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Of the famous sayings in the real estate business, "real estate is local" is right up there in using the fewest words to convey a truism. This week, a respected industry analyst I follow spoke of rising inventory nationally and mortgage interest rates near 7%. While I follow the national real estate news, I am intimately familiar with Central Oregon statistics, which I access through our MLS. I can report unequivocally that the local numbers are bucking the national trends. For example, the inventory of Deschutes County single-family homes dropped again, now at 552, a decline of twenty-one from last week. According to Mortgage News Daily, and verified by a local lender, rates yesterday were at 6.17% for 30-year fixed-rate mortgages. So if you were to listen to the national media on real estate, you would likely be sitting out the best buying opportunity in the last couple of years.
Pending Sales in Deschutes County were a solid fifty-one over the previous seven days, down one from last week. Crook County had ten pending sales, the highest number since September 14, and Jefferson County had four, the most since late November. The median days on the market for the pending properties in Deschutes County was sixty-five, balanced by ninety-two days for the active inventory. Fifty percent of the actively listed homes have reduced the asking price by a median of -5.46%. While no doubt asking prices have moderated, the median sale price in Deschutes County remains stable at 674k. However, the high asking prices of many properties are beginning to line up with reality.
While the decline of homes for sale might not be as dramatic as last year, the volume is decreasing. You may recall that I reported a low in Deschutes County for 2022 in April of 333 single-family homes. Whether we reach that number and for how long inventory declines are unknown. Although mortgage rates, while still volatile, have settled in at the low 6% range. The heavily manipulated CPI has indicated a reduction in inflation. While the Fed is likely not finished with rate increases, many analysts speculate that Jerome Powell will waive the white flag on inflation and shift to easing monetary policy to fight the battle against a looming recession. Those factors combine to indicate that mortgage interest rates are likely to moderate rather than continue their climb into decade highs. I have already witnessed enough buyer activity at current rates that I am comfortable predicting increasing sales activity if mortgage rates dip below 6%. As I have often said, home purchases should have a long-term focus. A home that is an excellent fit for your needs is worth a second look. There are no guarantees that a similar home will be available later this year at a lower price.
One area where similar homes are readily available lies in new construction, a segment of our market that has seen the deepest price cuts of late. Builders have sharp pencils and are intimately familiar with their costs. New home builders also have the incentive to clear inventory from their books and know that getting ahead of the market regarding price is critical to making a sale. As a result, in light of recent deep price cuts, I wouldn't expect new home builders to continue dropping prices through the summer, making now a great time to consider those options while there is a reasonably large selection. Keep in mind that waiting out the last cycle of real estate activity has not improved much for buyers.
Lastly, whether a significant price drop materializes remains to be seen, but the chances of severe price reductions still need a rising inventory and reduced buyer activity. The next several weeks will strongly indicate prices for the rest of 2023. Suppose inventory continues to decline, along with steady or declining mortgage rates. In that case, I expect prices to remain firm, making my prediction of a 9% appreciation for Deschutes County for the year likely. On the other hand, a crashing economy, decreased buyer demand, rising inventory and days on the market, and interest rates above 7% would all have a deflationary impact on home prices. So far, the second scenario is not playing out, although the year is still new.
Whatever your views are on our real estate market, I am available to provide up-to-the-minute analysis, and help you plan your strategy, no matter your timeframe.
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