Portland Market Update: February 2023

Feb 6

Welcome to the calm before the storm! The market is waking up after a very sleepy winter, where lack of inventory coupled with rising interest rates created a stagnant market. Do you recall me talking about all the clickbait articles spouting doom and gloom rhetoric without sound data to back it up? Their stories of skyrocketing interest rates and talks of housing crashes plastered internet feeds around the country. This freaked out a lot of buyers, causing active house hunters to pause their searches and would-be-buyers to push back their timelines in hopes of catching a deal at the bottom.

Meanwhile, the reality is that over the winter months inflation finally took a mild chill pill and rates started creeping back down. I’ve seen zero headlines from non real estate news sources about the fact that rates are now back to where they were in the late summer (that’s to say: not fantastic, but not anywhere near the 7’s we were seeing over the fall). “But Chrystal, the news says that the Fed met last week and they actually INCREASED rates!? Are you sure you know what you’re talking about?!”. That’s a great question! This is a topic worthy of it’s own blog post entirely, but here’s the quick and easy download:

› The Fed funds rate is what you hear about on the news. It’s what banks use to lend money and affects credit cards, auto loans, personal loans, etc. It does *NOT* directly impact mortgage rates.

› Fed rate hikes are a tool to curb inflation—they make things more expensive in an effort to reduce demand.

› Inflation drives mortgage rates. When inflation goes up, mortgage rates will also go up. When inflation is low, mortgage rates follow suit.

› The bond market controls mortgage interest rates and has been reacting positively to the Fed’s actions to curb inflation. Hence, why we’ve seen mortgage rates come down despite continued Fed rate hikes.

This means that savvy buyers are now back in the game trying to buy before the rest of the population catches on and we are once again seeing multiple offer scenarios. The shift was sudden—one week things were slow and the next week agents around the country were sharing stories of bidding wars and waived inspections. While the pandemic home buying craze has come to a close, all signs point towards the ushering in of a much more competitive market than we’ve seen over the past 4-5 months.

For my sellers:
This is mostly good news for you. We can expect prices to remain stable at worst over the coming months and possible moderate increases. While this spring won’t look anything like what we saw this time last year, I do expect some semblance of a typical pre-pandemic spring market with competition for homes that are well-staged, properly-marketed, and priced appropriately. Another plus: finding your next house should still be a cakewalk compared to what it would have felt like last year. The proper buy/sell strategy will depend on your individual circumstances—I can help you come up with a game plan that makes the most sense for you!

For my buyers:
If there’s one piece of advice I can give to buyers, especially right now, it’s this: don’t base your decisions off of things you see on your news feed. Instead, reach out to me and/or a reputable lender for accurate information. Second piece of advice would be to stop trying to time the market. When you attempt to do so, you’re just as likely to miss out on a good opportunity as you are to land one. I always say: the best time to buy a house is when 1) you are logistically and emotionally ready to buy a house and 2) you find a house that you love that you can afford. It’s never too soon to start conversations with a Realtor so that you’re ready to hit the ground running if the right house pops up. If you’re interested in buying ANYTIME in the near distant future, I’d love to help you get your ducks in a row and set you up for future homebuying success. Get in touch with me and we’ll set up a time to chat—coffee, beer, or ice cream is on me!

xoxoxo
Yours truly,