Market Update - Turning A New Leaf
Anyone paying attention to the Portland real estate market knows that there has been a shift in the last few months. While our spring season was pretty out of control with low inventory, multiple offers, and sold prices shooting through the roof, things cooled down rather quickly this summer. It felt as though buyers were fed up with the extreme sellers’ market, and they just finally gave up. This wasn’t just the trend in Portland, but nationally as well. Sales slowed down, inventory jumped, and we started seeing less multiple offers. When we did encounter multiple offers there weren’t as many competing offers and the sold prices weren’t as much over the asking price as the ones we had seen in the spring.
Does that mean the market is crashing?? No, I don’t think so. We seem to be headed into a market that will be evening out for buyers and sellers, but it’s still a strong sellers’ market right now. In August 38% of homes still went for over the list price, including some that went as much as 44.7% over. While sales are slowing down there were still over 2500 homes sold in the Portland area in October. That’s only .9% less than a year before. When our market declined in 2007/2008 we saw a decrease of 33% in sales from Jan 2007 to Jan 2008. We’re a long way from hitting those numbers.
The biggest constraint on our market right now is INVENTORY. We simply do not have enough homes to sell, so buyers continue to have to pay a premium for them and the prices trend upwards. We had 2.3 months of inventory in September (meaning it would only take 2.3 months to sell all the inventory on the market if no new inventory appeared and the rate of sales stayed the same) which is the highest we’ve seen since February of 2015.
Here’s some perspective on the inventory numbers. The very lowest inventory I’ve seen in Portland since I started in real estate 18 years ago was in December 2015 when we only had 1.2 months of inventory. The highest inventory I’ve seen was in January 2009 when there was a whopping 19.2 months of inventory. That was an extreme buyers market. We’ve come a long way since then! Inventory has mostly been under 2 months since 2014, and during that time the market has heavily favored sellers.
If the inventory grows over the winter months, as it usually does, it may mean less of a feeding frenzy come Spring 2018. However, until we get closer to 4-5 months of inventory, we’re still going to be in a seller-favored market.
Over the last year we have seen Portland area appreciation at about 9%. That’s great for existing home owners, but our year over year increase have really strained those trying to get into the market, or those trying to move up. We suspect that with the slowing in sales, the rate of appreciation will also slow. It’s hard to pinpoint what’s a”healthy” amount of inflation. Since the 1960’s the average appreciation on U.S. homes has been around 6%/year . However, you have to take into account that much of the increase in prices also has to do with the increase in the average house size. Whatever the averages are, I think that most people would agree that 6% appreciation on their home is something to be proud of. Anything above that is just gravy.
Carrie Richardson | Managing Principal Broker