Last summer when we went to Bend for our summer vacation, true to form about 30 minutes into the car ride we got the yell from the back seat “How much longer?” Every few miles we got the notorious question. I think it is a genetically programed question into the brain of every child to ask their parents every few minutes “Are we there yet?” I know, you’re thinking what do my Saturday night ramblings have anything to do with real estate…Just bear with me here while I spin my thoughts…
Everyone wants to know if we have hit bottom. I think my poor crystal ball has been clasped so many times in my sweaty palms as I started into its depths in order to answer that question for every home owner and home buyer that asks. What my crystal ball says to me seems to be directly proportional to how much coffee I have had that morning though so I’m not sure if the crystal ball is really talking to me, or I should have gotten one less shot of espresso in my mocha that day…but back to real estate.
So what this graph shows is the year over year (ie Aug 08 vs. Aug 09) median price difference. In this case a price drop. It is my opinion that the median home prices didn’t drop as much in the 3rd and early 4th quarter as much due to the tax credit. Buyers jumped in the market in much greater numbers than usual and caused the prices to remain higher than normal. With less buyers in the market, the prices plunged in December and January. Now these are Salem Oregon specific real estate numbers. The median home price plunged 21.9% Jan 2010 over Jan 2009. This was inevitable to make up for the lack of correction earlier. I really don’t think the market is going off a cliff right now.
While it appears that the prices are declining rapidly, the flip side of this is the sales volume. That big peak was of course the expected end of the tax credit. Sales were up 6.25% this January over January 2009 and for the past 6 months each month had more sales than the previous year. So that is a good trend. Buyers are out. The sales volume is still low, but positive is a good direction to go. Not surprisingly, the percentage of sold homes that are distressed properties (meaning short sales or foreclosures) has been slowly creeping up. I have no doubt that this will continue to creep up all year. I’m hoping it tops out at about 25% but we’ll just have to see what happens as the year progresses.
So, what is the point of all of my rambling…well this is a very long answer to those of you that ask me “are we there yet? Is Salem Oregon at bottom?” My answer to you is the same answer I give to my kids in the car…”we’ll be there in a little bit.”
P.S. Data was crunched from the WVMLS.