on February 1, 2023
In talking about the 2023 housing industry, one thing experts agree, unlike the last few years, it will be hyperlocal. We will see some markets across the nation drop home prices. Others will remain flat while some communities will continue to see moderate value price increases. Will the national news be able to tell the whole story for where you live? The consensus is that unlike the last few years, in the year ahead, probably not.
Take the Portland/Salem Metro area, of which Yamhill County sandwiches in between. When dipping into trends, new construction, supply, price points, and multiple offers versus price drops, the areas vary greatly. Some pockets of Portland have seen great price decreases, while homes in Salem have remained steady. Due to the large amount of homes still needed in the area, new construction in Newberg is still going strong and selling fast.
What does this mean to you? If you are in the market to buy, sell, or thinking about doing both, keeping in touch with your local agent and lender will be imperative in learning about your hyperlocal housing market. This will allow you to make the most informed decisions for you in your area.
Where Are We Now?
Entering 2023, Yamhill County sat on the greatest amount of home supply seen since early 2020 when COVID first hit. As the last half of 2022 saw mortgage rates increase, inventory steadily grew due to less buyers committing to buying homes. You can see this in the below chart. While looking at this chart and its inventory also notice the purple line. Though 2023 inventory increased, it is still well below inventory held in 2018-2019. The housing inventory in 2018-2019 were considered more balanced markets for Buyers and Sellers.
A large portion of the reason the inventory grew, was that pending and closed home sales during this same period, fell to their lowest levels in 4 years. We finally were gaining inventory, but it was because the buyers had near disappeared when rates skyrocketed.
What are Experts Predicting Ahead?
Market experts are saying mortgage rates will likely stabilize below the high peak that we saw last year. That’s because mortgage rates tend to respond to inflation and early signs are showing inflation starting to cool. Just as we have seen rates do in January, if inflation continues to ease, rates may fall a bit more. Many experts believe rates will settle around the 5.5% window by late spring or early summer. Rates are anticipated to hold fairly steady the reminder of 2023. As buyers recognize the normalization of rates (still historically low), we will see them re-enter the market. Buyers will again start qualifying and more homes will go pending and begin closing again.
Should sellers in Yamhill County continue to be hesitant to enter the market, inventory could again fall. This could cause home prices to rise. If we do see sellers enter the market at a greater rate than the last few years, inventory could remain steady or even grow. This would allow us to move into a more balanced housing market. A balanced market will typically keep home prices remaining steady or growing at a slight few percentages points. (A standard balanced market sees home values increase 3-5% a year. This is unlike the last few years where home values grew by double digit percentages). A balanced market means it is easier for sellers to sell and buy at the same time. It allows more purchase options for buyers, less competition, and often, more equal negotiating between buyers and sellers.
Yamhill County in 2023
Yamhill County does not have a lot of land left to build on due to Oregon’s Urban Growth Boundary (UGB). Available land is currently under construction. Additional land approved in 2022 is in the beginning phases of re-zoning, platting and development. This will take 2-4 years before construction can begin. This keeps inventory tight in the county. Unlike other areas of the country where multiple home developments construct 1000’s of homes in a summer, or where there is land available to buy acreage and build a home, Yamhill County does not have this luxury. Most of the lush land surrounding us is protected from construction due to the soils and the viability of the parcels for agriculture.
Inventory and rates will determine our hyperlocal housing year. Inventory will be dependent on the sales of the subdivisions currently under construction that are actively selling fast and on the resales of homes as sellers decide to re-enter the market. Buyers wanting back in the market, are watching the rates. As rates fall and settle, buyers that got out of the market when rates jumped to near 7%, will re-enter the market. We are also starting to see the likes of the common pattern of a cyclable housing year. This is where the market picks up around spring, gets busy in summer, a small slow down the beginning of September, small uptick in October and then begins to slow the rest of fall and flattens around the holidays and into the new year.
The bottom Line…
Just as I asked in the beginning, what does this all mean to you? If you are planning on being in the market to buy, sell, or even thinking about doing both this year, now is the time to start preparing. Prepare your home for sale, talk with your lender and start talking with your agent (I’d love to be that person!) to create your game plan moving forward.