Recently, there has been a lot of chatter about the price of homes in Central Oregon, and in actuality, the entire country. The chart for the median list price of Bend zip code 97702 (below) shows the pricing plateau I mentioned in recent reports. Although a slowdown in price increases does not equal a slowing in the market. More single-family homes sold in Deschutes County from January 1-July 13, 2021, than any year. Ever. In 2020, there were 2,240 homes sold in the county, with a median sale price of $430,545. To date, in 2021, the sale price increased to $580,000, with 2,636 sales! The increase in sales and flattening of rising prices has, not surprisingly, coincided with an increasing inventory. There are 487 single-family homes listed in Deschutes County this morning, up from 447 last week.
With record home sales and prices, many are concerned about a housing bubble. But, depending on the opinion, the sky is either the limit or falling any day! Reality most likely falls somewhere in between, although a thorough analysis of the numbers gives some indication about what lies ahead. If you have the stomach for big spreadsheets and data, click here for a breakdown of Deschutes County home sales since 1999. Granted, some of the older data was from a different era than we live in today, but there is no harm in understanding where we started. Looking at the relationship between mortgage interest rates, the year-over-year inflation rate, and the Fed funds rate, it is evident that increasing rates are an effective tool to combat rising consumer prices. Two things are clear: 1) the Fed has painted itself in a corner with interest rates, and 2) low mortgage interest rates have fueled a large part of the housing boom. I do not anticipate much changing over the next several weeks, but next week's Fed Open Market Committee meeting will be telling. If the Fed slows the purchase of mortgage-backed securities (less printing of dollars) or raises the overnight rate (currently at 0.25%), expect the housing market to react. In all likelihood, everything remains the same after this Fed meeting, and we all go back to Merriam-Webster to look up the definition of "transitory."
If you like the data contained in the spreadsheet, you'll be happy to know I am building an even more extensive collection of Deschutes County data going back to 1979!
