Thursday, March 19, 2009

Portland inventory levels off

When I started the blog my goal was to ascertain whether Portland had a housing bubble. I felt the evidence was overwhelming but I too am subject to misreading the market fundamentals. Since the market peak metro area homes prices have fallen 15%-20% and it looks like the negative price trends will continue for the foreseeable future.

The next step is spotting the bottom in the local market. The housing market has many different measures and each one is important to different users. Housing starts and building permits are important to home builders; existing home sales are important to Realtors; median home price is important to home owners/buyers.

To one extent or another I will capture all of these statistics here on the blog. Building permits will be seen in the U of O index and sales volume and median home price will be seen in the monthly RMLS reports. Since I am neither a builder nor a Realtor my personal focus is on the median home price.

One shred of positive news is the year over year change in inventory. Since real estate is seasonal it’s best to compare year over year numbers rather than month over month numbers. Portland, Vancouver, and Eugene all show similar trends in inventory. The graph below is for Portland only, click on the graph for a bigger image.

Note: the source is RMLS not HUD & RMLS

Inventory appears to be leveling off, we need to see inventory levels drop before home prices will level off. We might see this number bounce around +/- 5% but we are done with the 20%+ gains in inventory.

We are not even close to a bottom in home prices but this is a positive sign that we are making progress to that point.