Is The Summer PDX Market Cooling?
Today we're going to talk about the temperature of our local real estate market. I've heard a lot of opinions and bold claims recently and think it's important to stop and look at the facts to decide if any of these claims contain truth.
The strength or “temperature”, if you will, of the real estate market is measured by something we call “inventory”. Inventory is the number of months that it would take to sell all out of all of the homes on the market if we stopped putting homes on the market at the moment this inventory was measured. A “cold” real estate market - or a “buyers market” - is when inventory is above 9 months, a balanced market is 6-9 months, and a “sellers market” is less than 6 months.
The RMLS report for July (2017) came out recently and it contained some interesting information for this particular statistic. Every July for the last few years, the market inventory has increased over the June market - but this July, it increased a bit more.
At 2.1 months, this July was our highest monthly inventory number since February of 2015.
Before we sound the alarm and start crying "the sky is falling" in true chicken little fashion, I want to give you a few reasons why this number is not necessarily a cause for concern, but rather it is likely just a sign that the market is as hot and healthy as ever...
First, it’s not a lot higher than it’s been in recent similar times of the year - for example, last year we saw 1.9 months of inventory in July (only a 0.2 month difference). In both September and October of last year we saw 2.0 months of inventory. So, 2.1 isn’t an astronomical leap.
In the first 7 months of this year, we have averaged 0.1 more months higher in inventory each month than the same month last year - April was 0.3 months higher than April in 2016 - and this 2.1 number is only 0.2 months higher than July of last year. In other words, this isn’t a new trend - it was to be expected.
2.1 months of inventory is still an extremely hot market when considering that a balanced market is 6-9 months of inventory.
To summarize, while we have seen our highest inventory in 2.5 years, it’s not drastic enough of a change to start panicking or making fearful assumptions.
That said, a market cooling would have to start somewhere - and perhaps this last April was the beginning of some slowing to come. If you’re thinking about buying or selling real estate in the Portland Metro area and would like to discuss what your options might be as we head into a possibly cooler fall and winter market, please reach out to me so we can connect.