Market Action Report for May 2011

By now everyone has heard that 2011 is not a good year for real estate sales! It is not a good year for the

economy, the unemployment rate, or for consumer confidaence. New construction remains a dead industry the likes of which have not been seen since the Depression. Speaking of the Depression, recently I read that the rate of decline in home values is greater than during the Depression. Next month in July, we hit the 4 year anniversary of the bottom dropping out of the housing industry. Last week, on a business show I listen to on the radio, the normally optimistic and upbeat host gave voice to what I have thought too many times now, “It is getting hard to be optimistic anymore!”

The reality is that no one seems to know what tomorrow holds, and no one seems to know what it will take to slow down the economic free-fall and eventually right the direction of the economy and its attendant industries. Therefore, everyone speculates, and every minor event on any given day is analyzed for signs in the tea leaves.

As for May’s report for the Portland metro area:

1. Inventory is down. It is difficult to find many new homes anymore and the ‘glut’ of homes to sell is down to less than a 7 month supply from a high of a 20 month supply following the financial sector meltdown of 2008 (6 month’s supply is considered in the range of healthy). This helps to stabilize pricing and balances the marketplace from being a completely one-sided buyers’ market. Although a good number, it likely reflects the public’s unwillingness to sell if they do not need to. Also parallel to the unemployment industry, it likely reflects discouraged sellers who have quit trying.
2. Closed sales are the second lowest (YTD) of the last 5 years but seem to be following the normal seasonal cycle up.
3. Pending sales are complicated: Pending sales are up by comparison with one year ago because the $8,000 tax credit expired on April 30th 2010 and there was a great push to submit all offers before that deadline. That made May of last year a dead month for accepted offers (pending sales). By comparison, we ‘look’ good this year.
4. Market time for a sale remains consistently high averaging over 140 days.
5. The average sales price is at the same level as it was in late 2004.

If you have made it to this point in the email, you have a strong constitution! What can we do about this? Professionals and business owners adapt to changing conditions and relentlessly pursue success in spite of obstacles; it is our nature. People adjust their expectations and their lifestyles to make due until there are better times. The wise hold onto a higher and historic perspective: business cycles come and go; recessions and even depressions eventually end; famines have stricken people for all human history but the famines do not last forever. Prosperity can be rebuilt. This is a particularly tough patch of American history but as in times past and in time, we will heal.

I am truly amazed at the high caliber of Principal Brokers (14 of the area’s finest), and exceptional Realtors® (now numbering over 30), which make up our professional cooperative at Bella Casa Real Estate Group. We serve the greater Yamhill County area as well as much of Washington, Marion, and Polk counties, and several of our brokers work the Portland and Beaverton area markets. We are grateful for you who entrust your sales to us. As always, we are grateful for your referrals to family, friends, neighbors, and co-workers.