Has the Housing Market Plateaued?
For over a year, the inventory of homes for sale in Deschutes County hadn't exceeded 300. Last week, there were 304 homes listed for sale, and this morning in Deschutes County, there are 341 homes listed. The developing trends in real estate follow a more typical trajectory, although artificially low mortgage interest rates are helping to keep demand high. Recently, there have been several modest price reductions by home sellers trying to position themselves for the peak of summer, while several vacant lot sellers have increased their asking price. 
Even though the numbers look strong, there has lately been a palatable calm over the Central Oregon housing market. While some anticipate a slowing of the frenetic pace of our real estate market, the closed volume at the halfway point of 2021 is staggering! Looking at the chart above, the increased sales volume through the first half of 2021 is apparent. The average sales volume through June 8 for the last four years was 1720 sales. Therefore, 2034 sales through June 8, 2021, depicts an 18.26% increase. 

Additionally, the days a home is on the market represents buyer demand, with the average from 2017-2020 being 30 days. The current median days listed for a Deschutes County single-family home is four! That's an 86.78% decrease from the previous four years. While buyer demand is easy to see in retrospect, it will be interesting to see how the rest of the year wraps up.
As home prices increase, the entire market shifts upward in price. The chart above shows sales volume for the first six months of the last five years, broken down by price points. The reduction of homes sold below 299k (90.8% fewer transactions) and the corresponding increase in sales from 900k-$1,499,999 (465% increase!) clearly show the direction buyers are heading. In the 900k-$1,499,999 price range, the median days on the market have decreased 92.86%. You don't need to be an economist to see the challenges of buying at either price point. 
After analyzing the data, have we reached a plateau in housing prices? Most likely not yet, although the signs are beginning to appear. The chart above shows the rapid increase in home prices, transactions, sales to list price ratio, and plummeting days on the market compared to the same period from the last five years. While prices of newly listed homes appear to be moderating, that can be hard to determine at the moment because of our diverse housing supply. Although, with a more typical fall schedule for both students and parents, our market may follow a more regular pattern, with prices peaking in summer before moderating into fall and winter. 

The most recent Consumer Price Index will be released tomorrow, with all indications pointing to increased inflation. In addition, gas prices are up considerably as we head into the summer driving season. While inflation takes a bite out of consumer spending, the most significant impact on housing will be rising mortgage interest rates. The Fed isn't supposed to be political, but leaders in powerful positions tend to want to stay in power. With Fed Chairman Jerome Powell's four-year term coming to an end in February 2022, I expect the easy-money policies to continue. While I don't expect Chairman Powell to take a page from Paul Volcker's book, it is becoming more accepted that inflation might be more than transitory without substantial policy changes. 
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Reed Melton
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