According to the Case-Schiller Index, in terms of appreciation, Portland at 9.2% dropped to the #2 market in the US behind Seattle at 12.3%. After leading the nation for nearly two years, with much of that time being above 10% appreciation, is Portland in the midst of a shift or does it matter since we are still well above the national average of 5.5%?
If this is a trend, I believe it’s a great one. In most every real estate market with multiple years of double-digit appreciation, it ultimately leads to a correction. Ideally, we would like to see inventory grow and appreciation hover around the national average at 5.5%. This is a far more sustainable number that will allow salaries to stay in better alignment with the affordability of homes.
As for seeing a change, if you take a snap shot of April, there were 3,759 new listings and 3,088 sales. At the end of the month we were left with 3,753 homes still for sale. At our current sale rate, we have 1.7 months of inventory available, which does not suggest anything is going to change soon. This said, I believe we will begin to see appreciation slow down as a great portion of our current inventory is hitting the market at significantly higher prices. It is my feeling that many of these homes will not sell within the market average of 42 days, and inventory should build. Ultimately, this is a good thing. Buyers will have more selection and ideally the market will have a mild slowing, but not a correction. Interestingly, closed sales in April were down 11% from March, and down 15% from April of 2016. This slowing trend will also contribute to inventory growth and further bring the market into balance and long-term stability.
This should be a fantastic summer for buyers as the selection of homes will be trending upwards and interest rates appear to be stable, despite the oft-heard warnings they will be rising in the coming year. As for sellers, the current prices in the market place are at all-time highs, finally eclipsing the peak of 2007. That said, if you are thinking about selling in the next two to three years, I personally believe our big appreciation years are behind us, and now is a good time to make the change.
