June 2013’s RMLS Market Action shows a slight cooling compared to May but still way ahead of May 2012. Inventory climbed to 2.9 months which is still an indicator of a seller’s market. Six months has traditionally been viewed as the neutral point between a sellers market and buyers market but I think in this “new” housing market we’ll see that number drop to somewhere between 4.5. to five months as buyers are going to be more willing to let deals die as the market settles in. Regardless, we don’t want to see an extended period of time in very low inventory numbers as it’s been proven that the market cannot sustain rapid run-ups.
That said, our team has been closing a record number of transactions in the last few months. These numbers exceed the month that the First Time Buyer Credit expired and any of the peak months of the 2005-2007 “crazy” market before the crash. We’re educating buyers that they need to put their best foot forward as it’s likely that they’ll be competing with other offers. Cash is king but their are lots of other terms that can cause the seller to accept financed offers or offers with preferable terms.
The average sales price in Portland Metro area is up over $300k for the first time in years at $302,700. That’s a 13.8% increase which is frightening. At that rate, we’ll be at $344,472 next year and $392,009 in 2015. That’s bad for a myriad of reasons. Hopefully the market will settle down to an appreciation rate of around five percent. That should be sustainable.
Interest rates are now a hot item in the news. Rates spiked which greatly reduces buyer’s buying power. In combination with rapidly increasing prices, we’ll see buyers priced out of the market which will reduce the buyer pool.