The current 30-year fixed mortgage averaged 2.81% this week, well below the 3.49% of last February. There are 200 single-family homes for sale in Deschutes County this morning, compared with 198 available at this time last week. The median list price for Deschutes County is 850k, with the median days on the market at 30. Eighty-four homes had an accepted offer last week, with 63 homes sold. Last week's sold properties had a median sale price of 515k, with the median days on the market of five.
By any measure, the inventory of homes in Central Oregon is shockingly low. Why? Many experts have mentioned the digital tools that allow higher-paid employees to work from home and the corresponding flow of people fleeing cities. While that may be true, the Federal Reserve and interest rates are the likely culprits. The last time the year-over-year home inventory increased was late 2018 when mortgage rates spiked from a national average of 3.7% to 4.8%. Low-interest rates have enabled many buyers to maintain ownership of their prior homes, further exacerbating the low-inventory. As rates move higher, fewer buyers will juggle two mortgages, and overall buying power decreases. Keep an eye on interest rates and inventory for indications the market is adjusting.
The Federal Reserve has continued purchasing bonds, Quantitative Easing (QE), while the executive branch is working on another $2T (Trillion!) in government stimulus. Currency pumping leads to inflation, and low-interest rates drive investors to more speculative investments in search of yield. Are home purchases becoming speculative in Central Oregon? Are home prices inflated? There are no easy answers to those questions, but when economists begin talking about asset bubbles, it is time to make sure that your personal financial decisions are sustainable! Each of these issues impacts individuals differently, so call me for help designing your unique strategy.
