It doesn’t take much to warm up the housing market. With a slight drop in interest rates at the beginning of the year, we saw a little more activity in February than January; however, compared to last year, 37% less homes sold in Lake Oswego in February and we’re behind 48% for the year.
Because of higher mortgage rates, now hovering near 7% and a lack of inventory, the market is slow. Sellers are continuing to stay put for a variety of reasons including not wanting to trade their low-interest rate for a higher one and not having someplace else to go.
Sellers should take comfort from Lawrence Yun, Chief Economist for the National Association of Realtors who predicts that, “Amid the backdrop of high inflation, elevated mortgage rates and slowing sales activity, severely limited housing inventory will prevent large home price drops for most of the country next year.” As you can see in the chart below, it’s still a seller’s market in most price points in Lake Oswego, except in the $2.3M to $4.6M price ranges. Homes are still selling close to the list price (98%) on average and there is much less competition for the buyers that are out there.
And there are buyers out there for a variety of reasons from already having sold their home during the heated market to professionals relocating due to a job. Many of them have cash in hand so the interest rates are not part of their buying decision.
Buyers need to be patient and also realize that while they may be looking at higher interest rates than a year ago, they are also looking at homes that will most likely sell closer to the listing price rather than $50,000 to $100,000+ above like during the heated market. What that means is that buyers will already have that extra $50,000+ equity in the house once they move in, as opposed to having that amount be part of the loan they had to take out to buy the house a year ago. Granted, monthly payments will be higher; but if buyers can swing it, the long-term picture might be better for them. And, remember that loans taken out today at 7% can be refinanced in a year or two when rates go down, which many experts predict. By the end of the first quarter alone, Fannie Mae and Wells Fargo project the average 30-year fixed interest rate to settle in at 6.1% and 6.3% respectively.
Buyers should also take into account something else economist Lawrence Yun predicts: “a strong rebound in housing in 2024 with a 10% jump in home sales and a 5% increase in the national median home price.” That means a home purchased today has a good chance (and an even better one in Lake Oswego) of appreciating by at least 5% in a year.
If you’d like some help making sense of today’s housing market in Lake Oswego and the Portland metro area, give me a call at 503.939.9801, email me at firstname.lastname@example.org and/or check out my website. I’d be more than happy to discuss best strategies given your current situation. I’ve been a Realtor in this area for over 30 years so I have the hyperlocal insight you need when deciding your next move. I’m here to help.