As we enter 2024, there are couple main themes from 2023 that Grants Pass must grapple with – not enough homes and high interest rates. This shortage has various roots (including lack of new construction) and far-reaching implications, particularly when paired with the impact of the “locked-in” effect.
Decreasing Inventory
As of today, there are 170 active single-family properties on the market in Grants Pass. This number, although typically lower in January due to weather (who wants to move during all this rain?!), is near an all-time low. This decline is partly attributed to insufficient new construction, as builders have struggled to keep pace with the demand for new homes.
For reference, in 2023, the city of Grants Pass only had 107 new unit permits (includes ADUs and Multi-Family) which is the lowest number in the last 5 years. Builders are really struggling with costs, and are also impacted by higher interest rates, making it harder for buyers to move up, or even downsize.
The Locked-In Effect
According to Redfin, 89% of people with mortgages have an interest rate below 6%, which has “handcuffed” or “locked-in” many current homeowners. In 2023, mortgage rates peaked just above 8% and even though rates have come down to roughly 6.75%, homeowners are still hesitant to sell their properties, preferring to keep their current, lower-rate mortgages.
The average homeowner may have $274,00 in equity, but even if you take all your equity, it may not make sense for you to sell and buy as your monthly mortgage payment may shoot up! This is really an individual case-by-case scenario, and it is something you may want to talk to a mortgage professional about.
This reluctance to sell reduces the already low supply of homes, creating a vicious cycle that exacerbates the low inventory, which is ultimately keeping home prices higher. For reference, the median sold price in GP in December of 2023 was $419,000 up from $288,500 in December of 2019.
Looking Forward
What does 2024 hold? The FED has signaled 3 interest rate cuts this year, which will help bring rates down, but will it be fast enough to impact inventory? That remains unclear. In Grants Pass, we are seeing monthly rents cooling and rental availability increasing. Will this be the answer for GP residents in 2024, or will we magically see an explosion of new and existing home inventory that brings down prices?
Travis Moddison is a real estate broker and co-owner of Whole Heart Realty, a brokerage dedicated to serving Grants Pass with professionalism and value. He also runs a YouTube channel providing information on Oregon, and updates on news/events impacting Oregonians. In addition to real estate, Travis is an active musician with the Rogue Valley Symphony and raises ducks as a hobby. He loves to have evening jam sessions with his wife Alyssa, and three sons – Gabriel, Wynston, and Stephen.
