February Monthly Market Check In- Are we looking at Stagflation?
February 14, 2025
Winter seems to be moving through quickly and Spring is right around the corner! It’s almost March already!
All Real Estate is local. Here is a snapshot of our current local market and the trends to pay attention to.
| Current Active Listings (All Types) | 2589 | Up 4.5% from last month & up 14.5% from this time last year |
| Current Pending Listings | 816 | Up 18% from last month & down 3% from this time last year |
| Sold Listings Last Month | 509 | Down 22% from last month & down 3% from this time last year |
| New Listings Last Month | 1000 | Up 86% from last month & up 23% from this time last year |
| Months of Inventory | 3.74 | Up 4% from last month & up 12% from this time last year |
| % List to Sold Ratio | 97.98% | Down .2% from last month & down 1% from this time last year |
| Absorption Rate *Based on current active listings vs sold listings for the past month | 20%* | Down 23% from last month & down 13% from this time last year |
| Average Sales Price in All Categories | $468,000 | Down .6% from last month & up .2% from this time last year |
| Median Residential Sales Price Average Residential Sales Price **Based on Willamette Valley Multiple Listing Statistics | $464,000** $504,531** | Up 3% from last month & up 6.6% from this time last year. Up .6% from last month & up 1.8% from this time last year |
| Average Owner Occupied Interest Rates ***Based on Freddiemac.com Statistics of 30 year fixed mortgage | 6.89%*** | Down .5% from last month & up 4% from this time last year |
| Consumer Price Index (CPI) **** Core items-FED’s Goal is 2% | 3.3%**** | Up 3% from last month & even from this time last year |
+Some numbers are rounded
January proved to have a decent influx of new listings hitting the market. The Months of Inventory increased from 3.60 to 3.74 with 1000 new listings. That is almost double the amount of new listings in December and almost 200 more listings from January 2024. Although this is a good sign, we need around 5-6 months of inventory to have a more balanced market for buyers and sellers. Less than 5 months encourages prices to increase, and more than 6 months encourages prices to decrease.
We have also experienced increased Real Estate activity with people inquiring about purchasing in the beginning of 2025 compared to the past couple of years, which has been encouraging; however some people are experiencing growing concerns for higher interest rates as inflation continues to be a problem. We believe most people are coming to the realization that mortgage rates will continue to be stubborn as well, and home prices will continue to rise. Although one month of data is not enough to get a good assessment, January’s average sales price increased to $504,531 in our area. It’s really unfortunate when we witness everything around us increasing in price at staggering levels. We’ll see how the trade and tariff wars go as the politicians like to talk about beer, avocados and eggs; but housing is one of the most expensive transactions people will ever experience. Remember that Real Estate ownership is one of the best ways to hedge against inflation.
Paramount Real Estate will be actively lobbying the state legislature next month when we meet with our legislators regarding a number of Real Estate related bills and topics that they are considering. We will always fight for homeownership and the reduction of the regulations and fees to help our community members accomplish their homeownership goals. The two main causes of inflation are government spending and regulation.
The issues that our government can help with could be…
- Deregulation. For instance, the Green Building Initiatives have increased costs dramatically. Energy efficient system costs have increased dramatically. The city municipalities require developers and builders to create expensively major systems to divert water into the storm drains in the effort to filter the water before draining into the watersheds. In the effort to save the environment, costs for Real Estate have increased exponentially.
- Giving even more flexibility with city and county municipalities to expand the Urban Growth Boundary. Land is becoming increasingly hard to find to build and develop. We need more supply options.
- City and county governments decreasing System & Development Charges (SDCs). These costs have become so outrageous that builders and developers must speculatively invest millions of dollars to plan for development. One lot can cost anywhere around $100,000 just to develop into a buildable lot. A builder adds on $25,000 of SDCs on top of that and has to price to make a profit. The city of Independence recently added an additional $21,000 on top of their current fees for builders to build, which makes their SDCs around $54,000 to build a house. These costs are always passed on to the consumers.
- Speeding up the processes for permits. The current systems in place with the city, county and state governments are so slow and archaic. People working these jobs do not have the capacity to process quickly enough to deal with all of the policies they have in place.
- Encouraging homeownership instead of encouraging investors & landlords to develop “housing”. Adding more apartment complexes usually makes the rich richer and does nothing to help encourage people to own their own homes. More lending & tax incentives and credits could be on the table for discussion.
We will do everything we can to influence our elected officials that create policies that impact homeownership and the rights of our free republic.
The February CPI Report came out on Wednesday showing that inflation rose .5% for January for all items and Core inflation rose .4%; both higher than expected. This comes off a decrease in inflation numbers around the holidays. Stagflation is defined as the combination of high inflation, stagnant economic growth and elevated unemployment. One could ask, who decides what is “high”, or “stagnant”, or “elevated”. It seems it can be in the eye of the beholder. One thing we can document is that interest rates have been elevated recently, however they are still below the historical average. Our economic growth (GDP) seems to be struggling to rise recently as it ended at 2.9% for 2024. Does that appear to be “stagnant” to you? The media will tell you what you should believe, but we encourage everyone to make their own informed decisions.
Now, how about those unemployment numbers? The latest report for January states that 143,000 non farm jobs were created. The unemployment rate dropped to 4% according to the Bureau of Labor and Statistics. Can these numbers be trusted? Remember the government had to readjust their reported numbers in 2024 to reflect over 800,000 jobs that were not created in 2023 through the first quarter of 2024.
This year is building up to be very interesting. There is so much information regarding so many topics coming at warp speed, and it can be exhausting. If you would like us to help you unpack the Real Estate market, we would be happy to sit down with you to give you our assessment of how it might impact you.
Have a wonderful weekend & Happy Valentine’s Day!