Local Market Trends

What started out this year as a solid real estate market in the Foothills area seems to have turned sour in September after numerous misleading reports in major media outlets about plummeting sales and prices.

The reports about a sagging real estate market were true, of course, but only as they pertained to the real estate picture for the nation as a whole. Locally, sales and prices were continuing at near record levels. But outlets including CNN, USA Today, and major television networks frequently reported a declining real estate market without mentioning that their reports referred to national statistics and without mentioning that local markets were being battered in some areas, but not in others. These media reports also did not specifically disclose any areas where the markets were not declining, even though such areas existed.

The local reality was that sales and prices continued to rise through the second quarter of this year, despite news reports to the contrary. The number of sales started to slip in the third quarter, compared to the third quarter of 2005, after news outlets reported huge market declines. These declines had not been occurring locally, however.

Local sales were falling modestly by the middle of the third quarter of 2006, but prices were continuing to rise. In September, however, sales plummeted, causing a general decline in sales for the quarter. While sales fell, prices stalled, but they remained higher compared to the third quarter of 2005.

The median home price for this year's third quarter was down slightly from the second quarter, but remained 5.4 percent higher than last year. Meanwhile, the average home price continued to rise, possibly because of extraordinarily high prices for "Street of Dreams" homes, which were built in the Oregon City area this year. The average price climbed 2.5 percent from the second quarter to the third quarter this year, and was 5.4 percent higher than the third quarter last year.

While sales were falling in the third quarter, the number of new listings was on the rise, seeming to mirror a trend throughout the Portland metropolitan region.

Overall, sales throughout southern Clackamas County's foothills area went from 503 in the second quarter to 494 in the third quarter, a 1.8-percent decline. The area had 602 homes sold by Realtors® in the third quarter of 2005.

The median price for a single-family home declined 3.3 percent from the second quarter to the third quarter of 2006, slipping from $305,000 to $295,050. The median price in the third quarter of 2005 was $280,000.

The median price is exactly in the middle of the prices for all homes sold. The median price is often a more accurate indicator of broader market value because it provides a contrasting picture to the average price, which can be skewed by a few homes being priced unusually high or unusually low.

The third quarter's average price was $358,790, compared to $350,029 in the second quarter and $340,357 in the third quarter last year.

Comparing third-quarter sold prices in the area's larger communities to prices for the third quarter of 2005, Molalla saw a 12.7-percent jump with 74 homes sold and a median price of $235,975, while Canby saw a 9.6-percent jump with 94 homes sold and a median price of $272,000. Wilsonville saw a 6.9-percent increase to a median price of $435,000 with 68 homes sold. Oregon City had a 3.3-percent increase to a median of $303,000 with 215 homes sold.

Accumulated housing inventory in the July-September period this year was estimated at 2.34 months. This is the amount of time it would take to sell all available homes if no more homes were put on the market.

Looking at other nearby communities, the median price for Salem and Keizer rose 17.1 percent to $199,000, while Woodburn's median price rose 16.4 percent to $215,000. Silverton's median price rose 13.3 percent to $241,300.

The table below provides a summary of third-quarter real estate activity. Results include data for single-family detached homes (both site-built and manufactured), as well as for townhouses and rowhouses, in those parts of the following communities that are within Clackamas County:  Oregon City, Molalla, Canby, Wilsonville, Barlow, Beavercreek, Mulino, Colton, Marquam, Aurora, Hubbard and Woodburn.

Month	Units Listed	Listed Volume	Listed Average	Units Sold	Sold Volume	Sold Average	Rough DOM¹
July	307	133,247,446	434,031	189	63,875,830	337,967	48
August	314	135,205,982	430,592	180	61,850,340	343,613	41
September	249	102,593,229	412,021	125	51,516,192	412,130	40
Totals:	870	371,046,657	426,490	494	177,242,362	358,790	44

Total Listed: 870	Sold Units: 494	Remaining Units: 376	Inventory² Accum: 2.28
Min Sold Price: $105,000	Median Sold Price: $295,050	Average Sold Price: $358,790	Max Sold Price: $3,600,000
Source:  Regional Multiple Listing Service, Portland, Ore.
1. Rough days on market. Actual DOM is longer. Rough DOM varies due to reporting inconsistencies among brokers, and is used only to analyze market trends. 2. Inventory Accumulation is an approximation of the amount of time, in months, that would be required to sell all existing inventory if no new listings were received. The equation to calculate Inventory Accumulation is A = R ÷ [S ÷ M], where A is Inventory Accumulation, R is the number of remaining units, S is the number of sold units, and M is the number of months in the reporting period.