Central Oregon Market Report

Rising Rates and Rising Inventory

Increasing inventory of homes for sale is typical for this time of year and true to form, more homes are listed every day. Although, it would be a mistake to assume the increase in homes for sale indicates a slowing of the market. This week in 2021, arguably the hottest real estate market in the last twenty five years, there were 96 single-family homes sold in Deschutes County at a median sale price of 585k and four days on the market. Last week, there were 103 sales in Deschutes County at a median sale price of 745k and five days on the market. Is it conceivable that home prices will be undeterred and continue rising throughout 2022? While anything can happen, there are significant headwinds to unfettered increases in home prices, notably mortgage interest rates. With rates already nearing or in some cases exceeding 5%, why haven't home prices softened? In the past several months, I have mentioned rising inflation as a concern, and investors move to hard assets (real estate) from equities. With more than 9 million homebuyers in America priced out of the market with the recent rise in rates, shouldn't the market be slowing? While higher rates will eventually impact the market, buyers today understand that today's rates have not peaked. All signs point to the Fed raising the overnight rate another 50 basis points in May, with consistent hikes throughout the year. Buyers who can still obtain financing understand the risk of waiting and do not hesitate to make aggressive offers to secure their place in Central Oregon. Many of those buyers make all-cash offers that give them a significant advantage in these volatile times.

The chart below shows that the volume of sales above $2M has increased dramatically, with two more sold homes in this price range than last year. The distortion in our economy, combined with the most significant monetary policy bungle since the Gerald Ford and Jimmy Carter eras, will continue the frenetic pace of sales in this market segment.

In this chart, the most shocking number is the increase in the median sale price, a 98.5% jump from 2016!

The Central Oregon real estate market bifurcation creates a need for solid advice. While it may be easy to determine that now is a great time to sell, buyers need to make quick decisions that can add a lot of pressure to the purchasing process. No matter your price range, I am here to help in any way I can.