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Locally, it remains a seller’s market

Andy Atkinson / Mail Tribune Home construction continues at Twins Creek in Central Point.
Andy Atkinson / Mail Tribune Preston Caldwell, of Battles Construction, works on the floor of a new house in Medford.
Mortgage-rate increases aren’t stopping the local real estate market yet

Recent increases in mortgage interest rates have had little effect on the local real estate market so far, according to two local brokers.

First quarter sales were strong but likely don’t reflect recent rate changes. Both said the influx of buyers from outside the area may help maintain momentum even if sales elsewhere slow.

“By all accounts, most people who are buying a home will stay in the market. The short term looks good that it will stay a seller’s market, subject to change,” said Colin Mullane, principal broker with Full Circle Real Estate in Ashland.

Those changes could be spurred by the Ukraine war, oil prices, inflation or other factors, he said.

“I do not expect prices to drop. I expect the crazy increases in home values will decrease. I think the rise is going to moderate,” said Scott Lewis, a broker with John L. Scott in Ashland. “I don’t think things are going downward ... (or) a bubble will pop and you can buy in a fire sale.”

Nationwide, mortgage application volume fell 6% for the last week of March compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was down 41% from the same week one year ago.

The average interest rate for a 30-year, fixed-rate mortgage with conforming loan balances ($647,200 or less) increased to 4.90% from 4.80%, for loans with a 20% down payment. That rate was 3.36% one year ago. That was the fourth consecutive week of increases.

Sales, inventory and median prices in Jackson County all increased for January through March compared to the first quarter in 2021, according to statistics from the Rogue Valley Associaotn of Realtors. For urban areas, sales were up by 19.7%, median price increased 13.6% to $399,900 and inventory gained 18.4% with 405 active listings on March 31.

“(Interest rates) affect the first-time home buyer,” said Lewis. One first-time home seeker who had worked with him for over a year has dropped out of the market, but another remains committed.

Mullane said the local market is seeing some reaction to the rate increases, but added there is always a time lag.

“Right now, buyers are going through sticker shock. The rapid rise in interest rates has caused challenges in the market, but buyers are staying in because everything is pointing to it getting worse,” said Mullane.

Some sellers are rushing to get in fearing that interest rate increases might lead to a drop in prices due to fewer buyers.

Lewis said the rest of his business has been relatively unaffected by the increases.

“It’s been a frenzy for quite a while,” said Lewis, although he noted the increase in average days on market — from 24 a year ago to 35 in the latest quarter.

“Right now, we still have a 1- to 2-month supply of homes for sale. That is one of the mitigating factors to the rise in interest rates,” said Lewis.

Homes sold at 98% of list price in March, up from 97% in January and February in Jackson County. In June, 201 homes sold at 101% of list price but the figure has declined since then.

The slight decline in the sale-to-list-price ratio is notable and worth watching, said Lewis. “There are outside forces here. Interest rates have gone up but they are still basically at record lows when you look at longtime statistics.”

A decrease in rural home sales could be more of an indication that the supply is limited rather than disinterest, said Lewis.

For the quarter, sales decreased from 159 in 2021 to 141 this year, but days on the market also dropped from 75 to 57 for the period. Median price rose from $574,000 to $607,000.

COVID-19 accelerated people’s awareness that they could live in an area with a great quality of life and still earn a livelihood, said Lewis. Many buyers are often professionals who can work from home.

Out-of-area buyers are informed on the market, said Mullane. They know, for example, that smoke-filled days are likely in the summer but are willing to live with it rather than spending hours in traffic in a larger urban area.

Most of his clients looking for rural properties are from out of state, said Mullane. He also sees many all-cash buyers who had greater equity in other markets looking for both urban and rural properties.

“I would expect the Southern Oregon market will buck all the national trends,” said Lewis.

Urban homes in west Medford, southwest Medford and White City saw the largest increases in median prices.

West Medford median price went to $300,000 from $250,250 in 2021, a 24.4% jump. Southwest Medford prices jumped to $400,000 from 357,000, a 20.4% increase. White City prices were up 18.7% to $326,000 from $267,450 in 2021 for the quarter.

“West Medford, southwest Medford and Phoenix are the most affordable. They are pulling in first-time buyer traffic, and it’s supply and demand,” Mullane said of the higher increases in those areas.

More expensive markets saw single-digit increases in median selling prices. Ashland was up 6.3% from $520,000 to $585,000, where 108 homes sold, compared to 72 in 2021. In Jacksonville, sale price increased 8.6% from $585,000 to $601,000, although sales fell from 16 to 10 units.

During the last year, days on market for a listing have varied from the high teens in March through June 2021, to the mid-30s in January and February before dropping to 30 days this March.

Months of inventory available for sale remained between 1 and 1.6 for most of the last year, although that number spiked above 2 months in October 2021, and was at 1.8 months in September and November. The figure was at 1.6 months for January and February, but dropped to 1.3 in March.

Reach Ashland freelance writer Tony Boom at tboomwriter@gmail.com.