Inventory Jumps!

Single-family homes for sale in Deschutes County increased this week by the most significant amount in 2023 to 570, up forty-seven from last Wednesday. The increase is welcome news to buyers working with constrained supply and up from this time last year. However, on May 25, 2022, the inventory of Deschutes County homes was 591, and the skewed comparisons of our year-to-date data are narrowing rapidly. For example, this week last year, the median list price was 827k compared to 841k this morning. On July 6, 2022, the median list price in Deschutes County dropped below 800k for the first time and dropped below 700k in October. On March 1, 2023, the median list price moved above 700k again, breaking 800k on April 19, 2023. The likelihood of a surge in inventory before the end of the peak summer selling season that floods the market and brings prices down is nearly impossible. In fact, despite the increase of available homes for sale this week, I expect prices to remain firm or increase through the summer. Although, most of the price increases reflect more expensive homes hitting the market rather than an overall increase in home prices. 


Twenty-two single-family homes are listed in Deschutes County under 400k and forty-eight under 500k, providing options for many buyers. In a volatile mortgage market, yesterday's average 30-year fixed-rate mortgage was 6.58%. Later this morning, the Federal Reserve will likely raise rates another 25 basis points, but the accompanying narrative to the hike will be the meat of the story. If Jerome Powell sends a dovish message regarding future rate hikes, the markets will most likely respond favorably in expectation of the pivot everyone has waited for. On the other hand, if Powell shows continued concern about the pace of inflation and indicates more rate increases are necessary, we could see buyers pulling back further as affordability in lending decreases. While I do not expect a hawkish Fed, anything can happen. Today's Fed narrative will be the most pivotal point of the 2023 selling season and set the tone for the remainder of the year. A pivot at the next Fed meeting in mid-June or a pause should keep buyer demand strong, while another increase could roil markets and further slow sales. Year-to-date sales are 881, compared to 1444 in 2022, and it is doubtful we will match last year's robust total sales of 4130. 


As I mentioned last week, projections expect significant growth in Deschutes County and Central Oregon through 2030. If monetary policy eases, there is a strong chance that buyer demand will increase. Two issues impacting buyers today are mortgage rates and low inventory. While we may have peak rates behind us after today, there is unlikely to be a flood of inventory. Not only has the housing market in past recessions been robust, but a recession is pinpointed by data released well after a recession has started. In other words, we could be in a recession today, and judging by the general strength of the overall economy, would anyone guess that is true? Terms like contraction and expansion are excellent for esoteric economic discussions but, in real life, have little bearing on what takes place in the housing market. Supply, demand, and financing costs are the most significant factors in a real estate market, and all real estate is local. While anything can happen, nothing in today's data indicates a drawdown in home prices or the economy in general. 


Lastly, a quick look at the M2 money supply (linked at the bottom of the Market Trends page of EnjoyBendLife.com) shows a 170% increase from 2008 to today. The expansion (debasement) of the dollar is a significant contributing factor to home prices and decreased inventory. I mention this to illustrate how unlikely home prices will ever reach the lows of 2010 again. 


Now is an excellent opportunity for sellers to list and command near-peak pricing. While the process for buyers may be more challenging, some fantastic lending programs are available to make homeownership attainable. In addition, for high-net-worth buyers, looking at the growth projections in Central Oregon may ease any doubts about buying in today's market. No matter your views on the market or your timeframe, I am available to help! Whether you take advantage of the resources on my website or put me to work to help you reach your real estate goals, you can count on me to make the process easier. Please reach out anytime. 

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