WOW! The Portland Real Estate Market has seen Six Straight Months of Inventory Declines?
The Portland Real Estate market reduced it's inventory for 6 straight months. This is a great sign because it shows some consistency and sign of stabilization. In January 2009 the Portland Real Estate market hit an all time high of 19.2 months of inventory available. Then in February it dropped to 16.6, then March it dropped to 12, then April it dropped to 11, then in May it dropped to 10.2, then in June it dropped to 8.2, then in July it dropped further to 7.3. What does having 7.3 months of inventory mean? Well it's a measurement of how much supply the market has. It means that assuming their were not more new listings and the rate of sale/time on market remains the same at about 145 days than it would take approximately 5 months to clear out all the current active listings.
Real estate is all about supply and demand. The supply of homes has remained steady because of the foreclosure market, however the inventory has dropped significantly because many of the new homes that were in addition to the foreclosed and distressed homes have sold. More importantly those homes have sold with tough criteria like large downpayment, proof of jobs (debt to income ratios) low appraisals among other things. This will definitely slow down the foreclosure data because unless Portland jobs get pummeled then the most recent homes will have a higher percentage of non-foreclosures. This ultimately will stabilize the market.
Another item of concern is that the average sales price has also declined approximately 10% per year over the last few years. This information will help keep inventory lower because there will be fewer new listings coming to the market because homeowners are so upside down on their purchases. It will also cause even more foreclosed homes because people are more apt to walk away from a large debt that is worth less than they paid for it. Also with the recent job losses in Portland it will also increase foreclosures as well.
To improve the Portland Real Estate market and stop the declining while at the same time starting the appreciating many things have to happen. First and foremost in my opinion a friendly job market needs to surface in Portland. If people are working they are buyer and if they are working they can afford their current payments which keep them in their house and not foreclosing. If less people are foreclosing than inventory should drop because less homes will be available assuming people continue to purchase as the current rate of sale. Also if their is an influx of jobs than not only will it slow down the foreclosures but it will instill confidence and increase home buying even more. More people buying homes in combination with less foreclosures end up dropping inventory levels. Dropping inventory levels lowers the supply of homes which conversely increases the demand of homes. Greater demand causes prices to go up. It should be a fun end of the year. Stay tuned!
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