Living in Portland

Rather than quote statistics, I’m inclined to talk about what I actually see happening in the Portland Real Estate market.  I have been doing this for 19 years now and have a pretty good feel for what’s happening.  November and December of 2009 where the busiest I can remember in recent times.  As an Exclusive Buyers Agent, I was working with several Buyers trying to claim the First Time Home Buyers Tax Credit.  Extending the Tax Credit was the best thing the Government could have done to keep the housing market moving.  Winter is always a slow time of year for real estate and the market always begins to pick up mid January and is in full swing by March. Since the winter stayed strong I predict the spring will be far better than usual.

I predicted that we hit bottom sometime this last Summer and I am sticking with that prediction.  Prices are not dropping.  In fact in some locations  prices are rising due to the state of the market.  Here’s what is happening that is different from the last two years that support that claim.

1. Sellers have finally got it, and are pricing their homes at market value.

2. Available inventory that is NOT a short sale, is very limited. Most Buyers and their Agents are avoiding short sales for very good reasons which leave fewer homes to choose from.

3. When inventory is low and the demand is strong, prices increase.

At this time last year, we Agents were trying to get Sellers to realize the market had dropped and their homes were not worth as much as they thought. This point was reinforced when Buyers were making offers that were significantly lower than the asking price.  Sellers had no choice but to sell or wait a few years until the market recovered. Foreclosures did have an impact on this, but I believe it was a very small factor in the Portland market.  We have very few foreclosures compared the total numbers of homes on the market, and they don’t stay on the market long.  Short Sales on the other hand do comprise a fair number of the available homes on the market. But since they are not selling with any kind of volume they are not impacting the current market value.

So here’s the problem. Buyers have not caught up with the market and still believe they can get a home for far less than the asking price. What they don’t understand is that the adjustment for the declining value has already be made and is reflected in the asking price. I had four separate Sellers reject offers that were in the 8-10% less than asking price range  in December alone. When Sellers start saying ‘no’ the market has in fact turned.

The reality for Buyers is that they have missed the bottom of the market but they are still in a good position to ride the wave up. The bigger concern is that interest rates are finally starting to increase. The ‘Perfect Storm’ (low interest rates, low prices and a tax credit) has started to break up and  buyers may only be able to get two of the three advantages of buying a home now rather than later.