Let’s talk inventory here. RMLS calculates inventory by talking the number of available listings at a fixed point and dividing by the current rate of closed sales: if there were 100 homes on the market and they are selling at a rate of ten a month, there is ten months of inventory. Inventory for March was 3.8 months.
Inventory spiked in January at 6.2 months and declined to 5.2 months in February. March’s 3.8 almost matches Jan. ’05 and July ’06 levels. Inventory bottomed out at in June ’05 and was under 2.0 between March ’05 and September ’05.
Looking back at the previous years, inventory drops through the spring, bottoms out in the summer and increases during the fall and winter months. Inventory is used a lot as an indicator of determining a buyers or seller market. It looks as though we spent the winter in more of a buyer’s market but may trend back towards (though not as extreme) seller’s market. Looking at the past to predict the future may not be the best investment strategy.
I tend to disagree with the seller’s market scenario for this analysis. March 2007’s inventory figure is almost twice as high as March 2006 (99% higher) , whereas the difference between March 2005 and March 2006 was only 11% higher. I’ll be very interested to see what April brings.
And how does these percentages take into consideration those houses pulled from the market for new RMLS numbers, those homes available “For Sale By Owner”, and those that are under foreclosure?
I tend to agree with JJ. In raw numbers inventory is up something like 70% over last year at this time.
JJ, you said: “And how does these percentages take into consideration those houses pulled from the market for new RMLS numbers”
How common is this practice? You seem to be implying that this is being done on purpose to make the numbers look better than they are? (I certainly wouldn’t be surprised to find that there’s a lot of “smoke and mirrors” to make things look better at this point). As far as the 3.8 months of inventory in March of 2007 goes: I’m very skeptical.
Again, regarding inventory and sales rates: The tightening of lending standards really got going in late February and they have only continued to get tighter as the MBS (mortgage backed securities) markets have continued to falter (as in, it’s getting more difficult to find buyers for these securities – BTW: this in itself could lead to higher interest rates as I understand it). Since sales of existing homes get recorded at escrow close and since it generally takes a month or two from the time an offer is made until escrow close it’s going to be interesting to see what the April/May sales look like.
We’re currently in what should be the peak selling season, so I would expect sales to be more brisk than they were in January/February, but a return to a seller’s market? Doubtful. I’m seeing way too many forsale signs out there.
Also, anyone got any figures on vacancy rates in PDX? Nationwide, the vacancy rate moved up to a recored 2.8% in Q1 07:
Like I said in the previous thread, I know there are two vacant houses on my little cul-de-sac (out of 10 houses). One vacant since sometime in January when the owner loaded up the U-Haul and moved out. No foresale signs, no for rent signs. Nobody there.
I wasn’t trying to insinuate anything by my earlier comment. Some sellers, particularly if they’ve been on the market for several months, will get a new RMLS number (most of the time with a lowered price). On the surface, it makes the listing look new. A good buyer’s agent will always look at the full history of a house and take that into consideration.
I don’t disagree with the practice, but I also don’t think that a house sold in three days after getting its 3rd RMLS number (aka on the market for 90 days) should be used as an example of a house sold in three days from listing. (Sorry that was a long one, wasn’t it!)
And yes, TIP, you brought up something that I missed. The other external factors are much different now in 2007 than in 2005, which will affect the marketplace significantly.
But having just had a bad experience with a disreputable selling agent, I won’t discount that, in this market, some agents might tell potential buyers that multiple offers are coming in when that’s not the case, just to boost offerings a bit. If I hadn’t seen it for myself, I wouldn’t have believed it!
I don’t disagree with the practice, but I also don’t think that a house sold in three days after getting its 3rd RMLS number (aka on the market for 90 days) should be used as an example of a house sold in three days from listing.
Certainly seems misleading to me. However, with all of the information available to buyers these days (Zillow will tell you the last time the house sold and for how much) it seems pretty easy for buyers to see through this.
Hey, here’s a possible way to return affordable housing to PDX:
They’ve got houses as small as 100 square feet. Imagine subdividing your backyard and putting a few of these in and then selling them for, say, $50K each. Or just rent’em out for additional income. Could work.
This is an interesting article from Motley Fool http://www.fool.com/investing/general/2007/05/01/lipstick-on-the-housing-pig.aspx which includes this NAR internal powerpoint acknowledging the housing slowdown far before it did publically: http://www.realtor.org/Research.nsf/files/Leadership%20Summit%20(August%202006).ppt/$FILE/Leadership%20Summit%20(August%202006).ppt
I really like this quote from the article Steve linked:
there are fewer and fewer suckers out there willing to pay two or three times equivalent rent to get in on “the American dream.” This isn’t a buyer’s market yet. Just wait until the crummy loans of the last couple of years reset in 2008. Then find a property you like, and make a bid at 20% less than list.
That’s exactly what I’m waiting for.
Up north in Seattle, the MLS reported the Stats for April which was published in the local paper.
And this blog is still dealing with partial stats for March.
Portland is a more progressive city then Seattle and yet in this one area it is far behind.