May 2014 Residential Highlights

Prices Continue Their 2-Year Climb.  [Reporting  period: May, 2014.  Source: RMLS of Oregon].  Devastatingly low inventories and persistent low interest rates have pushed demand – and prices – for Portland housing to new highs.  In its most recent “Market Action” newsletter the RMLS of Oregon reports that May sales pushed the average price for metro-area homes up 9.1% from the same time a year ago, to $327,200.  Among the high-scorers, north Portland is up 15.1%; southeast is up 14.5%, northeast is up 11.7%, Milwaukie/Clackamas is up 12.9% and Oregon City/Canby is up 14.4%.  Among the laggards, Lake Oswego / West Linn is up 7.2%, west Portland is up 6.1%, and northwest Washington County is up 8.0%.

Average and Median Sales Price

Year-to-Date SummaryThe market has cooled, barely cooled, compared to 2013, and the culprit is not demand, but inventory.  Market watchers, including these writers, believe that the decline in pending and closed sales is coupled to the relatively limited number of homes for sale: inventories of homes for sale have fallen to near-record lows again, to 2.8 months in April and May.  There simply aren’t enough houses for all the buyers in the marketplace at this time.  As a consequence bidding wars have become commonplace again.

Inventory in Months, Portland Metro Area

2008

2009

2010

2011

2012

2013

2014

January

12.9

19.2

12.6

11.3

7.0

4.7

4.1

February

10.4

16.6

12.9

10.9

6.5

4.5

3.9

March

9.1

12.0

7.8

7.1

5.0

3.2

3.1

April

10.3

11.0

7.3

7.2

4.7

3.1

2.8

May

9.2

10.2

7.0

6.8

4.2

2.5

2.8

June

9.5

8.2

7.3

6.0

3.9

2.9

July

10.0

7.3

10.8

7.0

4.6

2.8

August

9.9

7.8

11.0

6.2

3.9

3.1

September

10.4

7.6

10.5

6.7

4.6

3.7

October

11.1

6.5

10.7

6.8

3.8

3.4

November

15.0

7.1

10.2

6.2

4.2

3.7

December

14.1

7.7

7.9

5.3

3.6

3.2

Interst Rates

 

Interest rates are trending pretty steadily.  This graph, courtesy National Association of Home Builders, illustrates interest rate history going back to 1990.  The line has been wobbling between 4.0% and 4.5% for several months.  And there’s widespread belief that continuing economic recovery and lessening federal influence over rates has set the stage for an anticipated rise beginning late this year.

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