December 2008 — Home Prices Decline, Inventory Climbs

Home prices and market activity have continued to decline as we bring ourselves closer to the year’s end.  Comparing year-to-date sales January – October 2008 to January – October 2007, the RMLS of Oregon notes that there have been 31.3% fewer closed sales and 30.2% fewer accepted offers this year.  In addition there has been a 7.5% decrease in the number of homes added to the market this year.  This is unsettling news for real estate practitioners through out the area, and in keeping with the times, many area Realtors are reporting their worst sales in a decade.

Average sales price and appreciation1 are tabulated below:

AREA

Average Sales Price

Appreciation

NORTH PORTLAND

$268,400

+2.2%

NE PORTLAND

$324,300

+2.0%

SE PORTLAND

$278,200

-2.2%

GRESHAM/TROUTDALE

$260,500

-5.7%

MILWAUKIE /CLACKAMAS

$323,200

-5.4%

OREGON CITY/CANBY

316,200

-4.8%

LAKE OSW’GO/WEST LINN

$550,500

+3.6%

WEST PORTLAND

$482,900

+5.0%

NW WASH. CO.

405,500

-0.7%

BEAVERTON/ALOHA

275,600

-4.2%

TIGARD/WILSONVILLE

$356,300

-3.9%

HILLSBORO/FOR’ST GROVE

$281,900

-5.0%

COLUMBIA CO.

$228,600

-8.9%

YAMHILL CO.

$269,300

-4.7%

1 % change is based on a comparison of the rolling average sale price for the last 12 months (11/1/07 – 10/31/08) with 12 months before (11/1/06 – 10/31/07).

Inventory in Months has continued to climb, and the trend fascinates us.  Readers of Shannon’s old By-Line will recall that Inventory in Months (“Available Inventory”) is a hypothetical calculation that figures the number of months it would take to sell all the current housing inventory if it were to sell at the current rate.  For example, if there are 2000 homes for sale at this time, and homes have been selling at the rate of 500 a month, then we have 4 months’ inventory on hand.  Old timers say when inventory in months is at the 8 – 8.5 months level, the market is in balance, and favors neither buyers nor sellers.  If the inventory falls below the 8-month mark, we’re in a “sellers’ market,” and if the inventory rises above 8.5 months we’re in a “buyers’ market.”

Take a look at the chart and then turn your mind back to good old 2005, when we never had more than 3.4 months’ inventory available, and back in the halcyon days of June we only had 1.5 months’ available!

Inventory in Months, Portland Metro Area

2006 2007 2008
January 3.2 6.2 12.9
February 2.7 5.2 10.4
March 2.0 3.8 9.1
April 2.4 4.4 10.3
May 2.3 4.5 9.2
June 2.6 5.0 9.5
July 3.5 5.7 10.0
August 3.6 6.2 9.9
September 4.5 8.6 10.4
October 4.6 8.4 11.1
November 5.1 8.3
December 4.5 8.5