The Impact, or lack thereof, of 8% Mortgage Rates

Last year, October was the first month the local housing market experienced the impacts of rising mortgage rates, most notably with a 6% drop in median home price in Bend and an 8% decrease in Redmond from the previous month. October 2023: mortgage rates were near or at 8% all month, and the impact was…barely noticeable?

If you ignore the fact the number of sales taking place throughout 2023 is fewer than previous years, I would argue the changes in the market are due to seasonal shifts rather than the affordability issue. Let’s look at the change in median prices for the month of October. This year, four of the six cities in the region saw a price drop:

• Bend: -1.5% (7% higher than October 2022)

• Sisters: -1.2%

• Prineville: -5%

• Madras: -1.2%

For some context, just Bend saw a 4% decline in the same month back in 2018 and an 8% drop back in 2019. Active inventory in the meantime is holding steady and/or declining. If the number of buyers making offers was drastically reduced beyond seasonal changes, one would expect to see inventory growing; especially with the observation called out in the next paragraph.

This market isn’t without its unexpected changes however; namely one seen specifically in Bend. Looking back to 2017, Bend saw an increase in new listings during the back half of the year on only four occasions: August 2017 (1.4%), September and December 2020 (1.3% and 2.4%), and October 2023 (4.5%). However, homes going under contract in October saw its usual decrease of active buyers. If I were a buyer in this market, perhaps there’s an opportunity arising due to increased competition among sellers as the buyer pool seasonally shrinks.

While the saying “one data point doesn’t make a trend” is still an important one to keep in mind right now, most of the changes seen in October follow the yearly seasonal trends. While high mortgage rates have been getting all the attention in the media, in reality, the market keeps humming along.