Summary: In the summer of 2012, the Portland metropolitan areas are experiencing a significant housing recovery. Ten months of improving sales numbers in tandem with much happy anecdotal confirmation, is a wave of relief for many weary sellers and an exciting green light for buyers wanting to make a great investment and catch the bottom of this historic market.
- The most significant improvement in the marketplace is the willingness and ability of buyers to purchase now. This 5 year log-jam of homes for sale with only a few buyers paralyzed the marketplace. Many sellers also wanted to become buyers, but they had to sell first. Now many sellers are also becoming buyers and the logs are flowing down river again.
- Portland and the close-in suburbs are experiencing the best of the recovery. It is a balanced market between sellers and buyers, perhaps on the verge of being a sellers’ market. The recovery is methodically radiating out to the rural counties.
- The low price ranges began to recover first but the upper price ranges are coming back strong.
- Low inventory at a time when buyers are willing to purchase is causing strong demand and multiple offers in a competitive environment.
- Several affordability indexes show we have the best buying opportunities since WWII.
What We Might Expect:
- The recovery will likely be uneven and unpredictable. This will be frustrating to sellers who do not yet feel experience it as a better market. Buyers who have to go up against multiple offers, above asking price, will also feel frustrated.
- Pricing is still king and buyers are still conservative and want to ‘buy right’. We do not yet see any price appreciation; right now we are grateful for price stability (stop the bleeding!).
- Caution: There are still a lot of distressed sellers who aggressively price their homes or ‘dump’ them in a panic. There are still a large number of short-sales available. Mortgage defaults are still high. This should reign in any upside market excesses.
There is still a large shadow inventory of foreclosed homes (bank-owned, REO) which will hit the markets over the next couple of years keeping downward pressure on pricing.
There are many sellers who want or need to sell but who gave up on the market. These sellers, when they have confidence that things will sell, may also flood the markets and push the inventory higher. This should also keep the markets balanced.
- The volume of sales, while the best in 5 years, is still below normal if we compare to a more normal market, for example the years of 2000-2004. We have a ways to go!
- Will something worse befall us? We were belted with the sub-prime mess in 2007, the financial sector meltdown in 2008, the constriction and crash of the business community in 2009, the out of control unemployment crisis since then, and we continue to wrestle with a sluggish economy which is the past few months has fallen back, not improved.
- Remember that real estate sales are still to some degree seasonal. We expect the numbers in the monthly reports to be at their peak in June or July and then to drop according to their normal cycle. Remember also that when we get to September, we will then begin to compare this year with the improving period which we track to September of 2011.
What Should I Do?
Be forewarned that if the trend continues, we are seeing the rapid melting of the ‘buyers’ market’. Do not be surprised at competitive forces vying for the best deals right now. Do not be surprised if the sellers do not negotiate price concessions as freely as in the past couple of years, or are as generous with repairs. The sellers may soon begin to feel their oats!
Everyone wants to buy at the bottom of the market and we, for the first time, have justification for believing the bottom is now. How long will it last???
- Supply and demand are beginning to work against buyers right now.
- Interest rates are tied to the long-term bond markets and when the economy is bad, investors flee to bonds and the demand causes the rates to drop; hence the historically low interest rates for mortgages. When the economy is good, investors fly to stocks and other investments and the rates of bonds must rise to attract investors back to buy bonds. Low interest rates will change when the economy gets back on strong footings.
- This is not the time to get cocky or to exact revenge on those savage buyers we have been dealing with. Stick to the fundamentals of selling. It is still about competitive pricing, and the attractive condition of the property.
- At the top of the market, there were hoards of people who thought they could ask for anything they wanted and ignore any buyer demands. They could have sold then if they were more temperate and prudent. These people lost everything when the market crashed. Do not squander the best hopes of selling now. The reality is that we do not know for sure that next year will be better; it could be worse. The goal is a fair market price for the current housing market.
- Be encouraged! We have the best odds of helping you move on this year than we have had in 5 years!
We are glad to provide this information and dialogue with you about your specific situation. We also are glad to be working hard, but finally making some money. We also have a long way to go to get back to normal but are glad to be journeying with you.
Best regards,Randy Randy McCreith, Principal Broker
Bella Casa Real Estate Group
Cell: 503-310-9147 Fax: 866-281-6653
Buy. Sell. Be Happy.