Clients and Friends,
April’s report is as refreshing as a spring shower! The post-mortem is in on the first quarter. The housing sector of the economy was flat almost everywhere nationally. The US economy showed a shrinking GDP during the quarter for the first time in 3 years. We were not imagining things or making excuses; the problems were economy-wide. Many blame the weather but it seems like we have weather all the time! I think it is more likely related to frustration with the weakness of the economic recovery. The housing market, as good as it has been, cannot tow the economy; the economy eventually has to undergird the housing market to lift it further.
April’s reports show very good news and a dramatic pick-up from earlier this year. May is much stronger than April so we will see even better news in the next report. There is some residual weakness as pending sales were still lower than last year at this time. The sales numbers this year are not as good as last year but they are still positive and good in most cases.
There are new dynamics which may be affecting the sale numbers:
Inventory: Portland is a white-hot sellers market. Inventory is very low – 2.8 months of inventory for the entire metroplex, but less than a month for the city proper and its very close suburbs. Even Sherwood’s inventory is just 2 months. Our reports show better sales volume numbers than just before the sub-prime mortgage crash in mid 2007. However, these volume numbers are down substantially from 2013 numbers. Why? The lack of inventory has slowed the pace of sales. You cannot have more sales with fewer choices.
Pricing: Portland’s prices are as high as 2006 on the way up to the top, and equal to 2008 on the way down- but early in 2008, before the financial meltdown. Prices have risen dramatically in these urban areas. High prices tend to slow down the feeding frenzy, the bargains are all gone. Buyers will also become more cautious about their purchases at high prices. Does anyone really want to live through another bubble bursting and the consequences of buying too high? I think most people have been scared-straight.
With this report, we officially become a balanced market between buyers and sellers. Last month our inventory was just under 7 months; April’s inventory number is 5.1 months (4-6 months is considered a balanced market). This is consistent with our belief that we are following Portland by about a year and a half.
Newberg is taking on characteristics of Portland but for the rest of the County sales and price increases remain modest. It is very frustrating for our clients to hear all the hype from Portland and other markets nationally but still experience few showings and no offers. My encouragement is that it is changing and we are in for better days ahead based on our trajectory. We expect to see our rural properties make a significant correction and recovery this year. Patience and persistence is important. Pricing is still a very important issue for us. There is no feeding frenzy here and when we get multiple offers, they are all under the asking price! However, recovering is ramping up nicely again. We expect to do better than last year.
1. Listen to the media reports cautiously. Hype, be it on the positive side or the negative side, attracts attention and that sells advertising and makes money to bring you more news. News without vivid fear or exciting hope is boring. It does not grab the attention of listeners and viewers. Remember also that real estate is local- meaning ‘location, location, location’ makes all the most difference in the world (literally). Family and friends can be the worst advisers of reality when you are buying and selling homes. They often want to support you, and tell you what they want to believe, and what you want to hear. Listen to informed, disinterested, local professionals for the best information.
2. We have continued to provide the most thorough marketing and sales support to our clients throughout the past 7 years and it has made us the top office for sales numbers in the county. We have done so without ever cutting back and always pursuing more and better ways of promoting your property globally, and presenting it in its best light. We never give up and we do not make our decisions based on cost cutting. As frustrating as it is, please know, you are in the best hands possible and we will work consistently and faithfully until the job is done. I think it is safe to say that there is light at the end of this tunnel, even way out here in Yamhill County!
Randy McCreith, Principal Broker
Cell: 503-310-9147 Fax: 866-281-6653
Bella Casa Real Estate Group