The Regional Multiple Listing Service (“RMLS™”) has today, September 13, 2013, published the statistics for August, 2013 in its monthly Market Action Letter. Although some of the numbers are a bit off from last month’s feeding frenzy, they are still quite good. Herewith, excerpts from the report:
Closed sales (2,623) decreased by 5.2% compared to July (2,766), but represent the best August for closed sales in Portland since 2006 when there were 2,939!
New listings, at 3,423, were down 11.7% in August from the previous month, but up 10.5% over August 2012.
Pending sales (2,614) decreased 4.5% from 2,738 in July. T his showed a 9.5% increase over the
2,387 offers accepted in August 2012.
Inventory has increased slightly and currently sits at 3.1 months. Total active listings rose between July and August. At the end of August, there were 8,003 active residential listings on the market.
Year-to–Date Summary
There have been 19,891 accepted offers and 18,231 closed sales in 2013, up 16.3% from 17,105 pendings and 18.4% from 15,402 closed sales in the same period last year. The 26,850 new listings so far this year represent a 10.7% increase from the 24,262 entered the first eight months of last year.
Average and Median Sale Prices
The average sales price so far this year is $309,200, up 14.1% from the same period in 2012, when the average was $271,100. In the same comparison, the median price increased 15.2% from $230,000 last year to $265,000 thus far in 2013.
Are We There Yet? For those wondering if we are in a “healthy market,” the answer is “No!” The primary reason is the monthly inventory of homes continues to be at all-time lows. RMLS™ defines monthly inventory as follows:
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.
The lower the monthly inventory, the more distorted pricing becomes. That is, more buyers are vying for fewer homes. In January 2013 it stood at 4.7 months; for August it was 3.1, which was up over July’s 2.8 months. When this occurs, buyers have little bargaining power; there are multiple offers; prices can be pushed to unrealistic levels; and buyers get into bidding wars, since they cannot find suitable substitute homes to make offers on. A healthy market is 6 to 8 months. So, “No” we’re not there yet.
Another big question mark is interest rates. They are still low, but over a point higher than Spring, 2013. As rates inch up, fewer buyers can qualify. Interestingly, though, both in FHA and conventional loans, there appears to be a move afoot to become slightly more lenient in lender underwriting decisions. This is not to suggest that one’s credit score is less relevant, but banks appear to be realizing that if they want to make home loans, they will have to adjust some of the underwriting criteria. FHA, which was freezing former distressed housing owners out of the lending market for 3-5 years, has now implemented certain rules that are more forgiving to folks with a short sale or foreclosure in their past.
So going forward, hopefully, as employment improves – which is still in the doldrums – we will hopefully see more qualified buyers, more sellers entering the market (as they emerge from negative to positive equity), and ultimately a little more sanity introduced into the marketplace. Stay tuned!
