Portland Housing Prices Up; Inventory Hits 12-Month Low

By Jeff Bale, Redfin Portland Market Manager

Looking for a three-bedroom, two-bath bungalow in close-in Portland?  Put on your running shoes… they’re goin’ fast.  So are mid-centuries, new construction infill, and most everything else priced right.  With inventory on the decline throughout 2011 and interest rates continuing to remain at historical lows, buyers have been climbing over each other to get a good house.  Does this make is a good time to sell?  You bet.  Low inventory, low interest rates and eager buyers is always a recipe for sellers controlling the market.  A quick word of caution though… you still have to price it right.  Today’s buyers have tons of information at their finger tips and know what homes in the area are selling for.  If the home is overpriced, buyers have proven that they’re willing to sit and watch.  Appraisers are also very cautious, so price the home right.  If you’re holding out for 2007 values again before you sell, get comfortable… it’s gonna be a long wait.  By then interest rates will likely be way up, and so will the number of homes on the market.  Current conditions are just about as good as it gets.

What about buyers?  Values are down nearly 29% since ’07 and the average interest rate is roughly 36% lower.  Whether you can throw down cash for the house or are driven by your monthly payment, this news is all good.  I’ll through in a word of warning for you buyers too… once you find the home you love, be ready to act quickly.  Many homes are selling within 24-48 hours of showing up on market.  Sellers are looking at multiple offers and often getting more than their asking price.  Be ready to make a decision, but work closely with your agent to set a price limit, stay focused on your true home buying needs and try to keep emotion out of the equation.  You still want to pay the right price and just like any relationship, three months after you close the deal, the honeymoon’s over.  Make sure the house is really a great fit, and doesn’t just offer a super cute porch swing.

So here’s the skinny on the numbers…

Inventory Slide Continues

The story in Portland in January was all about buyers having less to choose from. The number of homes for sale in Portland fell 10.3% from December and 37% from January last year, to 2,083.

Given the pace of sales and the number of homes on the market, it would take 3.9 months to sell through the current inventory, a term known in the industry as “months of supply.” In a market balanced between buyers and sellers, we’d expect to see 6-7 months of supply, so this represents a slight advantage for sellers in Portland, but a more balanced market than December’s 12-month low in months of supply.

Sales Drop by 24% in January

We’ve all heard that real estate is seasonal, and one look at the chart of the number of home sales reinforces that. There were 532 sales in Portland, representing a sharp decrease of 23.6% since December 2011, and down 8.4% since January 2011. This is largely due to the fact that not many people are out looking for homes during the holiday season, and so fewer offers were written between Thanksgiving and New Year.  With a typical closing period of 30-45 days, we see the impact in January and early February.

Portland Median Sale Price Up 8.5% for the Month

The median sale price for a single-family home in Portland was $225,750, up 8.5% from December 2011 and up 0.3% year over year from January 2011. The per-square-foot price was also up 6.6% month over month, to $162, but down 2.4% year over year.

Redfin’s housing market data combines public records, local multiple listing services, for-sale-by-owner and other verified sources. The data is validated by Redfin analysts to ensure it is comprehensive and accurate. Redfin publishes these reports each month on or around the 10th of the month, for the previous month. As a tech-focused broker, Redfin is the only company with access to this level of data.

  • A Confused Client

    I was interested in your claim that “Many homes are selling within 24-48 hours of showing up on market.” So I did some research using the Redfin tools available online. There is only two houses that are currently pending, and went pending in under 3 days, in all of Portland Metro. If you would like to repeat the research just search the area defined as Portland by the red map outline in Portland Maps, and check the boxes under 'Listing Facts'. Choose the categories that are titled 'pending/ under contract' and 'less than 3 days under contract'. 

    What I am wondering is why would you would misrepresent the truth to your clients and possible clients when you can do the research yourself? I am using you as my agent and I really want to trust your opinion. You said, “Many homes are selling within 24-48″.  I do not think that two houses qualifies as many.  How will I trust the other claims that you make? Is there not some fiduciary duty to represent the truth to me as your client? If I bought a house based on your claims, could you be liable for misrepresentation? Puffery is one thing, but a blatant misuse of facts which are easily quantifiable via your own research tools is another game all together.

    • Jeff Bale

      Confused Client,
      Thanks for bringing up your concern and providing the chance to respond. As a home first hits the market, buyers are writing offers quickly (within that 24-48 hour window) but there is usually a process in which the seller will counter back contract terms, hold off on responses to allow for additional offers to be submitted, verify buyer financing through lenders, etc… Once the buyer and seller have reached mutual agreement (this may take 3-4 days, but to my point, offers came in immediately), the Listing Agent is then expected to show the home as Pending in the RMLS within a period of a few days.  Many agents wait to show the home pending until after earnest money has been delivered to escrow.  Running the same search for homes on Redfin for 14 days or less (a better predictor due to the events described above), there are 66 homes pending of 359 new listings (exclude Short Sales and it's 65 of 315). That's basically 1 in 5 newly listed homes across the city.

      Without a doubt, some areas move more quickly than others.  Examples of neighborhoods with new listings now pending within 14 days of posting to Redfin: Hawthorne/Belmont 6 of 12, Irvington/Alameda 4 of 8, Woodstock 3 of 6, Mount Tabor 1 of 5, Beaumont 2 of 6, West Haven/Sylvan 6 of 9, Forrest Park 3 of 14.  All of these searches were for single family homes.

      It is always critical to understand the trends of the area/neighborhood you are looking in, and trusting your agent is just as critical! My original post is certainly impacted by personal experience having written many multiple offer contracts over the last 12 months for clients mainly focused on the close-in neighborhoods of Portland, but personal experience aside, the numbers are clear… inventory is very low and well priced, quality homes are selling quickly.

      I hope that helps clarify.  Best,
      Jeff

      • A ( much less) Confused Client

        Jeff,
        Well, I feel less confused now.  I appreciate that you have provided the research. It does appear, based on what you've reported, that the houses in those areas are going pending within a couple of weeks.  I believe that would've been a more accurate thing to say that instead of 24- 48 hours. For example, I might say something more like: “Within selected areas, half of the homes went pending within one to two weeks, some within days.”

        Either way, I should let you know that I really like Redfin. I appreciate the research online and so far my interactions with the people at redfin has been very good. Your courteous response only confirms my experience. One of the things that drew me to Redfin is the way that you are paid and the assumption that you would not be so pushy if you are paid by salary and not by commission.  I believe Redfin provides a unique service because they provide the research that consumers needs to make the right decision. I imagine many clients come to you because they see you as different, in that, you appear to be providing services which empower both buyers and sellers. And this makes us feel that you will be honest with us.

        Just a gentle reminder that staying neutral in the real estate process will win you the loyalty of your clients, and our referrals as well. Let the markets speak for themselves. And also it is important to remember that, things can change quickly. There are many contingencies out there including problems in Europe, gas prices on the rise, the possibility of a another recession.  I believe the choice to buy a house is an important personal decision that should be made not in a frenzyor out of fear of missing out, but because one feels it is the right home at the right time.

        Best,
        A ( much less) Confused Client (and fan of Redfin)

    • JBM425

      I am not an agent, but a frustrated buyer, and what Jeff says is all too true.  I used to say when it comes to making an offer, “If you snooze, you lose.”  In the past month, we have found that you can barely breathe without losing.  The most frustrating one was, we found a home that was the perfect fit and went out to see it the first night it was available and made an offer the same night for the seller's asking price…and still lost out!  The only homes that seem to be staying on the market a while are homes priced over $250K, or homes for which the seller is not asking fair market value.

  • Dddd

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  • JBM425

    Just one thing to add to this discussion, relating to Jeff's comment to sellers that “If you’re holding out for 2007 values again before you sell, get
    comfortable… it’s gonna be a long wait.  By then interest rates will
    likely be way up, and so will the number of homes on the market.”  We are aware of a home that is sorely overpriced, especially compared to a home next door that sold in November.  We made what our broker considered was a fair offer, and the seller replied that he was offended by it.  In looking a little more closely at all the man-toys that are in his house, we think he's trying to move up to a larger home, but the current market doesn't support his asking price.  He doesn't have a lot of equity in that home and needs to wring out every drop he can, at least in his mind.  Who knows…in a year or two, he might get what he wants or at least closer to it, but here's a news flash:  that bigger home he wants may also go up in price, too!  And who knows where interest rates will be?  (P.S.  That seller's agent contacted our realtor and suggested her client may now be willing to entertain another offer, but even with the market being sparse in our range of 1,200 to 1,500 SF homes, we aren't going to make another offer.  We think there are better homes out there than that sub-1,100 SF home.  And we certainly don't want to insult him again!  ;-)

  • Ed~

    JBM425 and Confused are both expressing the reasons why a real estate professional is necessary to help close transactions.
    In both instances, the buyers are concerned and ruled by emotions. One is afraid the market is going to climb out of their affordability, the other that the bottom is going to drop out of the market.

    Indeed, these are difficult times to judge the market. More people these days are educated about real estate as an investment vehicle and more first time homebuyers have the necessary information to price their markets.

    But in the end the truth is, we as buyers are often making the largest purchase in our lives and cannot but be passionate about the decision. The Sellers in this market are not often happy sellers. Real estate agents will always have to be the ones in between to hammer out the details and help close a deal.