The average home price in the Portland Metro rose 2% in May. Home prices are now up 11.5% since January. While total market time for Portland Metro listings remains elevated at 86 days, the average days on market for listings in the Tri-County has fallen from a peak of 64 days in January to 34 days as of the end of May. The huge discrepancy between these two statistics tells me there have been a lot of failed sales and some of those homes are still available. As a team we saw a lot of sales fall out of escrow in Q1; though the rate of pending transactions closing for us in Q2 has been dramatically higher. While the number of active listings continues to rise, inventory actually fell to 2.3 months in May. This means that as more properties are being listed, more buyers are stepping up and buying them. Based on inventory being under 3 months, we are still in a seller’s market and I don’t see that changing in the short term.
The 30 year fixed rate fell to 6.95% on average across the United States last week. There has been a gradual decline in mortgage rates this month as economic data continues to demonstrate that the economy is gradually slowing. The ISM Manufacturing Index came in at 48.7 on June 3rd which signals that US manufacturing is contracting. The labor market has been extraordinarily tight from a historical perspective based on several measures but there are some signs that labor market tightness is easing. On June 4th, the US Labor Department reported job openings fell to 8.1 million which was the lowest reading in 3 years. On June 7th, the jobs report showed the US economy added 272,000 jobs in May. This was a surprise to the upside and immediately drove mortgage rates higher for a few days. Rates started to retreat again on June 12th after the Consumer Price Index showed there was a 3.3% year over year increase in prices in May. Additionally, core inflation, which excludes energy and food prices, had the smallest year over year increase since April 2021. Overall, the general trend points to the US economy gradually slowing but some of it is hidden in the numbers.
Of the four reports I just mentioned, the jobs report was the only one that exceeded economists’ expectations. The biggest issue with the jobs report is it does not differentiate between part-time and full-time employment. Many Americans are working multiple part-time jobs right now since full-time work in their preferred industry is not available or the pay is too low. Differences in pay between jobs also doesn’t get taken into account in the jobs report. Most people with a high income spend lots of money on local goods and services which has a trickle-down effect on the local economy. Someone being hired to work as a barista shouldn’t be considered as an equal replacement to a high income job that was lost, but that’s exactly what is being hidden within the numbers. We certainly have seen heavy job losses in higher paying areas of the US economy such as in the tech sector or locally, such as through recent job cuts at Nike. I’m not saying that the economy is unhealthy, just that stock traders, analysts and economists shouldn’t rely so heavily upon one flawed statistic.
Which price points and areas listings are getting action in Greater Portland is very hit and miss. One day I am writing an offer 2% under the asking price and the next day I am in a bidding war going over the asking price. This same sequence happened multiple times last month. I managed to get 8 consecutive written offers accepted in only 5 weeks from mid-April through mid-May. The inside knowledge from seeing so many negotiations was extremely helpful in knowing what to do in each individual situation. I eventually represented a buyer in a 12 offer bidding war on a house in South Beaverton that ended the streak. The one benefit from taking part in that bidding war and not winning it was that I was able to correctly predict three houses the losing bidders would switch their attention to. This ultimately helped my seller in Summer Lake set a price record last week. I oversaw some work to finish updating the house prior to listing, then staged it in a unique way to highlight its positive attributes and released it right at the perfect time. Her 1400 sq ft ranch closed for $43,000 more than any 1400 sq ft detached house with a lot under 10,000 sq ft has ever sold for within a 1 mile radius.
As listing agents, my team has continued to set price records in this environment. Depending on how you look at valuations, that was our 3rd or 4th listing to set a price record in only the last 6 months. I would be happy to discuss how we are achieving these types of results if anyone needs guidance. We are certainly looking for more people that we can help.
