Trayse Riggle of Eagle Cap Realty shows a house on Tuesday, Nov. 16, 2021. Supply chain backups and low mortgage rates have played large roles in a red-hot seller’s market in 2021. {div id=”highlighter--hover-tools” style=”display: none;”} {/div}

LA GRANDE — The year 2021 has been unprecedented in many ways, including for those looking to buy a house.

Supply-chain issues and inflation have created challenges for people wanting to buy or build, while low mortgage interest rates have spurred a fast-moving, competitive market, driving up prices and making it a good time to sell. There is uncertainty across the board as to what is to come in 2022, and local real estate agents are hoping for a more mixed market.

Inventory at record lows

Across the nation, the total inventory of houses has reached record lows, with listed units flying off the market. In La Grande, Federal Reserve Economic Data showed that in June, houses stayed on the market for an average of 36.5 days. While that average was up to 53 days in October, the city still is in a seller’s market.

The COVID-19 pandemic, supply-chain disruptions and labor shortages are some of the factors local real estate agents see as impacts on the current housing market.

“I don’t know if it’s all necessarily from COVID, but inventory has definitely been more scarce. It’s been much harder for buyers in the last year, year-and-a-half.” said Anna Goodman, principal broker at Eagle Cap Realty in La Grande. “At some point it’s going to level out, but the supply shortage is playing a big role.”

Price hikes in lumber led to increases in housing prices earlier in the year, and there’s been a recent spike in the cost of other construction items, including concrete and paint. Lumber was nearly three times its typical price at the peak of the increase but during the past year prices have steadily fallen back to a more normal price point.

One major question looming over the housing market moving into 2022 is whether supply chain shortages will continue to impact homebuilders.

For John Howard, of John J. Howard & Associates Real Estate in La Grande, inflation rates are the biggest thing buyers should keep an eye on in the coming year.

“The inflation makes me a little nervous going into next year,” he said. “The cost of goods — and so many supplies are limited — could impact the market a bit.”

Labor shortages and inflation increases play a major role, but it is uncertain what the outlook is moving forward, with increases in inflation caused from supply-chain setbacks leading to increases in mortgage rates.

“If the interest gets up to four-and-a-half, pushing 5%, that’s going to put a damper on the market,” Howard said. “Hopefully the supply will be increased and that will ease the inflation.”

Increasing inflation and mortgage interest rates — the average interest on a 30-year fixed mortgage rate currently stands around 3% — could stem the flow of motivated buyers and bring down asking prices.

Heightened inflation rates have a large impact on the cost of average 30-year fixed mortgages, with the average interest on a 30-year fixed mortgage rate standing around 3%. A continued increase could play a big role in the future of the housing market, as heightened monthly payments could stem the flow of motivated buyers and bring down asking prices.

Buyers outnumber sellers

“It’s something that I haven’t quite wrapped my head around — the prices,” said Holly Walker, of RE/MAX in La Grande. “I would have never imagined when I started this business 26 years ago that I would see this level of interest.”

The high demand from buyers drove significant hikes in asking prices this year. Buyers have faced bidding wars and have often overpaid for listings over the past year, as they sought to take advantage of the low interest rates.

According to Federal Reserve Economic Data, the median listing price in La Grande reached an all-time high of $385,000 in May. From December 2020 to February 2021, the median listing price in La Grande jumped from $232,450 to $339,000. That median price has leveled out since, coming in at $285,000 in October. Across the country, the median price of a new house sold increased from $344,400 in September 2020 to $408,800 in September 2021.

“During the summer and spring there was a lot of competitiveness for properties,” Howard said. “Some people paid over value, but they just wanted that particular house and were willing to go over and above other buyers.”

Walker, Howard and Goodman all noted the competitive nature of the housing market has been noticeable locally during the last year, with the ratio of buyers to sellers at times resulting in bidding wars. Howard noted that this could cool off a bit in the coming year, which has started to take form this fall.

“That part is starting to pull back. Some buyers are not wanting to be so competitive. I’m noticing more of a pull back on that,” Howard said.

Shortage of houses is nothing new in La Grande

With inventory across the country at a significant low point, La Grande is already accustomed to a shortage of housing. The city and its planning commission continue to address the shortage of affordable housing in La Grande. A housing needs analysis in 2019 found that single-family homes are the biggest need in the area — that was before pandemic-related issues took the scene.

“I think it’s a lot to do with the housing shortage,” Walker said. “People are moving from different locations thinking the grass is greener on the other side.”

Howard noted outsiders moving in have an impact on the amount of home buyers in the area. He stated that new residents come to Union County for a variety of reasons, including retirement or wanting out of a larger city.

“We’ve noticed a lot of people that have been moving to rural areas,” he said. “We get people moving into our area from all across the states.”

Howard also noted Grande Ronde Hospital’s reputation as a high-quality hospital in the area is attractive to an older population who might move to the area to retire.

Walker said the housing market in Eastern Oregon typically slows down during hunting season as well, a feature unique to many other areas of the state: “It’s been a yearly trend, we see things slow down when hunting and archery season starts. But then we get another boom right before school starts, when people want to get their kids relocated.”

La Grande’s rental market is another aspect of the local real estate scene. The presence of Eastern Oregon University students in La Grande affects the market, with many students typically keeping rentals from year to year. Fewer rental properties available can lead to more potential home buyers.

COVID-19 plays a role

In addition to its impact on labor, supplies and interest rates, the pandemic itself has played a role in housing.

“In my personal opinion, I don’t think COVID has slowed the market down. It has, however, changed some of our rules,” Walker said.

Walker said the process in which potential buyers are vetted before visiting a listing has changed, and safety precautions due to the virus are now part of the home-buying process. Interested buyers must be bank qualified or have a letter in hand proving they can buy the house before visiting the property. Real estate agents also have a stricter sanitary routine when showing houses to prospective buyers.

COVID-19 also has impacted living situations, whether it be the ability to work from home or having to relocate because of an occupation.

“People’s lives changed,” Walker said. “With COVID we are seeing some people relocating because of their job situation. With the requirement for the vaccine, health care workers are walking away. Even here.”

Walker stated she has seen one house sold for that reason in the area.

While no one can predict the future, the distribution of vaccinations provides a light of hope for coming out of the pandemic as a whole. A lessened burden on workers and supply chains could show dividends to the housing market.

Howard noted that with added construction in the area and coming off such a seller’s market this year, the outlook for 2022 is promising.