RMLS Market Action for June 2011 was released just before happy hour on Friday afternoon. I’ve updated our graph of housing inventory levels in the Portland and local market areas and the trend continues that City inventory averages about a month less than Portland Metro as reported in Market Action. North Portland has just 4.2 months of inventory whereas West Portland is at 7.1 months. Metro reports in at 6.0, the lowest level since July 2007. Southeast Portland, which I wrote about last week, has 4.7 months of inventory. The average sales price in Southeast Portland is $218,600 compared to West Portland’s $408,500.
Market Action reports an average sales price of $267,000. That’s up from last month but down from $289,800 a year ago (down 7.8%). Last year at this time listing inventory was 1.3 months higher (7.3 months) than it is today.
What this means for the Portland housing market is hard to say. Interest rates remain low, lending rules are largely static and home prices are down around 2005 levels, if not 2004 levels. Home prices increased last summer but then declined through most of the fall, winter and spring. We have personally seen signs of market strength but our clients represent just a small portion of the overall market. The national budget (or lack of) and job strength (or lack of) in Portland remain concerning.
What I find interesting is the crack analysis of people like Wendy Culverwell over at the Portland Business Journal. She writes: “By most other measures, however, the residential market remained largely stalled in June.”
–She thinks a slowdown in the number of listings is a bad sign for the market…that doesn’t make sense. If twice as many people put their house on the market in June would the market be somehow better?
–She writes that “There were 1,958 closed sales in June, down 7.8 percent from a year ago but up 12.4 percent from May.” and puts that in a “bad market” explanation. She never seems to understand that last year was a fluke and that the tax-credit houses mostly closed in June. The May-June numbers are a good sign!
–She misstates that inventory is the lowest since July 2007. According to housing tracker. Inventory is currently 14,759 units, 21% lower than July 2007 when it was 18,710.
The press was so bad in 2006 and 2007 when they were reporting that the end would never come. They are just as bad or worse the other way now. The “business press” seems to be the least astute.
Why is lower inventory a bad thing? Let me tell you: My street is lined with owners who would love to sell, but when the market is full of a bunch of desperate short sellers, what’s an honest seller to do? Simply put, that lower inventory is a reflection of low prices. If prices suddenly went back to near peak pricing, I bet plenty of owners would be willing to sell. But seriously when you know the place wont sell for a good price, why list?
But beyond that, last year every Realtor I asked suggested that prices would go up by $8,000 after the expiration of the tax credit, and I asked many Realtors. The idea was that prices were going up, yet the tax credit would no longer be available. Prices have gone down by more than $8,000.
Now what’s happening? I’m getting told last year should be excluded from consideration, since everyone knew about tax credit. It seems this is a bit of ‘We always want to present the data such that it supports our view, no matter how much money you lose.’
The bottom line: Prices are down, so it should be no surprise that inventory is down. Sellers simply are not motivated to give things away for free.
Oh man… I just spoke with a Realtor who “expects a sharp increase in July sales, over last year.”
Yea, let’s ignore the tax credit until July, when sales dropped off the cliff.
I won’t be surprised when the reports show a big increase in year over year sales, but can we simply agree that’s rooted in the tax credit too?
I agree Wendy at the B-Journal is actually correct in her comment about “inventory” being the lowest since July 2007. Inventory is a ratio of the number of listings to the rate of sales and is measured in months- if no new listings were taken as of today, how long would they take to run out at the current rate of sales- that is the inventory amount.
I’m quoted in the B-Journal’s Forty Under 40 write-up saying our biggest challenge is, “keeping a positive but realistic attitude in the face of doom and gloom media coverage.” Blood and guts sells.
Tim, you’ve been reading long enough to know that I shy away from market predictions. Our team is five licensed agents of nearly 6000 in RMLS. What I do know is that our July 2011 is far and away better than our 2010. With only ten days left in the month Realtors have a very good idea of what is or isn’t going to close in the month.
It’s hard to pin anything to the Tax Credit as the market was (still is) so unstable. April 2010 was our best month ever but when you look at our individual clients only a small percentage were making use of the tax credit. That’s not what I expected.
I’d have to look to see if I was one of the Realtors that said prices would rise at expiration. Armchair quarterbacking now it is logical that prices would fall- buyers lost $8000 of their buying power when the credit went away.