Clients and Friends,
Thanks for taking the time to read and respond to these updates! We trust this information will prove helpful (either to you or to someone you know who is looking to sell or buy in 2024), but if all the charts and data are not your style, please feel free to call or email Joni, Catherine, Amy, or Molly to discuss further. We are weekly considering new industry information and how it impacts our clients, and we are more than happy to walk through it all with you.
If you know of anyone hoping to own in 2024 but who is stretched due to affordability challenges, we have been learning about some incredible loan programs and would love to share how they might help create a path to homeownership. According to the Affordability Index on page 9 of the attached Market Action Report, a family earning the median income is able to afford a median-priced home in the Portland Metro area. This sounds great until you read the disclaimer below the graph: “The formula assumes that the buyer has a 20% down payment…” A 20% down payment for a median-priced home is $105,000! That is not an accessible down payment for the vast majority of buyers looking to purchase a home in that price rage. We have resources to help navigate the challenges borrowers are facing in these areas. Owning a home is still one of the best investments a person or family can make in their future; we want to help as many people achieve that as possible!
The January 2024 Market Action Report referenced herein can be found via the link at the bottom of this article.
We’re officially in a new year, which means 2021 numbers have dropped off the charts and we are merely comparing our current numbers to, primarily, 2023 numbers, as well as 2022 numbers. This is the year where we will see a leveling off, as the sharp changes from 2021/22 morph into more moderate changes in numbers from 2023. In fact, if you look at the graphs on pages 4-6, you will see that 2024 is starting off almost exactly as 2023 did, particularly in terms of new listings, closed sales, and average market time. While new listings almost doubled from December 2023 to January 2024, the numbers from January 2023 are virtually identical to January 2024.
In the Residential Trends chart on page 2, you can see that almost doubling of new listings month-over-month, and the chart also reflects a slight increase in inventory (in months) and total market time. Of interest to us is the shift in Average and Median sales prices: while a previous-12-months-calculation will still show these numbers as decreasing, January ’23 over January ’24 shows the numbers increasing again.
As mentioned in previous updates, these numbers are not a one-to-one correlation with price appreciation. Rather, they are a reflection of where the money is being spent; essentially, where are unit sales predominately decreasing. And what you can see from the Residential Sales by Price Range chart on page 3, the trend from December 2023 is continuing: average and median sales under their respective thresholds (under $700k and $600, respectively), both lost unit sales. Meanwhile, unit sales over those thresholds actually gained units sold in January ’24 when compared to January ’23.
While we certainly don’t want to see the downward trend in units sold under those thresholds, the loss of unit sales in these ranges is only partly due to higher interest rates; it is also still a significant supply issue. We need more units available to buyers under these thresholds. The strong trend in higher-priced sales will certainly have somewhat of a trickle-down effect there. Consider, most people buying a home over $700,000 are first going to be selling a home at a lower value. The trouble is, the volume of units needed to meet the demand under the median threshold is much higher. The chart on page 3 shows that units sold under the median threshold more than double the number of units sold over the median threshold.
Bottom line: we still have a supply-and-demand problem, which means we are still in a seller’s market.
As always, if and when you begin to think about selling or buying, please reach out! We are here to help.
The McCreith Team | www.themccreithteam.com
To Email: Joni McCreith
To Email: Catherine Summers
To Email: Amy McCormick
To Email: Molly Barajas
For a full, in-depth analysis, download the PDF below.