Market Trends Create Opportunities For Condo Buyers
General awareness of Portland’s declining market has picked up steam in recent months, leaving many sellers stranded and bringing transactions in some areas almost to a halt a mere 9 units sold in the Pearl district in the last month). While the overall situation is anything but encouraging – especially for builders, sellers and homeowners in default – several favorable trends are emerging for buyers. Consider these findings from Portland State University’s Center For Real Estate Quarterly Journal (PDF):
It Is Taking Longer to Sell Condos, 80 Percent Longer
Based on the latest figures from RMLS, condominiums in the four west side submarkets for 2008 needed an average of 114 days to sell. Detached homes, by contrast, sold after 67 days. The graph below shows condominium sales between 2004 and the present. The current market time of 114 days over last year’s 63 days represents an increase over 80 percent. The more time a unit spends on the market, the more likely a seller will be inclined to negotiate. Eighty percent is a lot more!
Supply Is Up, Demand is Down
With high levels of inventory, the central Portland market has only averaged 80 sales per month, down 33 percent from last year’s average of 119 sales per month. July, typically a strong month for residential sales recorded only 85 sales this year — one hundred sales fewer than were recorded for the same month in 2007. Economics 101: fewer buyers are competing for more inventory, generally producing more flexibility on behalf of sellers and creating downward pressure on pricing. Demand is particularly thin towards the end of the year, typically producing very little competition among buyers.
The Pool Of Qualified Buyers Has Shrunk
The residential real estate market has experienced tightening lending standards due to the fallout from the subprime mortgage market. The days of income-stated and no-money-down loans have long passed. Today buyers typically need to bring a minimum of between five percent to ten percent equity before being approved for a mortgage. This has significantly reduced the number of qualified buyers as evidenced by a greater proportion of condominium buyers purchasing with cash. Out of 691 west side condominium sales tracked by RMLS this year, 182 sales (26 percent) were purchased with cash at an average price of $578,000. The same report showed that only 15 percent of homes on the west side were purchased in this fashion.
Now may not be the easiest or best time to buy for everybody, which is precisely why it can be the right time for some…
