May’s RMLS Market Action report was posted today. If it is any indicator to what our market is doing, it’s going up, not down. Seven tenths of a month of home inventory is the lowest it has ever been. What is inventory? It’s the ratio of active listings to closed homes: 150 active listings to 100 closed homes would be 1.5 months of inventory. Conventional “wisdom” says that six months is the balance between a seller/buyer market. Even if we reduce that to four months, we’re a long way off at .7 months!
Prices are going to drop. Maybe. Probably not anytime soon. Portland Metro appreciation over the last 12 month is 18.9%. I’m going to be the first one to say that this is concerning, I’d like to see closer to 6% but when (not if) the market slows it’s going to hit the brakes, not grind into reverse. Demand is way above supply and when the market starts to slow it might mean a home that would have had 10 offers will “only” get three or four. Caveat here for sellers: overprice your home and the market is unforgiving.
Interest rates are going to go up. Yes, they are. It’s reasonable to expect that we will see the best rates climb to over 4% by the end of the year. Those best rates are currently under 3% and every half percent they go up, buying power goes down by 5%. If your purchasing power was $500,000- now it’s $450,00. It is entirely possible that the $500,000 house you look at today will be worth $600k next year and your financed buying power will go down.
All the other metrics: new listings, pending sales, closed sales and time on market are all indicating an upwards trend, not decline. If you’d said a global pandemic and world shutdown would tank the market back in 2019, we all would have believed you but here we are. There’s something out there that could tank the market but it’s an outlier.
“But the housing market caused the 2008 recession.” Yes, it did. And it was the housing market that pulled the economy out of the 2020 lockdown recession. Gone are the “fog a mirror” and other loans that caused the economy to collapse. There is more equity in homes now than there was then.
“Okay, prices aren’t going to drop but how do I compete with multiple offers?” Fair question. And honestly, it depends on your situation. That said, we have 38 pending buyer transactions so we’re doing something right. We may not win on the first offer but we’re winning in the end. Contact us to see how we can help get you into a home. Connect with us on Instagram, Facebook, Linkedin, or via email.