Thu. Aug 18th, 2022
q2-2022-central-and-southern-oregon-real-estate-market-update

The following analysis of select counties of the Central and Southern Oregon real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.

 

Regional Economic Overview

The Central and Southern Oregon counties covered by this report have added 5,470 new jobs over the past 12 months, representing an annual growth rate of 2.3%. The region has now recovered all but 2,400 of the more than 37,000 jobs that were lost due to the pandemic.The Bend Metro Service Area (MSA) and Crook County have both returned the jobs lost during the pandemic, but the Medford MSA is still lagging, with employment levels 3,200 lower than at the start of 2020. The area’s unemployment rate was 4%, down from 6.1% a year ago and matching the pre-pandemic low. By area, the lowest jobless rate was in Bend (3.4%) and the highest was in Klamath County, where 5.3% of the labor force is still without a job.

Central and Southern Oregon Home Sales

In the second quarter, 2,424 homes sold, which represented a drop of 11.1% compared to the same period a year ago. Sales were 9.6% lower than in the first quarter of the year.

Compared to the first quarter of this year, sales grew in Crook, Jackson, Josephine, and Klamath counties, but fell in Deschutes and Jefferson counties.

Although sales fell overall, Crook and Josephine counties saw transactions grow by 16.8% and 2.4%, respectively.

The drop in sales is not troubling; the market is only reverting back to its pre-pandemic pace. There will certainly be some markets that underperform, and this may make it feel as if the market is collapsing, but it isn’t.

A bar graph showing the annual change in home sales for various counties in Central and Southern Oregon from Q2 2021 to Q2 2022. There are two counties with positive percentage year-over-year changes: Crook at 16.8% and Josephine at 2.4%. All other counties show a negative year-over-year change. Here are the totals: Klamath -4.8%, Jackson -11.4%, and Deschutes -21.1%.

Central and Southern Oregon Home Prices

While home sales fell, prices did not. The average sale price in the region rose 10.8% year over year to $603,271. Prices were up 1.5% compared to the first quarter of 2022.

Compared to the first quarter of the year, average prices rose in all counties other than Josephine. In Bend, prices were up more than 13%.

All counties contained in this report except Crook saw average prices rise compared to a year ago. The Bend area experienced significant increases.

Home prices have not been significantly influenced by the increase in mortgage rates yet. Median list prices in the area rose in all counties other than Josephine (where they were flat), which suggests that home sellers are still confident. I will be closely monitoring list prices going forward, as they will be the first indicator that the market is cooling.

A map showing the real estate home prices percentage changes for various counties in Central and Southern Oregon. Different colors correspond to different tiers of percentage change. Crook County is the only county with a percentage change in the -2% to -0.1% range, while Jefferson County is the only county in the 0% to 4.9% change range. Josephine and Jackson are in the 5% to 9.9 % change range, Klamath is in the 10% to 14.9% change range, and Deschutes is the only county in the 15% + range.

A bar graph showing the annual change in home sale prices for various counties in Central and Southern Oregon from Q2 2021 to Q2 2022. Deschutes county tops the list at 21%, followed by Klamath at 11.2%, Jackson at 8.5%, Josephine at 6.6%, Jefferson at 3.4%, and finally Crook County at -1.1%.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The speed of the surge in rates is due to the market having quickly priced in the seven-to-eight rate increase that the Fed is expected to implement this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A bar graph showing the mortgage rates from 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q2 2023. He forecasts mortgage rates continuing to climb to 5.9% in Q4 2022, then tapering off to 5.58% in Q1 2023 and 5.53% in Q2 2023.

Central and Southern Oregon Days on Market

The average time it took to sell a home in the region rose 2 days compared to a year ago, but it took 14 fewer days for a home to go under contract compared to the first quarter of the year.

The average time it took to sell a home in the second quarter of 2022 was 28 days.

Klamath (-2 days) and Jefferson (-7 days) saw market time drop, while market time rose or remained static in the rest of the region compared to a year ago. Market time fell across the board compared to the first quarter of this year.

Interestingly, the average market time in the second quarter of 2019 (pre-pandemic) was 82 days, which is just one indicator as to the vibrancy of the region’s housing market.

A bar graph showing the average days on market for homes in various counties in Central and Southern Oregon for Q2 2022. Deschutes county has the lowest DOM at 16, followed by Jackson at 23, Klamath at 26, Josephine at 34, Crook at 35, and Jefferson at 36.

Conclusions

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Though the job market is recovering more slowly than I would like, the housing market is still performing strongly. As we move through the year, some may believe that the market is underperforming, but this is not the case. Along with much of the rest of the country, the Central and Southern Oregon housing market has been overperforming since the pandemic started. As the market starts to trend back to its pre-pandemic pace of sales and price growth, the slowdown might feel exaggerated but there is no cause for concern.

A speedometer graph indicating a medium seller's market in Central and Southern Oregon for Q2 2022.

Despite dramatically rising financing costs, buyers still appear to be motivated. List prices have yet to “roll over,” suggesting that sellers are still confident. This, combined with the other data presented here, tells me that they are still in the driver’s seat.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

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