Portland End-of-Summer 2017 Real Estate Market Update
"Nobody on the road, Nobody on the beach.
I feel it in the air, The summer's out of reach.
Empty lake, empty streets, The sun goes down alone.
I'm driving by your house, Don't know you're not home."
I know, it's only August! How dare I say "end-of-summer"???
The sad fact that I had to face when looking at market stats is that we have only 1 month left until it's officially fall. As I write this, I feel like Don Henley's "Boys of Summer" should be playing in the background.
And I have yet to do All The Things! You know, like fulfilling my dream of dining on every restaurant patio in Portland. Or seeing the Portland Japanese Garden expansion and renovation. Or, well, just going outside... more.
Hey, let's start talking about something cheerier than summer ending. Market statistics always makes me super happy, so here we go!
THE HOT TOPIC - INVENTORY HAS GONE UP!
The news that every active Realtor in Portland (including me) has been talking about incessantly is that inventory has officially risen.
I hear tales of awesome homes sitting for weeks with no offers, buyers finding great options and placing offers with no competition, and price drops even in super-hot neighborhoods.
Woah, that sounds like a big market change!Buyers everywhere rejoice!!!
Hang on, though... Call me a cynic, a realist, a skeptic, or whatever - I like to check the evidence before accepting anecdotes as the final word on real estate. Even when some of the anecdotes are from my own experiences.
*Inventory in Months is calculated by dividing the Active Residential Listings at the end of the month in question by the number of closed sales for that month. This includes proposed and under construction homes.
Source: RMLS
Looking at the Inventory in Months chart, we can't deny that inventory has definitely gone up. And by half a month, wow!
But, we can hardly call one month between June and July of increased inventory a trend. 2.1 months of inventory is not a balanced market (5-6 months is considered balanced).
What other data can we look at to help us figure out whether or not the market is really shifting?
As always, keep the following in mind:
All chart data in this post is supposed to be for the "Portland Metro Area". But, for whatever reason, RMLS considers Mt. Hood, Columbia County, and Yamhill County as part of the metro area. This tends to skew the numbers a little. Micro-markets are also a very real thing, so many metro neighborhoods and cities still have startlingly low inventory while others are much higher than the metro average.
HAS INVENTORY REALLY GONE UP?
Source: RMLS
Well, yes, which often happens this time of year (as you can see above). Is the increase significant, though?
Pending sales fell in July compared to June and also when compared to July of 2016 (see graph below). Less homes sold could mean more inventory, depending on how many new listings we're adding to the market.
New listings decreased compared to June and also when compared to July of 2016 (see graph below). Less new listings means less inventory.
So, these two factors somewhat offset each other. If you check out the chart above, you'll see that the net inventory amount is about the same as July of 2015 and only a little higher than 2016. (2015 was considered one of the hottest years ever until last year.)
Yes, we've had a bump in inventory, which almost always happens at this time of year. Yes, we have more inventory right now than the same time last year.
Is it statistically significant enough to indicate a shift in the market? Let's look at a few other factors.
ARE PRICES STILL RISING? SHORT ANSWER: YES
Source: RMLS
Check out the Average Sales Price this year compared to last year. And even the average in July of 2017 compared to June of 2017! As you can see, inventory around Portland is still plenty low enough to continue driving prices upward. Prices aren't a leading indicator, but if the market were significantly changing, we'd begin to see an impact to prices.
THE IMPORTANT STATISTIC EVERYONE IGNORES
Source: RMLS
Average days on market (DOM) fell by 5 days down to 33 in July compared to 38 in June. This tells us that buyers are still very actively looking for homes and there is still plenty of competition out there.
If inventory were significantly rising, enough to indicate a market shift, then days on market should rise, too.
WHAT'S IT ALL MEAN?
The hay has been rolled. The summer is ending. Winter is coming. (Sorry, I had to. Don't throw an ice spear at me.)
It could be that we're seeing leading indicators of a market shift... but it's just as likely that the "sudden" increase in inventory could be a one-month blip, or due to factors that are more seasonal than economic.
We had an insanely hot weather streak in mid-summer. Once the extreme heat died down, the eclipse (which just happened a few hours ago as I write this) impacted the plans of many potential buyers and sellers.
We'll continue to keep a "weather eye" (haha) on the stats, but I'd say that the hot Portland market is still going very strong.
Could it be that we are oh-so-slowly inching our way back to a more balanced market? Yes, this is possible. But, please, don't hold your breath. It could be awhile.
The current increase in inventory could be an excellent opportunity for buyers that have been frustrated over losing out to all cash offers and fierce competition. I've had good results lately in finding properties for buyers and getting under contract with little to no competition.
Successfully finding a home can hinge on choosing a Realtor that stays on top of the market and knows how best to advocate for you.
THINKING ABOUT BUYING OR SELLING?
Now might be the best opportunity for both! Contact me or fill out the form below so that we can get started.
