Portland Market Melts Down

My first reaction after seeing the January RMLS statistic was something along the lines of “Holy cr@p, the market has imploded!” But after analyzing the data a bit more I realized that the past few Januarys have seen significant jumps month to month. So even though months of inventory jumped another 50% this month, that's not unusual for January. Given the historical trends, I expect the months of inventory will drop in February, so don’t be fooled with the realtors all crow about how months of inventory has peaked and is now dropping.

The trend to keep an eye on is inventory growth. While the total inventory is shocking, the fact that the growth rate has also increased over the past few months shows that the market continues to get worse.

So what’s driving this? If you combine the inventory data with the recent sales data that show average prices increasing while the median price is flat (over on Clint’s blog), I think what we’re seeing is that entry-level buyers, those with less than 20% for a down payment, or those with lower incomes are finding it harder and harder to buy. This will have a ripple effect on seller’s trying to trade up to larger homes.

I’ll post more comments once I’ve analyzed the data a bit more closely.