The Market: Latest Figures and a 2009 Wrap Up

OK, I’m planning on taking a  ”glass half-full, glass half-empty” approach on this.

RMLS just released the Market Action report for December 2009, the last one of a rather, hmm, interesting year.  Take, for example, the fact that closed sales were up a staggering 53% in December 2009 as compared to December 2008 or that pending sales were up 41% over the same time period.  Wonderful, right?

Glass half-full: Yes, it’s excellent news and, hopefully, a sign of things to come.

Glass half-empty: Big deal, December 2008 was one of the worst real estate months on record.  It’s not much of a surprise and of little consequence that numbers were up from such an extreme low.

Conclusion: As usual the answer lies somewhere in the middle.  It’s true that the poor 2008 numbers skew the current numbers and, perhaps, over-inflate them.  Having said that, it still shows that the market is indeed rebounding and THAT is an excellent thing.

Now when comparing December 2009 to November 2009 both closed and pending sales were down (16% and 14% respectively). 

Glass half-full: First off, November was a suprisingly strong month so a little drop off is to be expected.  Additionally, we almost always see a big drop off between November and December as the holidays hit and the weather gets worse.

Glass half-empty: The first time home buyer tax credit that was set to expire at the end of November was artifically propping up real estate sales. 

Conclusion: While it is undoubtedly true that the tax credit helped prop up sales, the fact that it was extended through April 2010 should help homes sales balance back out in early 2010.  It is equally true, though, that Portland always sees a drop off in real etate activity as December rolls in.  Probably nothing to get too excited about.

The 2009 summary is rather interesting.  While the market felt much livelier and average market time did decrease, closed sales were almost exactly the same as 2008 (falling 0.9%).  Compare that to the nearly 10% drop in closed sales from 2008 to 2009.  However, new listings decreased nearly 20% (18.8%).  That means there were about 10,000 less homes on the market.  The lower inventory helped the market actually improve its supply/demand ratio while, interestingly, having almost the exact same amount of actual closed sales.  As I’ve preached for nearly three years, getting the inventory in balance is essential to getting our market back on track.  I’ve been extremely happy with the inventory figures since about July of last year.  Hopefully the inventory figure will just a bit more.  I’d like to see the inventory rate right around six months.

Average sales price was down 2.5% for the December 2009 vs December 2008.

Glass half-full: Knowing how bad the overall economy, nationally and locally, has been and knowing how hard many other communities were hit, I feel pretty good about a minimal 2.5% decrease.  If that represents a bottoming out of the market as we begin to rebound, then I’ll be quite happy indeed.

Glass half-empty:  Maybe it was a small decrease, but it was still a decrease and any decrease in home values in inherently bad for home owners (though home buyers would argue that point!).  Additionally, while the average sales price only dropped 2.5%, the median price was down 4.2%. 

Conclusion: I’m taking the high road on this one.  I think such a minimal drop, taken in context, is actually a pretty good thing.

Now for the entire year, 2009’s median prices did fall 11.2%.  Again, while this isn’t necessarily good news, when seen under the light of the nation as a whole, it’s not that bad.  Put simply, it could’ve been a whole lot worse.

In any case, click on the pictures to see the full Market Action report and to check numbers for your neighborhood.

March Market Report – Some Good News

RMLS just released the March Market Action report and there are some positive signs.  March definitely was an improvement over a very slow February.  Sales grew nearly 40% as compared to February.  Probably more important, honestly, is that inventory dropped to the lowest level since October 2008.  In my opinion, the market will begin to stabilize and then improve as inventory reaches more “normal” levels.  Inventory for March 2009 was at 12 months.  I’d like to see that down to about 8 or 9 months, but it feels like we’re on our way to a stabilized market.

The average sales price is still down versus last year, but not nearly as much as many would expect.  The 12-month sales price is down 5.7%.  When many parts of the country are seeing 25% and great depreciation, Portland’s relatively tiny 5.7% has to be seen as good news.