Two years ago, it was anyone's guess where the housing market was moving as we entered lockdowns and the dystopian world of masks and hand sanitizer. But, by the end of March 2020, housing demand went vertical, along with prices. In years past, mortgage rate increases led to the building inventory of homes for sale and eventually lower home prices, although former trends do not bind this market. Instead, rising mortgage interest rates have accelerated demand as buyers rush to lock in their rate before another increase. So why are buyers behaving differently this time? Rising rents, low inventory, and skyrocketing inflation are impacts, along with the deterioration of the quality of life in many west coast cities that drives the migration to Central Oregon.
On the other hand, strong investment returns and historically high home equity nationwide make owning two homes affordable and diversify from an increasingly volatile equity market. In some cases, buyers are simply jumping on excellent properties without much concern for price. Whatever the particular reason, buyer demand remains high.
How long can this continue? Every mortgage rate increase takes a bite from affordability for price-sensitive buyers relying on financing. As a result, building inventory and flattening prices will occur in the lower-priced properties first. However, only 292 single-family homes are for sale in Deschutes County this morning, well below a level that would indicate softening prices. The median price for the seventy-three homes sold last week was 705k and four days on the market. Eighty-three homes were pending the previous week, with the median list price at $669,500 and five days on the market. One hundred fifty-six homes sold or under contract compared to 292 active listings is nothing short of a blistering pace at the end of the first quarter of 2022.
