There’s an old saying that got thrown around a lot in the movie business: perception is reality. Whether or not something is real isn’t of particular importance, it’s the perception that it’s real that matters. One could take this adage and apply it easily to advertising or political campaigns, but it also applies in a different way to the housing market.
What buyers and their agents have been seeing all summer- their perception- has been a shifting market in which there are fewer buyers in the pool, fewer offers, fewer sales, and more listings dropping in price. Naturally one would think these factors would mean that prices overall would drop but the reality is that they hadn’t, at least in an appreciable way. Both the median list and sale price on Portland’s west side were up from June to July. The perception has not been the reality.
Until now. We’re finally seeing the data catch up to the anecdotes, and some concrete signs that the market is not just adjusting to one that is more balanced between buyers and sellers, but settling into a new rhythm. One of those big signs is that the median list price and median sale price are now equal.
Could it be that sellers have finally gotten the memo and are pricing their houses accurately? It’s not quite that simple to tie in a bow, but however we got here it’s quite notable that for the first time in a long time, it is more common for a house to sell at or under its list price than above it.
In fact, more houses sold for under their list price than over it in August. Compare and contrast: in May, 842 houses sold over list while 146 sold under. In August, 374 sold over list and 404 sold under. That changed quickly.
The total number of sales- whether above, below or at list- remains markedly down from last August. Pending transactions too are about 1/3 lower than last year, all while the amount of listings going live was only down a blip. Add it all up and it continues to frame the narrative: more inventory leading to a more balanced market.
Moving on, we’re also seeing some sharp movement in the amount of days these sold listings spent on the market before finding buyers.
It’s not that an average of 27.5 days on market is high, because it isn’t. It’s how quickly it jumped back up from the lows that’s remarkable. In addition, the median of 11 days is running about triple where it was this past spring. These are “no duh” statistics: anyone who has been in the market over the last couple of months has seen houses sit longer than they did earlier, and the data is here to back up that perception.
Lastly, a quick look at how people are buying these houses, and the number of cash buyers has been rising marginally.
This isn’t to say that all of a sudden more people have stumbled onto buckets of cash with which to buy homes. There are a handful of logical reasons why this metric is rising. One is that some percentage of buyers were capable of paying cash all along, but chose to finance back when interest rates were next to free, and now they’re not. Another is that more buyers are using financing products and companies that allow the buyer to make a cash purchase, before financing the house immediately after closing. I’m not so sure the numbers would back that theory up though. Finally, with fewer homes selling it may just be that the percentage of first-time home buyers is dropping, and they’re more likely to be financing than someone with lots of equity.
Back to our old saying that perception is reality. The idea is closely related to that of the self-fulfilling prophecy, in which the perception that buyers and sellers have of the market conditions (faulty or not) will ultimately turn those perceptions into reality. As the market becomes more stable and settles into whatever new rhythm it settles into, we should see more instances in which the lagging data confirm the perceptions of a month earlier, and isn’t that what everyone wants?
