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Whether you’re a seller or a buyer, it’s spring time, and time to weigh the balances of entering the real estate market more than ever. You may rightly wonder if it is a good idea to put all your investment eggs in one basket?! Should you sell your home now — while prices are high — or resurrect your hopes of buying a home before the expected interest rate hikes price you right out of the market? Or, should you wait for lower sales prices, thinking a recession is looming? Will anyone be able to move to South County with the skyrocketed prices and our lower wages?
According to the Mortgage publication Markets in a Minute,
- Housing inventory is up 8.3 percent since its seasonal low in March. Inventory remains 65.1 percent lower than the same week in 2020. Large investors have increased cash flow to devote to housing, having accumulated $89 billion for building or buying rental homes.
- As fixed mortgage rates surge, applications for adjustable rate mortgages have increased and now make up 7.4 percent of total applications.
- Surging food, energy and shelter costs pushed consumer prices up 8.5 percent in March, slightly hotter than expected and the highest since 1981.
- The prices that goods and services producers pay also rose. Wholesale inflation hit 11.2 percent in March, the biggest gain on record.
Before you Spring Into Action
If you are considering selling:
The time is right for you to relocate by selling or buying IF you are looking to downsize, OR use the equity you’ve earned from the house you’re living in now to buy a nicer home near loved ones. If that’s the case, time is of the essence! Interest rates have already risen from 3.75 percent to 5.125 percent and are expected to increase four more times this year! This means the longer you wait you may have a mortgage $300 to $500 a month higher; think $125 a month more per $100,000 of the house sale.
If you decide to sell your home and want to get top dollar, you will need to start six-eight weeks before you wish to list your home in order to have repairs completed and have your listing ready to hit the market for High Sales season. If you’re selling in order to buy elsewhere by using the sales proceeds so you won’t have a mortgage, you will need to coordinate the timing of the sale so you don’t have to move twice!
If you are considering buying a home:
Don’t buy a house now because you are worried that prices will continue to rise. It is not worth buying a property higher than what you can afford, if it impacts your savings, retirement or you take on more debt to do so.
If you start working with a trusted Realtor now, you can act on this window of opportunity before it closes. So if you are looking for a home today, it needs to make sense for you and your finances.
If you are considering Selling OR Buying:
It is best to meet with a trusted Realtor and Lender who will give you several sales price ranges and loan options that fit your financial situation and goals. Do you have other investments? What are the tax consequences? When do you want to retire? and many other factors should be considered. Your mortgage is more than an interest rate — in certain situations, a fixed interest rate rather than the seemingly lower adjustable mortgate interest rate works better for you and costs you less in the long term. Every seller and every buyer has a different scenario, and it is important that your entire financial picture is considered. There are many different mortgage loan products that might be a good fit for your situation. After all, your life is not a one size fits all mortgage loan.
Why are buyers having such a difficult time now? Because Inventory of existing and newly constructed homes is so low, competition is brutal for the few available properties. Bidding wars have caused Buyer Fatigue, and supply chain disruption has stunted construction altogether. According to Regional Economist Josh Lehner, Oregon has underbuilt housing by 111,000 units in recent decades Deschutes County Builders are unable to build and/or finish homes in construction — due to the shortage of HVAC, windows, appliances and 30 percent or higher increases in costs for building supplies such as wood, drywall panels and rebar.
The supply of housing has not been able to match the demand, so prices will remain high and may continue to surge higher. In the past three years, it’s easy to see the meteoric changes of SOLD homes prices as evidenced in the dramatic changes in the price per square foot. According to Central Oregon Association of Realtors and Multiple Listing Service of Central Oregon, the Median Sold price per square foot has risen astronomically in South County:
- In Sunriver 97707 from March 1-31, 2019 at $258 to $465 as of March 1-31, 2022.
- In Three Rivers South (Bend 97707) from March 1-31, 2019 at $243 to $419 as of March 1-31, 2022
- In La Pine 97739 from March 1-31, 2019 at $181 to $266 as of March 1-31, 2022
Where are all of these buyers coming from?
- 17 percent Portland
- 24 percent Other Oregon
- 23 percent California
- 36 percent Other States
