A Feverish Market Amidst a Pandemic
Written by Vice President & General Manager, Eric Templeton
Back in March, I’m sure every one of us tried to predict how the COVID-19 virus and resulting societal changes would affect the local real-estate market; and I’m equally sure that nobody saw it unfolding the way it has. However, with the benefit of hindsight and Microsoft Excel, it’s pretty easy to understand how we got to where we are today.
Since the beginning of this altered state of being, AmeriTitle has been studying some key metrics on a weekly basis in order to see in real time how the market is responding. The data comes from Oregon’s WVMLS and includes all residential listings less than five acres in the Willamette Valley (you need an account to access the information, but their website is here). The graph below compares new listings (additions to the available inventory) to those going under contract (reductions to the available inventory) on a weekly basis going back to the beginning of 2018. In order to smooth out the volatility, each data point is a four-week rolling average.
Even prior to the disruption, new listings were slow coming out of the gate in 2020. They dropped off considerably in March and April before rebounding, but they never climbed back up to normal summertime levels. On the other side of the coin, demand was high to start the year with listings going under contract as fast as they were hitting the market. When the shutdown occurred, buyers joined sellers in slowing down for a couple months initially, but then they came roaring back full of pent-up demand to purchase homes.
Listing inventory in 2020 has held relatively constant with roughly 2,100 homes on the market in the Willamette Valley at any given time. However, the mix between available inventory (active + bumpable) and spoken-for inventory (active under contract + pending) has changed considerably. We started 2020 off with 1,469 available listings vs. 668 under contract, and at the time fewer than 100 were going under contract each week. In contrast, as of August 22, those levels have almost exactly switched places with 667 available and 1,473 under contract. Meanwhile we have more than doubled the number of accepted offers each week.
So we’re simultaneously experiencing a record-low number of available listings, a record-high number of contracts being written each week, and a general reluctance for would-be sellers to list their homes. At our current contract-writing rate, we only have about 21 days of available listings in the system. And this is traditionally the time of year that we begin building inventory through the winter.
Predictably, this abundance of demand and lack of supply is putting upward pressure on pricing. Median sales price is up 10% from the beginning of 2020, and we are currently experiencing average sales prices in excess of original list prices for the first time in two years.
My bet would be that most of us believed back in March that high unemployment, low consumer confidence, and a general fear of the unknown would cause the residential real-estate market to grind to a screeching halt. We were wrong – but only time will tell the long-term effects this pandemic will have on our industry. Stay tuned.