The question I hear most often right now is whether buyers and sellers should wait for better conditions. I get it, 7% mortgage rates feel painful compared to the 3% days. But here's what the latest market data tells me: waiting could cost you far more than those extra percentage points.

I just reviewed the numbers for the week ending July 11, 2023, and something jumped out at me. We're sitting at historically low inventory with steady buyer demand, and inflation just dropped to 3%. That combination sets up what I believe will be an absolute wild spring 2024 market, the kind of chaos we saw in 2021 when homes went $50,000 over asking with ten offers each.

Let me walk you through the current data, the inflation news that dropped this morning, and exactly why I think buying or selling now makes more sense than waiting for rates to drop.

Table of Contents

• Southern Oregon: Current Market Data and What It Means
• The Inflation Drop and What It Signals for Spring 2024
• Why Buyers Should Act Now Despite 7% Rates
• The Seller's Dilemma: Catch Appreciation Now or Wait for Chaos

Southern Oregon: Current Market Data and What It Means

As of July 12, 2023, we have 1,112 active listings across Jackson and Josephine Counties, that's for a population of about 300,000 people. To put that in perspective, we hit around 700 homes in early 2023 during our seasonal low point. Inventory typically peaks in August, then drops to its lowest point around January.

Last week brought 111 new listings to market, which is a nice bounce back from the prior week's 87. I think a lot of people held off during the 4th of July week, which also explains why we saw 161 price changes this week compared to just 82 the week before. Sellers are adjusting, but they're not panicking.

Here's what really matters: 101 homes went pending in the week ending July 11. The week before was 102. The week before that was 114, then 112. We've been sitting right in that 100-110 range for several weeks now, even going back into May. That consistency tells me buyer demand is stable despite mortgage rates bouncing around 7%.

We closed 74 transactions this week, down from 81 the prior week. But remember, closings reflect what happened four to six weeks ago when we had a week with only 90 pending sales. Some of those fell through, which explains the lower number.

What jumped out at me this week: of those 111 new listings, 17 are already pending . And of those 17, only 4 are above $500,000. That means 13 went pending under $500,000, primarily in the $300,000-$400,000 range. I've been tracking this for weeks, and it's been very consistent. Homes under $500,000 move fast if they're priced right and show well. Above that price point, things take a little more time, but I've seen plenty of those go very quickly too when they're dialed in.

The takeaway: buyers are still buying. The market hasn't frozen up. It's just selective.

The Inflation Drop and What It Signals for Spring 2024

This morning, July 12, the CPI inflation data came out. The year-over-year rate from June 2022 to June 2023 came in at 3% . Compare that to the prior year, June 2021 to June 2022, when inflation peaked at 9%. That 9% spike is what drove the Fed to jack up their rate, which pushed mortgage rates from 3% to 7%.

The Fed's target is 2%. We're at 3%. The end is in sight.

I don't have a crystal ball, but I would suspect we hit that 2% target sometime in the first part of 2024, maybe by January or February. When that happens, the Fed will start easing their rate, and mortgage rates will follow. I don't think we'll see 3% again, but I think we'll be somewhere in the 5% range by early 2024.

Now here's where it gets interesting. Inventory peaks in August, then drops to its lowest point in January. If we hit January or February 2024 with maybe 700 homes on the market, or even less, and mortgage rates drop to 5%, what happens?

You get a flood of buyers who've been sitting on the sidelines because they didn't want to pay 7%. But there's no additional inventory. When you increase demand without increasing supply, prices go up. That's basic economics.

I believe we're going to see home values absolutely skyrocket in spring 2024. If rates drop below 5%, it's going to be chaos. Even if they stay in the 5s, I think we're looking at something like 10% appreciation over the next year. We saw that exact scenario play out in 2021 when we had low inventory and low rates. Back then, we had around 300-350 homes on the market for 300,000 people. Every home had ten offers. Buyers were going $50,000 over asking. I had clients who just gave up because they kept getting outbid.

That could absolutely happen again.

Why Buyers Should Act Now Despite 7% Rates

Let's say you buy a $400,000 home right now at 7%. If home values go up 10% over the next year, which is totally doable based on what we saw in 2021, that's $40,000 in wealth creation . You're earning a 10% return on your money while paying a 7% mortgage rate. That math works.

Compare that to waiting. If you wait for rates to drop to 5%, you'll be competing with everyone else who had the same idea. You'll be looking at maybe 300 homes on the market instead of 1,112. You'll be writing offers $50,000 over asking. You'll be one of ten buyers on every property. And you'll miss out on that appreciation because you waited.

Here's the play: buy now at 7%, catch the appreciation boom I believe is coming, then refinance when rates drop to 5% or 5.5%. You get your cake and eat it too.

Now, everybody's situation is unique, so I'm not saying this applies to every single buyer. But in general, for most people I talk to, the timing makes a lot of sense to buy right now. If you want to talk through your specific situation, call or text me at  541-827-8767. We can walk through the numbers together.

The Seller's Dilemma: Catch Appreciation Now or Wait for Chaos

The seller side is a little more complex. You could wait and catch that 10% appreciation on your current home. Or you could sell now, buy your next home while there's still inventory to choose from, and catch that appreciation on the new place.

The problem with waiting is that you're going to be buying in a more competitive market. You're going to have less inventory. You're going to have a hard time finding a home. I don't know if you personally tried to buy back in 2021, but it was chaos. We had around 300 homes on the market for 300,000 people. Every single home had ten offers. They were going way above asking price. I had buyers who said, "You know what, this is just too crazy for us. We don't want to buy right now because we're getting outbid on everything."

That was the market. And it could definitely happen again.

If it were me, I would sell now because there's inventory to buy. I would find a place I like, catch that appreciation on the next home, then refinance when rates drop. That's the strategy that makes the most sense in my mind.

So to answer the question very directly: No, you should not wait to buy or sell in Southern Oregon. It makes a ton of sense to buy or sell right now because of what I expect to see over the next 12 months. I really think mortgage rates will come back down in the first part of 2024, maybe even before that. And I believe the spring season of 2024, which is historically the busiest time of year in real estate, is going to be an absolute wild seller's market where home values are through the roof and competition is happening and it's going to be crazy.

That's what I think is going to happen based on the data, conversations with other professionals, and what I'm seeing on the ground every week.