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ECONOMIC OVERVIEW
I’m happy to report that employment in Oregon continues to grow at a fairly healthy rate. Through November of 2015, the state added 51,000 new jobs for a growth rate of 2.9 percent. As we move into 2016, I anticipate that the region will continue to expand its job base, but at a slightly more modest pace.
In November the state unemployment rate was measured at 5.7 percent—down from 6.2 percent seen in September. In my last report I suggested that the increase in the unemployment rate was a temporary “blip” and it appears as if I was correct. I expect that this rate will also continue to contract as we move through the year.
HOME SALES ACTIVITY
- Sales activity rose by 11.9 percent compared to the fourth quarter of 2014, with 14,600 home sales.
- As we have seen in the past, sales rose at the fastest rate in smaller counties, with Hood River, Columbia, and Marion Counties leading the way.
- Double-digit percentage increases in closed sales were seen in a majority of the counties, but we did see modest declines in four counties.
- It was interesting to note that we are starting to see home sales slow in select counties. I believe this is due to a lack of inventory rather than any other reason.
HOME PRICES
- Average prices in the region rose by 7.1 percent year-over-year to $308,373. We are starting to see a slowdown in price growth, but I attribute this to a lack of inventory.
- When compared to fourth quarter of 2014, Skamania County continues to see the strongest price growth with home prices rising by 34.3 percent. This remains a function of the size of the market, which allows for substantial swings in price.
- All but three counties saw prices rise compared to the fourth quarter of 2014, with eight counties showing double-digit percentage gains.
- Prices fell in three counties, but again, these are counties where relatively few transactions take place so they are prone to extreme swings.
DAYS ON MARKET
- The average days it takes to sell a home in the region dropped by 18 days when compared to the fourth quarter of 2014.
- The average time it took to sell a home in the region was 100 days.
- Klamath and Hood River Counties were the only two markets where the average time it takes to sell a home rose, but these are relatively small areas, so there’s no cause for concern.
- It still takes less than a month to sell homes in the Portland area market.
CONCLUSIONS
The speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates and larger economics factors. The Oregon economy continues to expand and I do not see this changing in the foreseeable future. However, similar to many West Coast markets, Oregon’s inventory constraints are becoming problematic. I believe we will see more listings come online in 2016 as home equity levels continue to expand, but unfortunately it will not be enough to meet demand, and the market will remain imbalanced. I have kept the needle at the same level as last quarter. The market currently favors sellers, but buyers are growing weary of multiple offer situations and are likely to wait for inventories to rise, which will hopefully happen in the Spring.
Looking forward, I believe 2016 will be a year of few surprises. Because it is an election year, I do not expect to see any significant governmental moves that would have a major impact on the U.S. economy or the housing market.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.
