Friends, Clients, and this month in particular, our Sellers,
This is the mid-year report- the end of the 2nd quarter and the heart of the most robust selling season of the year. It is time for a re-evaluation of the local marketplace so that adjustments can be made. First a summary and some notes based on June’s Market Action Report and Home Sales Report.
1. The Portland area inventory (think of supply & demand) has risen slightly; from 2.5 months in May to 2.9 months in June. For Yamhill County, we still have 6.5 month’s inventory at the current rate of sales. A market balanced between seller and buyer interests is typically 4-6 months. Yamhill County is not a sellers’ market but neither is it a buyer’s market.
2. Sales have fallen by about 6% since last month. This is the first negative news of the year. Sales are still up about 12% over last June which is good considering that last June was already a significant improvement in the market as a whole.
3. Most notably, our sales usually peak in June but this year they seemed to have peaked early in May. They have fallen in June. Sellers who are noticing a slower market over the past 5 weeks are right; there are fewer buyers and fewer offers.
4. Our 2 quarter closings were higher than any 2nd Qtr since 2007. Remember that the bottom dropped out of the market at the end of July 2007. Year to date, the numbers are still very healthy. Many of the charts show that beginning in July (normally) the sales number trend downward for the rest of the year. This year it might have begun early or this year we might continue improving; time will tell.
5. The markets are good (the best in 6 years). The markets are frustrating (they are uneven, unpredictable, and for some categories and price ranges they still feel bad). Both are true. This is why we feel schizophrenic much of the time.
Observations from the past 6 months:
1. Buyers in our area are amazingly resistant to upward pressures on prices. We hear lots of complaining and see them digging in their heels. We get multiple offers now, but when none of 4 offers are at or over asking price we know that the buyers are stubbornly refusing to pay what they think is too much. On some of our properties we get a healthy amount of showings but buyers do not make offers noting that the price is too high. Too many negotiations are ending in failure rather than a compromised resolution because the buyers just will not budge on some of their demands (even over $5,000!). Buyers should know it is no longer a buyer’s market but they still feel like they have some power in the process.
2. By contrast, we do have some buyers who are willing to pay higher prices. We had a 10 acre rural property sell at a very high price- to my amazement. In town we are pending with a cash offer on a home which will raise the bar on price-per-square foot to a level not seen in McMinnville in many years. Many lower price ranges are selling very quickly (accepted offer within 30 days) but some price ranges at the higher end are still relatively flat.
3. We anticipated large influx of out of state buyers but so far this year, it is disappointing. This has left our rural properties floundering. This begs the question, is it the pricing or is it the lack of buyers?
4. To illustrate the reality that Portland is about a year to 16 months ahead of Yamhill County: Construction is brisk in the big city but just fledgling here. That affects buildable lots and land. We sold a very nice 1.13 acre parcel in the west hills for above asking price but elsewhere lots and land parcels are moving but so very slowly.
Recommendations for our sellers to consider:
1. Some of our seller’s pricing, and some of my recommendations for pricing, now need to be re-assessed. Ultimately, the best information and intentions related to pricing need to be tested in the real marketplace. 90 days in a good selling market is more than adequate to test the market. No one controls the marketplace, but the buyers as a whole will tell us when something is overpriced or not. In a more normal market, like we have now, where buyers are buying, and the property has had numerous showings over a period of time, and there is good saturation and promotion of the property, if there are no successful offers the market is telling us that it is overpriced. Sometimes there are other dynamics at play, but if not for those, then buyers would recognize a good deal and take advantage of it. I wish it could be otherwise! (see article “Why Properties Don’t Sell)
2. The top 3 priorities for selling property are:
- Price (which can be adjusted to compensate for any issue)
- Location, Location, Location. (some areas, neighborhoods, and settings just bring a better price)
- Property Condition (improving this is improving the odds of a quicker sale at a better price)
3. At this time of the year, sellers become most concerned with whether they can move this year or whether they are going to carry this property through the winter and have to wait for another spring and summer. Homes sell all year long and in the winter we have experienced some of our best months historically. However, buyers are fewer (often so is the competition) and the rush/demand is quieter. Think about what it might take for you to move your property this year.
4. What will the second half of the year be like? Last year the second half was much better than the first half. Will that be true again? Perhaps the problem is that our area is still ramping up to the new market conditions. Maybe the first half of this year predictions were just a bit premature? We hope so! We would love to see a more robust second half of the year but that would buck the normal cycle of the year.
I am glad to work with each of our sellers to show you what has sold in your price range since January and for how much. We can review the feedback data for clues to why the home is not selling. We can re-think your competitive position and the pricing. We can ferret out what else might allow you to move this year without leaving any of your money on the table. This is a big part of my job. Call or email me if you want to do this right away. My purpose is to give you the best information so you can make the best decisions regarding your property and your goals. My goal is to get your property sold so you can move on…