Clients and Friends,
As we approach the mid-point of 2016, what are the current dynamics in our market places?
Portland markets have skyrocketed since mid-2012 and the dynamics have been dramatic. It has been a rabid ‘sellers market’ and prices blasted through the former top of the market in 2007. Five dark years created pent-up demand, and challenging financial circumstances drove us to a surge when the market turned in 2012. Four years after this, multiple offers, and offers well-above asking price, have frustrated buyers.
For the first time this past month I am getting mass emails from Portland agents advertising ‘price reductions’ on their properties! We have not seen this since the recovery began. In this month’s report you will see further evidence that the hot market is cooling and the expectations of breath-taking rates of appreciation, normal for years now, are no longer realistic. Perhaps everyone who needed a move, or most people who wanted a move, have now done so? Or, is this just a pause in the markets for people to catch their breath and the market to consolidate in its gains?
This is neither bad news nor a harbinger of another bubble burst (at least I hope not); it is that the marketplace is resisting a continuation of the rapid escalation which has been normal. Buyers are beginning to stand their ground and exercising creativity by moving out farther to get more reasonable prices. At some point people in the area hit a limit to what they can afford based on local economics. At some point buyers stop and wait for sanity to return and for the market to moderate. My opinion has been that Portland is moving up to a higher pricing tier not seen here before but which all the west coast metro-plexes have already experienced. If true, the escalation is not over, just pausing. However, that kind of a quantum leap will eventually be accomplished not necessarily by local money but by out-of-state buyers and foreign money. We are seeing the beginnings of the happening already.
Yamhill County remains one of the great values among the Portland markets. Surprisingly, our area is characterized still by modest prices and great selection (although be warned we are following the pattern laid down by Portland). Our uniqueness and its promise is that our area is one of the top tier wine producing areas of the country and continues to gain world-wide recognition. This reputation is built on a moderate climate (even compared to Portland) and stunning and diverse beauty with a location convenient to Portland, Salem and the Coast. We are close enough to take in all the culture that Portland boasts. And far enough out to escape city-life (most notably traffic – beyond Dundee!).
Pricing in Portland is fueling the recovery in our area which until this year was good but quite modest. 2016 is a year of few ‘days on market’ and inventory of less than 2 months to sell out. Our pending and closed sales steadily climb in volume and our prices have gone up substantially and continue to escalate. We have a balanced market of specialty sales (commercial, investment, luxury, and specialty sales like farms and vineyards) but expect these sectors to do much better this year and next. Starter homes in Newberg, and also now in McMinnville, are getting unaffordable so our small towns, especially the West Valley (Sheridan, Willamina, and Grand Ronde) are thriving. All in all we have much to be grateful for, some things to bemoan (affordability), but the time seems ripe in our area for buyers to make good purchases in real estate with a reasonable expectation of attractive value for the future.
The main listing season surge will wind down by the end of July; even now it is slowing to a manageable pace. Buyers will still be active for the rest of the year but dynamics do change. Many sellers will lower prices by August so they do not have to carry their property through the winter. Buyers want to get settled-in before winter. Both parties become more negotiable (and nervous). This means that prices will soften (if not go down) and market dynamics will mellow. Showings, offers, and sales will diminish from the rush of volume we have been experiencing since January. Remember, August and September are slow months for activity and new sales. The 4th Quarter will be good enough.
We are at your service and appreciate your trust in us and our excellent professional brokers. Thank you for your referrals to friends and family, neighbors and colleagues. We take your trust seriously and our work together year round and on call for our sellers and buyers.
Included in this report is:
1. Market Action Reports for May
2. Home Sales Reports for May – Yamhill & Washington County
Randy McCreith, Principal Broker
Bella Casa Real Estate Group