Clients and Friends,
The August sales in this report show the closings for transactions that were mostly initiated in June (a few in May; very few in July) at the peak of the year’s sales, and at an escalating time of the year. These numbers are not impressive (in spite of the nonsense real estate commercials you hear on the radio). They are not bad numbers, but they are numbers that have changed dramatically in the past year and a half.
The former high water mark for our real estate markets was 2007. The bottom of the market in the Portland metroplex was mid-year, 2012. There was an impressive surge in sales and pricing beginning in Portland at that time until last year. In 2016, the surge moderated and the numbers leveled-out but still were mostly positive. This year the numbers are mostly down or flat. The recovery surge is clearly over! A big part of this is that the new construction industry has been rapidly filling demand everywhere for 4 years now with many thousands of homes.
Our numbers are not bad, and pricing is still steadily (but not rapidly) moving up. The volume of sales is perhaps back to a ‘normal pace’. Normal is also a more balanced market between the interests of buyers and sellers. The pent-up demand to move, after being locked-in during the ‘dark years’, is now satisfied – everyone who wanted to move has moved (motivated to sell and buy or be priced out of the market!).
The explosive migration into the Portland area which we simultaneously experienced with the housing recovery may also be waning for a number of reasons:
- We have had two years of bizarre and extreme weather which I expect made many people re-think their decision about living here! After 36 years here, even I had some dreams of sunny dry winters and cooler summers (but still? I am heartily committed to this area with 10 grandchildren!).
- The streets and the highways are packed full almost any time of day or night now. Even in our rural Yamhill County the traffic is oppressive. I grew up in Southern California and remember that traffic was a major reason people moved elsewhere.
So we are in a different market now; a balanced marketplace. What should we expect?
- Sales will get more competitive; buyers more aggressive and sellers more conservative with their expectations.
- There will be more give and take for both buyers and sellers in the days to come. Balanced markets are fair markets because neither party can take advantage of the other.
- There will not be as many buyers in the marketplace as before and this will mean fewer showings and rare multiple offer situations.
- We will again see the sales cycles clearer. A strong January through July; weak end of summer; and a quite respectable 4thQuarter.
It has been a difficult year. Change is hard to take and adjusting properly is not easy. When expectations were exciting, all were happy. When the expectations disappointed we experienced frustration and some fear. Real estate markets are always changing; there is an ebb and flow which has to be respected. Change is not necessarily bad if you adjust to it. We are now working to understand the new realities.
Is the solution to the current conditions all about pricing? It may be, especially if a seller is being speculative about the performance of the market. Most often, if the pricing is reasonable the issue is patience and flexibility.
As always, glad to have your thoughts about the market or your questions about local real estate. And if you are a seller, remember some of our best quarters ever were 4thQuarter of the year!
Would you like more precise market information tailored to your property type and exact location? Tell us a little about your property and we will be in touch.