estate market! 

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