What is really going on with Portland Real Estate?
The real estate market is not moving in a clear direction, but there are a few trends that are noteworthy.
Depreciation is slowing down. The 12 month rolling average sale price in May 2011 was down 3.8%. This is less of a drop than the 8 to 10% annual loss of the past couple of years, and since January, the average sale price has been going up.
There are fewer homes on the market. There are currently less than 12,000 homes on the market, and this is nearly 2,000 less homes for sale than the average number over the past two years. Sellers have come to terms with the new pricing paradigm, and less of them are putting properties on the market. When comparing May 2011 with May 2010, there was a 4.1% drop in the number of new listings.
The number of pending sales has been rising steadily since January of 2011. From April to May of 2011, the number of pending sales jumped up 8.1%.
Due to the fact that there are fewer homes on the market, combined with the fact that â€œpending salesâ€ are rising, we are now experiencing relatively low inventory levels. Inventory levels currently stand at 6.8 months, and this is the lowest inventory number we have seen since October 2009, and the second lowest inventory number we have seen since the crash began in August of 2007.
Supply is down, pending sales are up, so it is logical to assume that the real estate market is moving up right? Well, not exactly. It is really hard to get a loan these days. Banks are cautious, and underwriters and appraisers are very strict. I have clients that have the cash to buy a home, but they prefer to get a loan for tax and investment purposes, and even they are having difficulties.
Buyers are picky, but sellers are pushing back. Four almost 4 years now, buyers have had the upper hand. They have been able to beat up sellers on price, concessions for closing costs and repairs. For the most part, sellers just had to sit there and take it. However, we are starting to see areas where sellers have the upper hand. I have been involved in a few transactions this year with multiple offers. Close in SE Portland and Close in NE Portland and certain segments of the condo market are HOT. In these HOT areas, inventory is extremely low and we are experiencing a micro sellers market.
Many Realtors talk about inventory of 5 or 6 months being equilibrium between a buyers market and a sellers market, and we are not far from that number. If inventory continues to drop, then there will be upward pressure on prices, and we have already seen evidence of this trend in a few neighborhoods.