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Last year, at the end of June 30, the tax credit ended.   July was the first independent month that the real estate world had last year and the statistics were dismal.  It isn’t suprising, then, that we sold more homes this July that last July. It was kind of hard not to.    That said, it still wasn’t a stellar month.  Real estate is still quite slow and will be for a while.

Inventory in Salem Oregon is at 10.35 months currently.  Still a healthy ways away from the coveted 5-6 months of inventory we all desire, but still better than the one year plus inventories present for all of last year.  131 homes sold in July compared to the exceptionally dismal 102 that were sold in July 2010.  It was an ugly summer last year.

Foreclosures and short sales made up 21.3% of sold homes in July and has been inching up slowly over the past year.  I would anticipate that 25% of sales will be distressed properties by the end of the year.

Home prices took a tumble at the start of this year and the median was at $147,000 for July with a median of $152,000 year to date.  It has been hovering around $150,000 for most of this year as that seems to be the number that works for buyers.  Buyers in the starter home price range are finding that the good properties are getting scooped up fairly quickly and what is left isn’t exactly what they want.

As you know if you read my post from last month, Salem was named one of the worst real estate markets in the country based on NAR real estate data.  You can read how I feel about their data in that post.  I won’t rehash it here.  What I do want to talk about is the 2nd quarter data.  The monthly reports always have some swing in them since the data group is so small.  The more data we have the better quality the analysis I can do on those numbers in terms of trends.  Salem is trending towards some sort of stabilization here.

As you all know home prices have dropped oodles this year.  Yes, oodles is a statistically appropriate real estate term much like “needs a little TLC” means bulldoze the house.  Quarter over quarter from 2010, the median home price shifted downward 12.6% from 2010.  As I said in my rant post about the NAR before, this is entirely expected.  You can’t prop up housing prices with the tax credit without consequences.    The market has dropped 26% since the peak, and we are essentially at 2004 home prices.  So what that means is if you bought your home in 2007 and put $30,000 of remodeling into it, you won’t get it back.  Not even close.

So while that sounds like really horrible news, the good news is that inventory is currently at 10.7 months.  So if nothing else was put on the market, everything would be sold in 10.7 months.  Compare that with much of last year’s 15 month inventory and that is a definite improvement.  21% of homes that sold in the second quarter were foreclosures.   Ugly, but I’ll take it compared to some parts of California and Arizona.

So the number of homes sold in the second quarter was down compared to last year, but it’s that whole tax credit thing messing with the data again.  The 3rd quarter should show a big improvement from last year since all those summer buyers were shoved into the first two quarters.  Home sales are down 7% year to date from 2010, which is pretty good considering we don’t have a $7500 incentive this year.   The other positive aspect to the market we are seeing is fewer homes being listed for sale.  The regular seller knows it is a tough market and the number of homes listed over last year dropped.  This has really helped our inventory start to come down.   This is a good thing, and I encourage sellers that are wanting a certain price in order to sell to stay off the market.  While we are seeing some initial signs of stabilization, this is by no means a “let’s see if we get what we want” kind of market.

April 30th of 2010 ended the eligibility for the home buyer tax credit.  No big surprise that home sales were down year over year as a result.  Year to date sales are down 2.8% year over year.  I think this is pretty good considering the unnatural boost that happened in 2010 due to the credit.

Inventory is down to 10 months in Salem proper.  Last month it was 12 months, which means buyers were out at we ate up two months of inventory in just one month. Remember the goal is to get down to 6 months, which is that coveted normal inventory benchmark.

Home prices dropped just like in previous months.  Again, this wasn’t unexpected as we all know home prices were a bit inflated due to the tax credit of last year.  I think home prices are finally starting to get more inline with Salem incomes, but unemployment remains a problem which has impacted the market recovery.  The demand for lease options and owner financing has skyrocketed here locally with few sellers able to offer those options.

Improvement is happening in the market, but it will be a long slow process ahead.

Data in this blog was crunched from data provided by the WVMLS.