Central Oregon recently endured the hottest temps of the year as the Pacific Northwest experienced record-high temperatures. There are now some signs of relief as temps dip into the upper 90s. Yes, that's correct, temps have dropped, but they're still scorching hot. This is very similar to the real estate market. The overheated housing market is finally experiencing a cool-down, but sale prices are still hot and it's still a competitive seller's market.
Housing stock is increasing as inventory continues to climb. New listings in June rose 5.5% year-over-year and are up 10.9% over the prior month, according to a new report from realtor.com. The uptick in new listings gives buyers more homes to choose from and offers reprieve for the real estate market. This helps relieve pressure on each individual listing, spreading the competition out over multiple homes instead of one. The days of 20-plus offers on a home for sale are fading. There are still multiple offers coming in on homes, but the numbers have lessened on each home.
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COVID-19 affected everyone in many ways. As lockdowns end, the experience of sellers reluctant to want homebuyers coming through their homes is lessening. COVID also highlighted how important family is to us.
"Some people are eager to move closer to the families that COVID kept them away from for too long," said Ralph McLaughlin, chief economist at Haus. Quarantine and being faced with mortality forced many to ask the question, "What am I waiting for?" Buyers and sellers have decided to reach for their dreams now. "People who were thinking about selling in two or three years may have accelerated their plans," McLaughlin said. "They're selling now to realize the 20% equity they've gained in the past year."
Meanwhile, dropping lumber-sale prices will impact inventory and will assist in leveling sale prices. The Wall Street Journal reported that lumber futures for the July delivery of lumber were $1,009.90 per thousand board feet, a 41% drop from the record of $1,711.20 reached in early May. This will also help builders that couldn't bear the high lumber prices move forward with future builds.
The total number of home-sale price reductions has also increased in the local market. This is directly related to the pushback from buyers who are not willing to continue paying drastically escalating sales prices. Homebuyers now have multiple homes to choose from in each location, instead of all the buyers competing for one home. Some buyers looking to relocate to Central Oregon have turned toward lower-priced locations.
There are indications that a stabilization is in the future. The ultra-competitive nature of the market has lessened and the need to sweeten the offer with promises of bridging an appraisal gap and waiving professional home inspections will slowly go away. Home sale prices will continue to climb, but at a much slower rate. Inventory will continue to increase, offering homebuyers more new construction and resale opportunities.