My apologies to my non-data geek readers out there. June has ended which is the end of the second quarter in the world of real estate. That means the next several posts will be quarterly reports on the various cities in the Salem Oregon Metro area. If you want the short and quick market snippet, just scroll to the bottom…
I’m getting tired of reporting that home prices are declining so I decided too look at the data a little bit differently this month.
What if the real estate bubble never happened here in Salem Oregon?
For starters…we’d be right where we are price-wise.In the first few years of this decade, Salem Oregon averaged around a 5.5% median price increase a year, based on the WVMLS sold data. If we extrapolate that out, what we find is that we are where we would probably be anyway. In my what-if scenario (the green line) the median home price ended up being $3,000 above the current median. That is good news for people that purchased at the start of the decade…not so good for the bubble buyers. That sounds pretty good, right?
Then we look at the sales volume data…
This chart gets a little bit more confusing due to all of the lines, but it would make this blog post insanely long to have three charts in it. Really, I’m only thinking of your attention span here 🙂
What we have here is a return to a normal listing volume, which is really nice…and a not so normal return to number of homes sold. To me this problem is pretty basic…it’s not really about affordability because we have many well-priced homes on the market, but about demographics. We have too many houses and not enough people. If real estate functioned as a straight line (okay, I know it doesn’t but humor me), then we had 272 too many buyers in the boom, and there were 2079 too many homes listed on the market. What does that mean?
Well, it means that while the Salem Oregon real estate market is essentially returning to normal, unfortunately, homes were built for buyers that demographically never existed. This created our oversupply and we are still eating through that. I’m not expecting any seismic events in our real estate numbers, but I still feel that home prices will still decline, mildly.
For those of you that scrolled down for the quick synopsis for June 2009…
Current inventory: 10.3 months
Average sold price: $200,583
Median sold price: $184,500
DOM: 140 (4.7 months)