The RMLS™ Market Action Report was just released for the month of November, 2013. In almost every metric, the trend lines look good. However, Inventory in Months remains stubbornly low. [Per RMLS™ “Inventory in Months is calculated by dividing the Active Listings at the end of the month in question by the number of closed sales for that month. This includes proposed and under construction homes.”] For November 2013 inventory was just 3.7 months. A “healthy market” is considered 6 to 8 months.
Low inventory favors sellers, i.e. buyers are vying for a smaller number of available homes, so sellers have more control in dictating pricing. [Of course, the great equalizer is financing. For example, sellers can set whatever price they want when inventory is low, but if the property doesn’t appraise out for financing, the home may not sell – or if it does, the seller may have to reduce the price so the buyer can obtain the necessary financing.]
When inventory is too high, e.g. 10 to 12 or more months, the dynamic swings in the other direction, and it becomes a buyer’s market, since they can pick and choose among available alternatives. Thus, low inventory can drive prices up out of range of certain buyers, and high inventory can drive prices down, thus increasing the pool of available buyers. With a 6 to 8 month inventory, sale prices are more reflective of a balanced market where both sides retain negotiating power.
Here is what the RMLS™ stats tell us for November 2013 on a year-t0-date basis:
- New Listings YTD – 11.3% (34,478)
- Pending Sales YTD – 12.9% (25,667)
- Closed Sales* YTD – 15.4% (24,872)
- Avg. Sale Price YTD – 13.5% ($310,000)
- Medium Sale Price YTD – 13.3% ($265,000)
- Total Market Time** YTD –26.4% (Decrease) (83 days)
*Per RMLS™: Closed sales for this November (1,821) was the best November for closings in Portland since 2006, when there were 2,163 closings.
**Per RMLS™:“Total Market Time is the number of days from when a property is listed to when an offer is accepted on that same property. If a property is re-listed within 31 days, Total Market Time continues to accrue; however, it does not include the time that it was off the market.”
