The holiday months are typically slow in the housing market and Lake Oswego was no exception. Add to that higher interest rates and low inventory and the word for the first couple of months of 2023 for Lake Oswego and the Portland Metro area real estate market is WATCHFUL.
The chart below tells part of the picture. Sales are down from where they were in December of last year all over the Portland metro area. While some buyers are standing back and taking a “wait and see” approach, those numbers also reflect sellers who are choosing not to list their properties at this time.
Many of them are sitting with 2.5 – 3.75% interest rates so unless they are planning on renting, significantly downsizing, or paying in cash, they’re not in a hurry to trade that low-interest rate for something in the 7.0 range.
How long do they wait? Predictions run the gamut from “mortgage rates have peaked” to “mortgage rates will remain elevated.” With so many influencers at play—inflation, the war in Ukraine, Federal Reserve policies trying to tame inflation—it’s hard to know where things are going to land. Mortgage Reports polled eight industry insiders for their 2023 mortgage rate predictions and came up with a range that varied from just under 5% to over 9% for the 30-year fixed rate and 4.5% to 8.75% for the 15-year fixed. So rather than trying to “time the market,” both buyers and sellers need to make their next move when they’re financially ready and can afford it.
The conundrum for sellers, however, is that because inventory is so low, putting their house on the market now means there is not a lot of competition for the buyers out there.
And despite what you hear, there are buyers out there. We are working with several right now looking in Lake Oswego and Portland area neighborhoods and other agents reach out to us all the time, asking if we know of anything coming on the market. They either have cash or are in a position to manage the higher interest rates, knowing that when they come down they can refinance.
I think it’s also important to look at current interest rates from a historical perspective. The chart below shows you the ride interest rates have taken since the 1970s. The 1980s saw the worst of it with the average 30-year fixed rate topping out at 18.4% in October of 1981. Double-digit rates were ushered in during 1979 at 11.2 and stayed with us for over a decade, finally dropping in late 1990 to 9.97 and have remained in the single digits since then. How’s that to make 7+% look like a bargain?!
How did people afford to buy homes in the 80s? Creative financing starting with assumable loans which meant the buyer not only got the house but also the interest rate that the seller had on his/her mortgage! Congress put the kibosh on most assumable loans in 1982 so today’s buyers and sellers have to find other ways to get creative, some of which I discuss in a previous blog.
If you’re wondering what your next move should be and when in today’s housing market, give me a call at 503.939.9801 or email me at firstname.lastname@example.org. I’ve been a Realtor and Lake Oswego homeowner since the 1980s so I’ve seen it all and would love to put my experience to work helping you make sense of it all so you can move forward wisely.