martinoutdoorproperties.com
Looking Back at 2023 MARKET UPDATE
MOPG - 2023 Year in review
06 Market Update
01
Table of Contents
10 Residential Statistics
12 Farm and Land Statistics
Wow, 2023 has been a wild ride for our team! It has been filled with both celebrations and learning opportunities which resulted in substantial personal and professional growth for each team member here at MOPG. The word that resonates with our team right now is genuine gratitude. We are grateful for so many things in life. Specifically, we are grateful to our families for all their support and for putting up with the long hours that hit with regularity in 2023. We are grateful to our clients who trusted us with their real estate endeavors this year and graciously dealt with rapidly rising interest rates, low inventory levels, and erratic purchasing trends. We are grateful for our partners and vendors who enable us to provide a high-quality service throughout the buying and selling process. A big thank you to everyone else who positively impacted us and our business in 2023. On the business side, in a market that experienced roughly a 25% decline in transactions from 2022 to 2023, we were able to grow our team’s production by 20% this year with the same number of brokers. This growth was not without its challenges, as we coined the phrase “200% effort for a 50% return…welcome to 2023…” Even with the new demands of the market, the whole team truly embraced the reality of the new workload and did an amazing job! Possibly the most significant revelation that came from 2023 has been the importance of relationships. From our own families to our teammates, clients and colleagues, this world would be so devoid of purpose without the people that we are blessed to do life with. It is important to note that 2023 was not 2021. We are now two years removed from the peak of demand experienced in the real estate market during 2021, however conditions can still be characterized by low inventory and relatively strong buyer demand for homes (but that demand does not extend to all segments of the market). Although overall pricing has dropped from the peak of the market, it is still significantly higher than the pre-covid levels of 2019. Looking forward, it is increasingly difficult to forecast the current market trajectory as the rapid rise in interest rates only caused a marginal decline in pricing relative to the increase in the cost of financing. Most of the upward pressure that is keeping pricing up has been attributed to the overall lack of inventory and a general lack of housing. While there are many more factors that are impacting the real estate market, one thing is for sure: 2024 will be a very interesting year and could be the most critical year since the crash of 2008 to help determine the direction of the next 5 years. Early signs are positive with interest rates beginning to trend a little lower and the Fed announcing additional rate decreases on the horizon.
01 Year-In-Review Letter
Our team grew way closer as a unit over the past year, to the point it feels like a big ol’ family. A common theme amongst the team’s reflections over the past year has been that resounding gratitude for who is on the team. There were major personal wins for the team throughout 2023 as many personal and family goals were met, including travel, hunting trips, and great family time for all.
03
02
Ashley: Ashley surprised all of us with her awesome news that she and Mike are expecting their first baby boy (and third child) in early 2024! We will miss her as she takes a few months off for maternity leave, but as a group we could not be happier for her and her family and it is an honor for us to help during this well-deserved time away. We also have no doubt that Ashley will come back with an incredible amount of fresh drive and vision that will probably cause us to revamp half of our current systems (hahaha), but it's that drive and ability to innovate that made her a senior partner early in her real estate career.
Alex: Alex and his family moved into their new rural home this year and are now in the middle of a long list of fun projects, including a full kitchen remodel right before Thanksgiving. As a family, when not knee-deep in projects, they got to enjoy a boatload of camping trips and other adventures throughout the year. Alex is also now entrenched as a senior partner and has earned even more respect from our team. His steady and always positive demeanor, powerful work ethic and leadership skills have positively impacted MOPG at many levels. Shannon: Shannon Wester was honored to become Shannon Forrest in September of this year. We are so happy for her and Joey as they enter into this new and exciting chapter of their lives. Shannon continues to coach CrossFit (torturing poor people on a daily basis) and enjoys every opportunity to get into the outdoors. We are super proud of her as she enters year three of her real estate career. Her diligence, attention to detail, and follow-through are serving her very well as she grows her business.
04
05
Jordan: Jordan, our listing coordinator, has literally been our saving grace in the office this year as she, day in and day out, gets more done than any normal person could and she does it without complaining and is always filled with kindness and with great professionalism. We would not know what to do without her! Chris: Chris really enjoyed watching everyone grow this year, even more than any of his own successes. The team has grown so much personally and professionally, He is proud to be a part of this group. Personally, he and Juliana have continued to revamp their own health journey, focusing on learning and being consistent with healthy eating, physical conditioning, and managing stress. The confirmation of how much of an impact this has had on his life came this hunting season when Chris got to go to Alaska and Idaho for back-country hunting trips. The trips were challenging, hard, fun, cold, tiring, physically demanding, successful, and just amazing experiences.
Sam: Sam had his best professional year to date, but that was overshadowed by getting married to Erica this last October. Sam and Erica continue to enjoy all that Central Oregon has to offer, including hunting, fishing, hiking, camping, and much more! Professionally, Sam has found his niche in Central Oregon and we look forward to watching his business continue to grow. Sam has a genuine passion for people and works tirelessly on every aspect of his business. Evan: Evan has been “mister consistent” over the last few years in NE Oregon. He and his wife enjoy balancing their family ranch business with real estate, and he says the ranch gives him a great perspective on evaluating properties and helping understand the needs of ranch buyers and sellers. Personally, Evan and Cassie enjoy finding a balance between outdoor adventures and ranch-stay-cations. We look forward to watching Evan’s business continue to grow.
Residential Real Estate Market (Josephine and Jackson County, ALL price ranges)
Average Monthly Inventory Level
Average Number of Sales Per Month
Average Inventory Level in Months
2023
967
293
3.3
2022
957
394
2.4
2021
573
448
1.3
2020
694
434
1.6
2019
1545
437
3.5
Median Sale Price
$410,000.00
$424,500.00
$395,000.00
$339,000.00
$305,000.00
YELLOW represents the peak of market
2023 - A Tale of Interest Rates & Inventory
Rate (average)
Payment*
Notes
Today (1/6/2024)
6.75%
$2,594.00
Today's payment represents a 54.87% increase from 2021's average
6.81%
$2,610.00
Rates Maxed Out at 8% in 2023
5.34%
$2,231.00
April 2022 Marked Beginning of Rise
2.96%
$1,678.00
Rates Bottomed Out at Around 2.5%
3.10%
$1,708.00
3.94%
$1,896.00
07
Let us introduce “inventory" - The pre-covid average monthly inventory level was around 1,500 residential homes “available” at any given time. During covid we experienced a trifold market anomaly where we say unprecedented demand for housing due to three things: First, the lockdown, people across the country were locked down in their homes, which created the “need” for more room, more freedom, etc. Second was the cost of financing hit all-time lows with rates below 3% for much of the time. Lastly was scarcity, generally speaking as demand rises, prices rise and more sellers come to the market to capitalize on the opportunity, and it balances out. However that did not happen during covid. Many people did not want to sell because of safety concerns or felt they would not be able to find a suitable replacement with the intense competition between buyers. As a result, the average monthly inventory dwindled to a mere 573 homes in 2021, marking a substantial 63% decrease in available properties. Simultaneously, property prices experienced a 39% increase within a span of just three years.
So here is the big conundrum facing anyone who looks at the real estate market today. With a 54.87% increase in the cost of buying a home (increase in cost of financing) how have prices only come down 3.50%? This seems perplexing and counter-intuitive. What is going on?
9
06
* Approximate Principle and Interest Payment based on $400,000 loan amount, 30 year fixed rate. Rate Source: https://themortgagereports.com/61853/30-year-mortgage-rates-chart#average
Includes all residential, land and farm sales located in Josephine and Jackson Counties as reported in SOMLS Database as of January 10th, 2023.
Number of Units Sold
5,605
5,731
5,982
$299,000
$326,447
$380,000
Median Price Per Square Foot
$190
$203
$243
Median List to Sale Price
99.00%
100%
Median Days on Market
34
18
8
% Change from Peak of Market
5,108
3,846
-35.7%
$414,945
$399,900
-3.6%
$260
$258
-0.8%
99%
-1.0%
17
29
262.5%
Looking forward, what is the biggest risk to real estate pricing? Rising inventory. With interest rates seeming to have leveled out and even beginning to ease slightly, buyer demand should remain relatively steady and could possibly increase a moderate amount during 2024. The question is, as more properties list in 2024, will buyer demand keep pace? If inventory outpaces demand, one should watch for this to potentially impact pricing. The preceding paragraphs addressed the general real estate market, meaning the residential housing market. Other segments of the market have been impacted differently by the recent economic changes, especially by interest rates. The market for commercial income property as has seen a very noticeable decline. While some sectors of the land market have remained steady in the last two years, other sectors have received significant downward pressure. Give us a call if you have questions about the commercial or land markets, and we would be glad to discuss this in further detail. The following pages have additional statistics for your review, breaking down different segments of the market.
Big Picture Market
08
The lack of available inventory fueled the spike in pricing but now is also the key factor in the resilience of pricing amidst the rise in interest rates. Today, we are still 37.5% below pre-covid average inventory levels, and this is compounded by the fact that the overall quality of the current inventory is also below average (how is quality defined? Call us and we will be happy to discuss). Lower inventory levels are the number one reason that pricing has remained relatively stable. Now, the 3.5% decline in the housing market is a little bit misleading at face value and does need some additional unpacking. There are two major things to note: inflation and time. Inflation is something that has been in the headlines for two years. We experienced historically high inflation over the last two years, and this also has to be accounted for because, historically, real estate prices outperformed inflation. However, over the last two years, we have seen a 3.5% decline in the residential real estate market while at the same time experiencing inflation that peaked out at 9.1% in 2022. It is crucial to account for this discrepancy, with average inflation rates standing at 8% in 2022 and 4% in 2023, coinciding with a downturn in the real estate market. Time is also very important to recognize because we have not yet seen the full impact of interest rates and general economic conditions. We will not know the full effect definitively until we see pricing begin to increase consistently. In other words, today we are only part way through the story of how rates and economic conditions will unilaterally impact the real estate market. The elephant in the room that no one is talking about… While the prevailing news narrative on real estate predominantly centers around three key themes—interest rates, housing prices, and the housing shortage: It is very noteworthy right now to look at the total number of houses actually selling. The average number of homes sold in our market pre-covid was 437. During 2021, it only increased to 448 (though it would have been more if more inventory existed), but in 2023 sales dropped to a monthly average of 293 which represents a 34.5% decrease. This further adds to the conundrum discussed earlier about rates and pricing, and speaks to another anomaly that we are experiencing today as both buyer and seller demand has decreased at more or less the same rate. In other words, a similar number of buyers and sellers dropped out of the market at relatively the same time, and it produced a fairly balanced demand picture which has been the critical piece that has allowed pricing to hold steady despite the overall drop in units sold.
09
638
855
1,333
$598,750
$599,000
$618,271
$231
$237
$265
98.10%
68
32
10
1,455
977
-32.9%
$610,000
$630,000
NA
$278
$280
99.68%
98.62%
-1.4%
19
35
250.0%
Includes all residential sales located in Josephine and Jackson Counties as reported in SOMLS Database as of January 8th, 2023.
2023 Market Statistics
4,553
4,273
3,930
$288,437
$315,000
$354,900
Median Price Per Square Foot Footf
$186
$199
99.28%
24
13
6
3,187
2,428
-46.7%
$374,000
$365,000
-2.4%
$253
$249
-1.6%
99.12%
-0.9%
22
266.7%
50
85
153
$1,200,000
$1,130,000
1,260,000
$300
$303
$345
93.91%
95.60%
145
107
27
142
104
-32.0%
$1,225,000
$1,192,200
-5.4%
$348
$327
-6.0%
95.70%
95.44%
-2.7%
49.5
39.5
46.3%
Includes all residential sales located in Josephine and Jackson Counties as reported in SOMLS Database as of January 10th, 2023.
Housing Market $1,000,000 + (Luxury)
Housing Market Under $500,000
11
Housing Market $500,000 - $1,000,000
Farm and Land Market Under $1,000,000
Includes all land and farm sales located in Josephine and Jackson Counties as reported in SOMLS Database as of January 8th, 2023.
12
Farm and Land Market $1,000,000 plus
342
511
583
$125,000
$140,000
93.59%
93.94%
95.69%
116
119
53
360
323
-44.6%
$155,000
0.0%
94.46%
94.44%
-1.3%
75.5
95
79.2%
23
$1,500,000
$1,350,000
92.50%
92%
92.63%
98
154.5
97
16
-47.8%
$1,600,000
94.00%
-0.5%
20
240.5
1102.5%