More jobs and less houses?

2011 finishes with 2 major indexes showing the lowest levels in 3 years for the Portland Metro area.

1. Unemployment = 8.9%.  We have finally broken the 9% floor and continue to move lower.  Dropping 2 tenths of a point from November, after being seasonally adjusted.  The highest level reached was 11.6% in mid 2009 and has been generally declining ever since.
2. Unsold housing supply  = 5.3 months inventory.  This is the lowest level of inventory for the last 3 years reporting. The highest level of inventory was early 2009 and reached near 20 months.  That's almost 2 years supply of homes on the market.  It hasn't been a steady decline the last 2 years.  It's been more like a yo-yo, due to 2 significant tax incentives. These incentives increased buyers activity before those key times, and then were followed with sluggish behavior, until 2011, which appeared to be a steady decline.

We know that buyers have been helping gobble the inventory because low home prices and low interest rates, are making record low monthly payments.  Also, inventory has been held low, as 2011 has shown less foreclosures being taken back by the banks.

But let's be frank.  Without jobs, there is no consumer confidence.  Potential buyers with fear that any day they will be next in the unemployment line, won't be shopping for a house. 

Therefore, it is no coincidence that these 2 indexes are declining hand in hand.  Although, 5.3 months inventory is a great number in the real estate world, 8.9% unemployment is no figure to write home about.  And with economists still threatening that banks are withholding a large number of shadow inventory yet to hit the market, we should still stay on our heels.  But, the clouds are lined with silver now.

Percentage of Distressed Sales in the Portland Market

Below is a graph made by the local multiple listing service showing the percentage of homes that are bank owned vs short sale, and compared to traditional transactions.  It's about 20-30%.  Remember a short sale, will likely become a bank owned, if it doesn't move into the SOLD category. 

Look at the size of the short sale listings that become a sale, vs the size of the bank owned that actually become a sale.  Most of the traditional listings that don't make it into the SOLDs, likely are home owners that decide now is not the time to sell, and they stay there.  However, most of the short sale sellers, that are unsuccessful at selling, still move.  When they move on, the house goes back to the bank.  And it will reappear again on the market. 

The inventory of bank owned will likely increase in 2011.  However, they have made their mark already in our marketplace.  Banks are interested in selling for fair market value these days.  It's the short sale sellers that are the motivated ones, that drop their price below fair market value, just to avoid foreclosure.  In these instances, these short sales are likely to fail and become bank owned.  It isn't truly new inventory added to the market.  It's actually the same house, now with a new owner, and typically, the price is fair market value.  The only grumblings are that we don't like what we see considered fair market value any more...

March is in like a LION

March real estate activity numbers are in for Portland Metro home sales.

Below is a summary of the report from the Portland Association of Realtors.

The most recent data is actually pretty promising.  From February to March we saw increases in Median and Average sales prices.  We saw an increase in listings too.  But based on all the new pendings and closed sales, we were able to see a significant decrease in inventory!  The decline was seasonally normal, however, it managed to be the lowest March inventory for the last 3 years.