Winter Is Coming
January 27, 2013 13:38
For the past two years, we have been talking about future appreciation and affordability in Portland Real Estate. Affordability remains close to all-time highs because of low prices (due to the great recession) combined with low interest rates, but the term "future appreciation" has become "real appreciation".
In the Portland Metro Area, the median price in 2011 was $217,800, and in 2012 the median price went up to $243,300. That is an 11.7% price increase. The number of closed sales have going up too. In October of 2011, Portland REALTORS® closed 1474 sales and in October 2012 we closed 2103 sales. This is a 42.7% increase in turnover. Listings have been flat, so that means lower inventory. The inventory in the Portland Metro area is currently 3.8 months; this is the lowest inventory number since March of 2007.
The time on market for homes went down dramatically as well. In October 2011 the average days on Market was 136 and it 2012 that number was 102. That is a decrease of 33%.
It is a good thing that winter is coming, because our market is on the verge of overheating. I have had problems getting appraisals on a few recent sales. Appraisers are looking back up to 6 months for their comps, and in many cases the comps are 5 to 10% less than current values. What is an appraiser to do? They can’t really say, prices are up 10% over the past year, so this 6 month old comp should be adjusted up 5%. So appraisals are becoming a bridle on this wild market. Roughly half of the transactions that I have worked on in the past few months have had appraisal issues.
I expect prices to pull back a little bit this winter, but not nearly as much as past winters. The houses that are on the market are mostly left-overs from spring and summer. They are usually overpriced taking into consideration their condition. It is prime season for making low offers. The investors are keeping their powder dry… after all winter is coming.