Market Statistics: March 2020
Every month RMLS publishes statistics on the Portland Metro real estate market. Here's our take on last month's numbers:
Home prices increased quite a bit in March - up 6.5% over the same period last year, as did the number of homes that sold (up 7.9%). The average length of time it took homes to sell, and the inventory* both fell from last year. Taken together, these number are usually a sign of a strong market. But, as with everything right now, things are different this year.
The total market time of 61 days means that it took about 2 months for the typical home to sell. This tells us that nearly all the sales that closed in March (and therefore these market numbers) went into contract in February or earlier - so before the reality of the pandemic crisis set in here in Portland.
In Oregon the crisis really started to unfold in mid-March: on March 11th the NBA cancelled the rest of their season; on the 12th Oregon schools were shut down; on the 16th the Governor of Oregon cancelled all gatherings of 25 or more people and closed all dine-in restaurants, and on March 23rd she issued the official Stay At Home order. By this time, most of the Real Estate transactions that would eventually close that month were already under contract and many sellers did whatever they could to ensure those sales went through. So, the numbers we have for March are more an indicator of what could have been, rather than what we expect to see going forward.
So, what will the market do? This is the ultimate question for most of our economy right now; and for Real Estate the short answer is that we’re not sure. We know that while Real Estate activity hasn’t completely shut down, it has slowed drastically in the last few weeks.
Due to the length of time it takes to close a Real Estate transaction, there is often a lag of one to two months between when the economy slows down and when that slowdown is reflected in the market. The current crisis was a hard and swift blow to the local economy, so we’re going to see the effects of it sooner rather than later. The number of pending sales in a given month is a good indicator of the direction of the market because it tells us how many closed sales we’ll see in the next 30 to 60 days. If we look back at the last three months we see that the local market was likely gearing up for a strong Spring. Compared to the same time the previous year, pending sales in December, January, and February were up 10.8%, 11.1%, and 17.7% respectively. For March, pending sales were down 14.3% compared to last year. This tells us that we’re headed for a significant slow down in Real Estate activity.
Despite record low interest rates, we don’t anticipate a lot of new buyers entering the market until the threat of the virus has subsided, and that time frame is uncertain at this point. This means that the few buyers that are still in the market will likely have more leverage over sellers than they’ve had in quite a while. This will depress prices - especially in the higher price ranges.
With things changing almost daily, we’re keeping a close eye on the situation and adjusting our forecast accordingly. As always, if you have questions or concerns about your home, the market, or anything else, we’re here to help and provide guidance through this difficult situation.
—by Laura Bower, Think Real Estate
