Curious about those numbers?
Those are greater Portland’s dwindling home supply figures over the past three months. Our area would now ‘run out of homes’ in a miniscule 1.7 months.
Homesellers may describe this phenomenon as the ‘countdown to ecstasy.’ That’s because a shortage of homes boosts demand for what they’re selling. As a result, home prices rise.
Given such low inventories of available homes, buyers are now actively competing for a dwindling number of available properties.
In some local Oregon towns and neighborhoods, multiple offers that are above-list price are currently the norm, not the exception. These latest housing figures are startling, since a ‘normal’ level of home inventory for our area has typically been between 3 to 6 months.
While supply and demand are often cyclical, looking at the above figures, it’s clear that our most recent home supply shortage began in earnest around March of this year.
There are several reasons suggested for this shortage of homes. One reason is because many builders got out of the housing business when the severe market downturn begin in late 2007. So there are simply fewer builders building.
Lenders are also more cautious these days. So even if builders wish to get back into the housing game, it is more difficult for those deemed by lenders as ‘undercapitalized borrowers.’
Plus, with each successive round of homebuyer demands (think Internet wiring, or that necessary extra half bathroom) and building requirements (think yard setbacks, environmental considerations, minimum lot sizes and a myriad of onerous housing regulations), it’s simply more costly to build a home.
While our current ‘seller’s market’ is hardly unique throughout the country, what is unique to the greater Portland area is our regional quasi-government institution known as Metro, which has a ‘2040 plan’ that restricts growth to certain areas.
Some insist Metro’s limits of where development can occur helps to create artificial shortages of available land where many wish to live. Interestingly, residents throughout the greater Salem, Oregon region currently have a 4.3 month housing supply. That’s more than twice that of greater Portland.
A Tale of Two Cities
New of late are rapid sales in such disparate, far-flung Oregon locales as Waldport and Estacada. Normal market times for such far-reaching areas used to be calculated in months or longer. However, recent trends have greatly shortened market times throughout much of the state. Now even outlying areas are now selling briskly, compared to several years ago.
For now, first time homebuyers are competing and frequently losing out to cash buyers moving in from out of states like California. That state’s lack of water, significant crime and changing political climate have many homebuyers looking north.
In addition, landlords are seeking rental properties, while investors also eat away at an already measly number of available homes. The threat of rising interest rates add to the frustration for many, who tell themselves ‘If I can just find ONE affordable house I like!’
The ‘What Next?’
In this seller’s market, buyers are scrambling and sellers are smiling. It’s simply the reverse of what we saw five or six years ago. Given the ‘pendulum effect’ of real estate’s ‘boom and bust’ cycles, expect that before too very long we will once more move back into more of a balance. In the meanwhile, give yourself every advantage by working with an experienced, full-time Realtor who is prepared to respond rapidly to such a fast market.