Sales activity in the Portland metro area showed marked improvement thi s December compared to the same month a year ago. Closed sales were up 52.6% compared to December 2008 and pending sales rose 40.9%. New listings also rose 11.9%. On the other hand, compared to November 2009, closed sales fell 16.1% (1,506 v. 1,795). Pending sales dropped 14.1% (1,141 v. 1,328). New listings fell 15.8% (2,104 v. 2,499). At the month’s rate of sales, it would take approximately 7.7 months to sell the 11,597 active residential listings. 2009 Summary Comparing activity from 2009 with that of 2008, pending sales increased 4%. Closed sales were 0.9% short of the 2008 total. New listings fell 18.8%. See residential highlights table below. Total sales volume for 2009 was $5.5 billion, down from $6.3 billion in 2008, and $9.7 billion in 2007. Sale Prices The average sale pr ice for December 2009 was down 2.5% compared to December 2008, while the median sale price declined 4.2%. Compa r e d t o November 2009, the average price rose 7.3% ($293,300 v. $273,300) and the median grew 1.3% ($242,200 v. $239,000). For the year, the average sale price dropped 12.2% compared to 2008. The median price fell 11.2%. See year-to-date information in the table below.
I know this is a lot of numbers that may not make sense to everyone, but I do think it's important to give a background on where we are coming from. In 2010 I believe that prices will continue to decline due to the number of short sales and bank owned (REO) properties out there. Also interest rates are still unbelievably low and have been hovering at or below 5%. Eventually rates are going to have to go up. As this happens buying power will start to go down. For example, if you are trying to buy a $300,000 house at 5% your monthly payment will be $1610. If you are buying that same $300,000 house at 6% it would be $1798 per month and if went up to 7% it would be $1996 per month. You can see how much the rate can affect your monthly payment. Now assume you are stuck with a budget of $1610 a month and the rates are at 7%. Where you were going to be buying a $300,000 house, you are now only able to spend a little over $240,000. If you add this reduction in buying power to the pressure to compete with 'distressed properties', I think values will continue to fall for the short term.
NOW HERE IS THE SILVER LINING! If you are currently looking to buy a home you are in great shape! The example above shows how much more buying power you have right now. With the number of short sales and REO properties, there are some absolute steals out there. I have seen homes out there that are literally at 2003 or 2004 prices. Now if I could tell you that you could go back in time and buy a house in 2003 before the big bubble, wouldn't you jump on it??? I would too! However, in 2003 interest rates were hovering around 7%. So now you get the 2003 price with the current 5% rate. That goes a long way in helping out with the monthly budget!
I could go on for days and bore you to death with stats and figures, but I won't. Overall, I think 2010 will have a slight drop in prices for homes and rates will start to climb. If you are looking to buy, I would act quickly. A large jump in rate will more than outweigh a small drop in price. As always if you have any questions feel free to call or e-mail me. I'm always available! You can always check out my website at: www.aaronstelle.com as well.
Here's to a safe and prosperous 2010!
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