Search

May Real Estate Market

This week the median list price for Bend, OR 97701 is $767,000 with the market action index hovering around 90. This is about the same as last month's market action index of 90. Inventory has increased to 50.

This week the median list price for Bend, OR 97702 is $799,900 with the market action index hovering around 83. This is less than last month's market action index of 86. Inventory has increased to 83

This week the median list price for Bend, OR 97703 is $1,250,000 with the market action index hovering around 63. This is about the same as last month's market action index of 63. Inventory has increased to 76.


This week the median list price for Redmond, OR 97756 is $649,950 with the market action index hovering around 70. This is less than last month's market action index of 72. Inventory has increased to 78.

This week the median list price for Sisters, OR 97759 is $1,312,000 with the market action index hovering around 71. This is an increase over last month's market action index of 70. Inventory has increased to 18

This week the median list price for Madras, OR 97741 is $434,639 with the market action index hovering around 45. This is less than last month's market action index of 52. Inventory has increased to 38.


This week the median list price for Prineville, OR 97754 is $554,750 with the market action index hovering around 48. This is less than last month's market action index of 49. Inventory has increased to 65

This week the median list price for Powell Butte, OR 97753 is $1,450,000 with the market action index hovering around 35. This is less than last month's market action index of 41. Inventory has increased to 13.

This week the median list price for La Pine, OR 97739 is $565,000 with the market action index hovering around 51. This is an increase over last month's market action index of 50. Inventory has increased to 49.


We are seeing the market action index decrease across central Oregon going into spring which is not what normally happens. There were only two markets where we saw the action index increase and that was La Pine and Sisters. With Mortgage rates at their highest level in more than a decade. Home buyers are pausing and adjusting to find ways around this.

More borrowers are paying fees to cut their interest rates and making higher down payments to lower the amount they have to finance, lenders and real-estate agents say.

People buying homes under construction are choosing to lock in today’s rates rather than risk even higher ones later.

And more home buyers are considering home loans that carry lower rates in their early years. Applications for adjustable-rate mortgages have doubled over the past three months, according to the Mortgage Bankers Association.

For much of 2020 and 2021, ultralow mortgage rates helped offset the increase in home prices. The average rate on a 30-year fixed mortgage were falling below 3% for the first time in July 2020 before bottoming out at 2.65% in early 2021.

Everything changed this year. The Federal Reserve’s pullback from the mortgage-bond market has helped drive up rates on home loans to 3 percentage points since early January, their steepest climb in decades. And they are likely to climb even more if the Fed continues to raise its benchmark rate throughout the year, as expected.

Prospective buyers who had been quoted rates well below 4% when starting their search now face rates upwards of 6% They are scrambling to adjust. And the word is the Feds are prepared to raise rates to allow mortgage interest rates to go as high as 8% or more

It’s kind of like giving your kids a sucker and then taking it away before they are done They get upset and want to know if it’s gone forever and are sure they can’t live without it.

More home buyers are opting to pay fees to secure lower rates in the form of rate-lock agreements and discount points. A borrower can buy points at a rate of 1% of the value of the mortgage; each point lowers the rate by a fraction of a percentage point.

Borrowers in April paid an average of $3,134 in discount points and loan-origination costs, according to estimates from the National Association of Realtors. That is 31% higher than a year earlier.

About 75% of borrowers are choosing to pay for discount points Many have decided to make a one-time payment to get back to where things were a month or more ago.

Higher rates have pushed prospective buyers and sellers into rethinking their plans. Some of those who can still afford to buy are looking at mortgages with lower introductory rates that reset in five, seven or 10 years… Average rates on adjustable mortgages last month ranged from 3.69% to 5.03%, depending on the loan terms, according to Bankrate.com. The website’s average rate on a 30-year fixed rate mortgage was 5.22% over the same period.


Today’s ARMs are different from the ones that became hugely popular before the 2008 financial crisis. Then, ARMs attracted borrowers with reduced interest rates that skyrocketed after a year or two, saddling homeowners with payments they struggled to afford. At their peak in 2005, adjustable-rate loans accounted for close to 50% of all mortgages issued, according to the Urban Institute.


The lowest historical mortgage rates in history for a 30-year Fixed Rate Mortgages were 2.68%, in December 2020 according to Freddie Mac, due largely to the effects of COVID-19. The same goes for the lowest average, with an annual rate of 3.11% for 2020.


These rate increases are in response to rising inflation and are expected to continue to rise throughout the year. Historically we know that higher rates slow the housing market. We are watching to see the response in Central Oregon. We still have extremely low inventory in Bend and Redmond which is keeping demand up, but we can expect to see fewer buyers willing to compete if they are using a mortgage to purchase their home. This will most likely result in lowering or flattening of prices for homes on the market.


As we spoke earlier buyers will get creative in order to purchase perhaps asking sellers to contribute to discount points and closing costs in order to lower their monthly mortgage payments, allowing buyers to put more money towards their down payment. More buyers are looking at adjustable rates which adjust in 5 – 7 years allowing them time to refinance when rates begin to come down again.

Some buyers have held off waiting to see if there will be a market correction allowing then to purchase at lower prices than have been seen lately.


Homes are selling here in Central Oregon, during the last recession we experienced it took us longer to feel the wave of the changing market. I believe this is because we live in such a desirable location. Many people are looking to move here from larger metropolitan areas and many are buying second homes here to eventually retire into.