A Monday RMLS report reflecting a shrinking distressed property inventory for Q2 2014 was just one more indicator of a slightly retracting housing market. While distressed property inventory and sales are down in 2014, so is conventional housing inventory.
In a recent article published through the Oregonian, we learned that the Portland Metro real estate market, while remaining on the front burner of what has been an unprecidented measurable recovery of residential housing market value, in recent months is downtrending in sales volume due to an increase in asking price and a reduction of available housing inventory. According to the Oregonian, Portland housing prices are 6.7% higher than they were a year ago, with lower available housing inventory. While sales volume is down a mere 1/10th of 1% for Portland Metro, Eugene, Springfield is not fairing as well.
Portland's real estate market is irratic. One month up, one month down and by any measure unsustainable. The same can be said for Oregon’s second largest market, Eugene, Springfield Metroplex.
Looking to the numbers we find that although closed sales were up,(best June since 2007) they were off when compared to May 2014 and 4.8% below closed sales recorded in the first half of 2013.
According to RMLS: 1691 home sales have closed to date in 2014, with a 2% decrease in inventory over numbers recorded in May. However, average days on market has decreased, with 30 conventional and FHA mortgage interest rates remaining attractive to many buyers. So what’s the problem?
The cause and effect of “Making housing affordable.”
Fewer homes on market tend to drive prices higher. Higher housing prices reduce the number of prospective buyers that can qualify for mortgage loans. There's also another factor that isn’t being talked about, much… According to my sources, more than 65% of homeowners that hold mortgages, have refinanced at historically low rates over the last 48 months. Today’s low mortgage interest rates are 20 to 25% higher than those secured back in early 2013.
When we state “Historically” we’re speaking of a 100 year low.
Would be home sellers are not compelled to move up or down, knowing that a property purchased for a lower price than the subjects current home sale, would come with a higher monthly payment. Add to this realization an increase in FHA mandated mortgage insurance rates, most Eugene, Lane County residents that would be compelled to sell in 2014 will opt to stay in place.
The good news for those that are compelled to sell is that day’s on market is at its lowest duration for 2014. Also, Average and median home prices have increased by 4.7 and 6.3% respectively for the year.
Parks McCants is a nationally read economic, political journalist and a licensed Oregon Real Estate Broker.