Sisters Market Update
2023 In Review - 1/9/24
2023 Overview

If you had to describe the 2023 real estate market in one word, that word would be: frozen. With mortgage rates hanging around 7% for the majority of the year, affordability, buying power, and buyer demand all took a massive hit. At the same time, homeowners were not selling because nobody wanted to trade in their 3% mortgage for a 7%. All of this led to one of the most stagnant real estate markets we’ve seen in years. 

The biggest difference in the 2023 market compared to 2022 was not a dip in home values, but rather a dip in the total number of transactions. 2023 saw the fewest real estate transactions since the 2008 Great Recession and yet home prices held steady due to low inventory. Something else that I personally noticed was homes that sold in 2023 sold for about the same price as they would have a year ago (for the most part)...the biggest difference however is that there were many homes sitting on the market that would have no doubt sold quickly just a year and a half ago. December, however, brought a good amount of action to the market as The Fed came out and said they will be cutting rates throughout 2024. The mortgage market of course responded…Mortgage rates saw one of the biggest 2-day drops in decades. The average 30-year fixed rate dropped 0.5% during those two days. With that, the average lender is now closer to the 6.5% range (I’m even seeing scenarios now where some borrowers are able to get down into the 5’s via rate buy downs and/or FHA and VA loans). Since this rate drop, we are already seeing a serious uptick in buyer demand via mortgage applications. 

With all of this in mind (as well as the data below), my current advice for buyers is as follows: if you are hoping to buy something sometime in the next 3 years,  if you can buy something right now that you can reasonably afford without banking on a refinance in the future, do it now rather than wait! As you will see in my 2024 prediction below, every sign is pointing to interest rates continuing to drop in 2024. If rates more than doubled over the past 18 months and prices still didn’t decrease, what do you think will happen to prices when rates drop?

On the other side of things, my current advice for sellers is that you need to be as reasonable and objective about your home's value as possible. You can no longer just price your home 5-10% higher than the best comp and get multiple offers like you could in 2021. In this current market it is really important to get your pricing right. On that same note, be weary of agents that just tell you what you want to hear. Working with an agent like that will no doubt backfire. You want to work with somebody who will give you an objective and honest opinion on your home’s value.

See below for some notable stats and what they mean.
Joey Morgan
Real Estate Broker | Stellar Realty NW
Phone: 541-771-1379
JoeyMorganRealEstate@gmail.com
Notable Stats and What They Mean

Appreciation:

  • Stat: The median sales price of homes in 2023 was $775K. This is down about 3% from 2022 when the median sales price was $805K. However, the price/squarefoot in 2023 was $429/sqft which is up 8% from 2022 ($396/sqft).
  • Analysis: Why this discrepancy between a drop in sales price, but a rise in price/sqft? Simply put, buyers bought smaller homes on average in 2023 than 2022 (about 200 square feet smaller on average). This accounts for the decrease in sales price yet an increase in price/sqft. When it comes to the topic of appreciation in 2023, there’s no simple answer. For the most part home values stayed flat, but depending on the specific property, some went up slightly and some went down. For instance, almost all high quality homes that are updated, in great condition, and in desirable neighborhoods saw appreciation of about 3% in 2023. However, most “cookie-cutter” homes (especially those in need of updates and in not great locations) saw a little bit of negative appreciation (no worse than -3%). 

Transactions:

  • Stat: There were 235 single-family closings in 2023. This is down almost 20% from 2022 when there were 287 closings. 
  • Analysis: As mentioned above, 2023 saw the fewest number of real estate transactions since the Great Recession of 2008! The high interest rates discouraged sellers from trading in their low interest mortgages. The high rates also crushed affordability and buying power on the buyer’s side of things. 2024 will most likely see an increase in the realm of 20% in the number of transactions, as interest rates and affordability hopefully “normalize”. 

Days on Market:

  • Stat: Homes in 2023 took an average of 27 days on the market to go under contract. This was way up from 2022 where sold homes were on the market an average of only 10 days. 

  • Analysis: This jump in days on market is not surprising given the decrease in buyer demand. The buyer pool shrunk dramatically in 2023 due to affordability issues so it makes sense that that would be reflected in DOM. I would expect days on market to go down in 2024 as buyer demand has already dramatically increased over the last month.
My 2024 Prediction

My prediction for the year ahead is that we will see a more healthy and active real estate market than we saw in 2023. I believe the Federal Reserve will stay true to what it said in December about cutting rates throughout 2024 and by year's end we will see the average 30 year fixed rate at 6% (with many borrower scenarios yielding rates in the 5’s). Because of this, both buyer demand and buying power will increase, plus sellers will be more likely to list. Transactions should go back to normal and increase by about 20%. Because of the increase in buyer activity, I also think that homeowners will see home values appreciate by 4-5%.

As always, I hope this information is helpful! If there’s anything I can do for you, don't hesitate to reach out (contact info above).
About Me

I have lived in Sisters, OR since 2004. Having grown up here, I know the area as well as anybody so if you’re looking for a local expert, I’m your guy! After graduating from Sisters High School I attended college at the University of Washington in Seattle where I also played on the baseball team. After college I played a few years of pro ball with the Detroit Tigers before moving back home and getting into the real estate business. Whatever your real estate goals are, whether that be buying your dream home, selling, relocating, or achieving financial freedom through real estate investing, I’m here to help! I regularly transact real estate for myself personally so I like to think that I practice what I preach! I'm married to my wife Jessica and we live in Sisters with our 4 kids.