You all will cut me some slack, won’t you?
Home prices in Salem Oregon
In January 2009, I posted my predictions for real estate in Salem in 2010. My guess? Home prices would drop 5% in 2010. The reality? The average home price dropped 6.6% and the median shifted downward 6.1%. Pffft. I’m blaming the makers of Wheaties for not serving me breakfast in bed at a Holiday Inn Express. Had that occurred, I would have come up with that extra 1%, and I could amaze you all my great predictive powers. Alas, I merely had some green tea in Salem Oregon and we see where that landed me.
Off by 1%.
Inventory is an extremely important statistic in real estate because it is one of the closest measures we have in real estate to understanding supply and demand. When we look at the number of homes listed in 2010 vs. the number that actually sold you can see the disparity between the two. Ideally, the lines would run close together indicating a more healthy supply and demand curve. In 2010, 40% of what was listed sold. That is pretty grim.
What does all this mean going forward?
Here is my opinion. I am sure you will find some Salem real estate agent to give you a Pollyanna view of our market. I’ve already established that she and I aren’t really on speaking terms. The market is still declining. Not huge declines, but our unemployment remains in double digits in Salem with little to indicate that it isn’t going to be hanging there for a while. Our foreclosures, while they had been dropping, are still 4 times more than normal. Our real estate market is still bowled over by excessive inventory. All three of these factors are just going to continue to cause downward pressure on home prices over 2011. If interest rates creep up, that will add more downward pressure.
So, I’m predicting another 5% drop in home prices with a potential for up to 10% if interest rates creep up. Realistically, I think 5-7% is more likely. We’ve had this slow adjustment here in the Salem area, and I fully expect it to continue through 2011.
This data was crunched from information derived from the WVMLS. Data is for single-family, non-farms, ranches, large acreage properties.