This past week I attended a webinar that featured Laurence Yun, the chief economist for the National Association of Realtors, and Dr Jessica Lautz, the VP of research for the National Association of Realtors. It was very interesting.
Here are some takeaways:
The increased interest rates are having an impact. Home sales are down 23% since January of 2022. I think the biggest impact is happening for first-time buyers. Interest rates have doubled in the last year and that has priced out many first-time buyers. They generally have smaller down payments and larger mortgages. I don’t think that this is having too much of an impact here in LO. Condos are still selling very strongly and a good deal of our market is dominated by buyers who are bringing equity from a home that they have sold.
People are moving less often, but are moving greater distances. It used to be on average every 5 years that folks moved. Today, that number is every 10 years. In addition, whereas in 1989 people on averaged moved 1 mile away from their previous home, today the average is 50 miles. So many people now work from home, which has really enhanced people’s options.
Cash buyers now account for 25% of sales. This percentage was 20% pre-pandemic.
I’ve posted the most recent market numbers according to the RMLS. You’ll see that some parts of the metro area have actually experienced depreciation. It’s been years since I’ve seen this. Columbia County and North Portland are particularly hard hit. The good news is that Lake Oswego is holding on and still doing comparatively well.
As of June inflation is at about 3%. 2% is considered to be optimum. It takes time for the results of the Federal Reserve adjustments to be felt in the economy. Mr Yun predicted that by the end of this year the Fed will easy up on interest rates. I am going to hope so.
After several decades in this business I’ve seen and experienced the cycles. We had such a booming market from 2016 to 2022. Appreciation was double digit annually for several years in a row. The economy making adjustments is normal and healthy. Yes, interest rates have priced out many first-time buyers, but so has the cost of housing. We need the entry level buyers. I think I’ll call it trickly up economics. That first-time buyer creates a second- time buyer.
Please reach out to Linda or I if you have any questions. And, as always, thank you for reading the blotter.
Dianne