The numbers are in for December and we can now look back at last month and also at the year and see what we can glean for the coming year.
December 2010 Highlights:
We ended the year on a positive note after 6 months of really bad news!
- Pending sales (accepted offers) in December went up 6% compared to last December and were at the highest level since June of this year (recovery from the year’s lows).
- Closed sales were up 14.3% over the previous month so December was relatively good for both pendings and closed sales.
- Anecdotally, December was the best month we had since the end of the tax credit which expired April 30th. Most of those closings took place by the end of June. The months of June through November were some of the worst months we have ever known for activity and also for sales. We call it the ‘Famine of 2010’.
Not all the news was good…
- Pending sales in December dropped 15.2% compared with November which may mean that December was a one month surge and the offers did not continue in the last month of the year. It also could just mean that the traditional low point in sales because of the holidays was true to form.
- As good as December was, it was still 2.9% less than in December of 2009 meaning that we came up a lot but from a deep hole and not enough to match even 2009 levels.
- Overall, 2010 was not as good as 2009. In 2009 we were recovering from the financial collapse at the end of 2008. We stalled in 2010. Pending sales for the year were down 2.1% and closed sales were down .2%. For the greater Portland area, sales volume was down $200,000,000 to a level we have not seen since 2001. The average sales price was down 2.7% and median sales price down 2.9%. Prices on average are what they were in early 2005.
To summarize, in 2010 we did not continue to recover, we stalled and fell back some. We started the year well with sales increasing and the chart sloping upward, but fell off a cliff when the tax credit ended at the end of April. The charts on page 4 tell the story quickly – pending sales crashed immediately and two months later closed sales followed suit. The numbers for the next 6 months were in most cases lower than during the financial crisis of the fall of 2008. For the last half of 2010 all price levels were affected meaning that even starter and low priced homes did not sell. My final opinion on the tax credit is, as I suspected in October, that the industry gained no benefit from it and all it did was move first time buyers to a different part of the calendar. It is reported that for every $8,000 credit given, the tax payer paid out $30,000, and we will be cleaning up the corruption and abuse for a decade. However well-intended, it has to be declared a failure and a waste of time and effort.
Sellers cannot seem to buy a showing. Prices have dropped precipitously for two years now. Discouragement is rampant and frustration and fear is increasing. The few buyers seem to be sitting on the sidelines waiting for prices to drop more and interest rates to go to zero. When they do venture out and make an offer, they are brutal and demanding, even coercive. Inspections give new opportunities to lower the net to the seller, and appraisers, under a great chilling effect, are almost impossible to deal with.
Wish you had not read this? There is more to the story and I want to address these issues in a few more reports to you as we start a new year. Remember, we ended the year on a high note and the activity in January seems to be strong. I hoped to have share this with you two weeks ago but sales activity has kept me running day and night. So take this analysis as a look back and wait for the “look ahead” to come soon.
Randy McCreith, Principal Broker
Bella Casa Real Estate Group
207 NE 19th Street, Suite 100
McMinnville OR 97128