Portland area housing market surged in May
The roller-coaster effect of national spending, Oregon's unemployment rate and conflicting economic forecasts are reflected in Portland's residential real estate market.
The number of new listings of Portland area homes in May — 3,419 — skyrocketed 20.1% compared to the previous month (2,847), but was a staggering 30.3% drop compared to May 2019 (4,902), according to the local listing service RMLS.
Contracts for home sales in May (3,112) more than doubled (52.5%) from April 2020 (2,041), but were 5.5% less than the 3,292 offers pending in May 2019.
The number of closed sales — 1,963 — in May decreased 2.6% from the 2,015 transactions recorded in April 2020 and there was a 33.9% drop from the 2,969 closings in May 2019.
The best indicator of June's outcome: May's huge jump in pending sales.
These contracts, which typically close four to six weeks later, means June will enjoy a spike, but it will not match last June's sales, said Kurt Misar, a broker with NW Property Advisors who issues insightful newsletters to clients based on a variety of data.
Other factors are also influencing the home market.
Dustin Miller, a broker with Windermere Realty Trust, said the process of selling a residential property, although altered to conform to distancing guidelines, isn't hampering transactions as much as the difficulty to move safely and schedule a mover.
Miller also thinks Portland's protests will impact buyer interest. "I think a silent group of people may be looking to move from Multnomah County to Alameda Ridge, Garthwick, Dunthorpe, University Park and other suburbs due to safety concerns," he said.
The average time residential properties were for sale in May before receiving an acceptable offer was 38 days, a decrease from 44 days in April 2020.
"The market time is down over 13%, which is an indicator of a seller's market," said Miller. "However, many different price ranges and areas cannot quite boast about that just yet."
Average sale price dipped 0.8% to $467,500 in May compared to April 2020's $477,400.
The median sale price, the point in the middle in which half of the properties sell at a higher price and the other half at a lower price, held steady from April ($424,000) to May ($425,000), but is up 4.1%, from $402,400 to $419,000, when comparing the first five months of 2020 to the same period in 2019.
In other year-to-date comparisons of the first five months of 2020 to the same period in 2019, new listings in the Portland area (15,409) decreased 15.6%, pending sales (11,846) decreased 9% and closed sales (10,173) decreased 7.4%, according to RMLS.
Sellers at almost all levels continue to profit from the low number of residential properties for sale in Oregon, the state with the largest housing shortage in the nation.
The number of homes for sale has been dropping in the Portland area since January 2019, and even then, with a 3.3 month supply, it was considered a seller's market.
In May 2020, there was a 2.3-month supply of homes for sale, which was steady with April 2020's 2.4-month supply but an increase from March 2020's 1.8-month supply.
Inventory is calculated by dividing the active residential listings at the end of the month by the number of closed sales and homes proposed and under construction.
Misar with NW Property Advisors said low inventory affects price, but not demand.
Demand is based on buyers' financial strength, consumer confidence and motivation. If people have lost their job or are working less during the economic crisis caused by the coronavirus pandemic, the burden of taking on a hefty mortgage is less attractive, he said.
In this turbulent time, buyers who haven't lost their source of income and have acceptable debt-to-income ratios are cashing in on mortgage rates in the historically low 3% range.
Rates as of June 18 are 3.13% for a 30-year fixed mortgage, according to Freddie Mac.
Mortgage rates are expected to remain low, motivating buyers and sellers.