All real estate is local, and this monthly report is a resource for those buying or selling on the Portland metro’s west side. The data below is for the areas including but not limited to NW Portland, SW Portland, Beaverton, Bethany, Hillsboro, Tigard, and Lake Oswego, and includes all residential resale transactions (new construction not included).
So, if interest rates are doing this:
Why are prices doing this:
I’m no economist, but even I understand that at some point the cost of purchasing a loan- which has basically doubled in the past year- has to have a negative effect on home prices. After all, that’s the whole point of raising interest rates in the first place. The questions become when will this happen, and where. Not all housing markets are created equal, so it’s rational to believe that the downward pressure on prices will impact some areas more than others. Portland- and particularly the west side of Portland- has been white-hot for some time so the effects may take a while, if at all.
We can examine some of the data points to try and glean something from them. I’ve been noticing a lot of price drops lately, which made me wonder if this is actually happening more than it should or if it’s simply a result of there being more houses for sale right now. If it’s the latter that’s no big deal, but if it’s the former it would indicate that the market is softening, at least around the edges. There do in fact seem to be more than there should be:
That yellow bar is the number of price drops per week for the last six weeks. Where the yellow line touches or is lower than the blue bars (which are the number of active listings per week) indicate a normal balance between active listings and price drops. When you look at the final week on the chart, the yellow line floats above the blue bar. This tells us that the number of price drops is above average, at least when comparing to active listings. Not by a lot, and certainly not anything to write a thesis on, but interesting to see nonetheless.
Similarly, we can run the same graph with homes that found buyers but have since come back on market. We (realtors) call these sale fails, because it rhymes. Sale fails happen for a variety of reasons, with inspection issues typically being the #1 culprit. However, some fail due to buyer financing- which can happen when interest rates shoot up quickly- or, often, they simply fail because the buyer had second thoughts and perhaps doesn’t think they can afford it anymore. Any way you slice it, the number of houses coming back on market can be an indicator of softness creeping in.
Like the graph with the price drops, the yellow line is now exceeding the blue bar, and rising. So yes, at least in the last week there have been more sale fails, and this number exceeds the market average.
Moving on to the monthly statistics. As always, it’s important to note that these stats look backwards a month or more to when the transactions initiated. That’s when the decisions were made.
Median list and sale prices continue to climb, with the sale price up nearly 6% month-to-month and the list price over 7%. That’s…a lot.
Active listings and sales continue to climb (slowly) but don’t match the level at which they were at last year.
No real change here since last month, with 75% of sales happening above the list price. On average, the percent over list that homes sold for is 5.2%. That’s down from 6.4% in March but when list and sale prices are up as significantly as they are, that’s small consolation.
Average days on market continues to get smaller, with half of all transactions initiating in under four days.
No major changes here either. A reminder that even though it seems like every time you get outbid for a house by a cash buyer, it’s only the case 16% of the time.
It takes a while for negative pressure to truly impact the market (when the housing market crashed in 2007, it took two years for prices to bottom out), but any softening at the edges is good news for those buyers that are out there. Between price drops and sale fails there may be more opportunities happening as we speak, and with rising interest rates causing buyers to drop out, the balance between supply and demand should improve. That’s all Econ 101, which works on paper. In real life, it’s not quite as simple.
I am a licensed real estate broker in the state of Oregon. Data is sourced from RMLS, and all analysis is mine and mine alone. Other opinions may vary. If you would like a free analysis of your specific area, please contact me at eli.cotham@eleetere.com or via the contact page.
