Good News! Inventory is Growing!
Most economists seem to perceive the growing inventory of homes available as a negative sign in the market place. It is generally thought that if sales cannot keep pace with the growing inventory, there will be an oversupply of homes, and values will level off or decline.
I, on the other hand, believe that the growth of inventory creates fluidity! For the past 5 years, we as Realtors have had plenty of Buyers who would like to make a lifestyle change, but they are afraid to let go of their existing home due to the limited inventory for purchase.
Over the past 5 years inventory levels have been hovering around a 2-month supply. For example, if there are 3,000 homes for sale in Portland during an average month, and we are selling 1,500 homes per month, we would sell out in two months. The good news is that we are now up to a 3-month supply, where economists consider a balanced market to be a 4 to 6-month supply.
Whether or not this is good for sellers all depends on your perspective. Yes, for now our annual 10% appreciation is down to 5% and could perhaps dip as low as 2 to 4%. However, many owners have not come to the market due to lack of selection to make a lifestyle change. Many empty nesters are still living in their 4,000 square foot family homes while hoping to downsize to that urban pad or a simple quaint one level home in a quality community. With this shift, there will be more opportunities, and while one may not yield as high a price on their sale, it is all apples to apples when they go to buy, provided they are staying in Portland.
For Buyers, this means they now have choices and the leverage to perhaps have a win-win negotiation on their transaction, versus what we have seen in past years, whereby the seller has dictated all the terms and can select the best offer from a slue of suitors.
The best news for Realtors is that we have work to do! We need to preview more homes, show more homes, and will likely be writing more offers, hoping to create a win-win scenario for all parties. It will also be essential that we guide our sellers to best prepare their homes to compete with the increasing inventory. We must be priced accurately and capitalize on all the marketing engines with the best photography.
In the end, we are thrilled to have more product on the shelves and look forward to serving our customers. It is our mission to provide data and perspective to help our clients achieve their goals, whether that be to move or to recognize that they already have a slice of heaven.