Buying a Home in Portland, Oregon in 2017: Top 5 Questions Answered

Are you thinking of buying a home in Portland, Oregon in 2017? Do you have questions about the real estate market, mortgage loans, or other aspects of the home buying process?

You’ve come to the right place. Below, you’ll find an update on current market conditions, home prices, loan limits, and other topics of interest to Portland home buyers.

Buying a Home in Portland in 2017: Top 5 Questions Answered

Below, we have compiled some of the most common home-buying questions, and have done our best to answer them thoroughly. We hope this update helps you make an informed decision when buying a home in Portland.

1. What is the local real estate market like?

The Portland, Oregon housing market is very competitive right now, as we head into 2017. In fact, it has appeared on several lists of the “hottest” markets in the U.S.

There is a high level of demand for housing in the area, but limited supply. This has led to significant home-price gains over the last couple of years. (See question #2 below for more about price trends.)

Portland’s robust tech industry attracts young and upwardly mobile residents from elsewhere in the state, and from across the country. This, among other things, has increased demand for housing.

The local real estate market might cool a bit in 2017, but it’s still expected to outpace the nation next year as it did this year. One forecaster predicted that Portland could be among the top three metro areas in 2017, in terms of home-price increases.

Related: local market forecast for 2017

Bottom line: If you’re planning to buy a home in Portland in 2017, start preparing now. Speak to a mortgage lender (like us!) about your financing needs. Get pre-approved for a home loan. Start researching the market and the neighborhoods where you might want to live. Get a feel for home prices in your desired area. This preparation will pay off later on, when it comes time to make an offer and negotiate with the seller.

2. Are home prices still rising in Portland?

Yes, home prices in Portland, Oregon are still rising steadily. According to the most recent Case-Shiller Home Price Index, published at the end of September, home values in Portland rose 12.4% from July 2015 to July 2016.

According to that report: “Portland, Seattle, and Denver reported the highest year-over-year gains among the 20 cities [covered by the index] over each of the last six months. In July, Portland led the way with a 12.4% year-over-year price increase.”

House values in the area are expected to continue rising throughout 2017, though possibly at a slower pace than what we’ve seen in 2016. Zillow, for example, has predicted an increase of 7.5% between October 2016 and October 2017.

Bottom line: When buying a home in Portland, it’s important to understand the impact of appreciation. Buyers who postpone their purchases until later in 2017 will likely pay higher prices for a house. On the other hand, those who purchase sooner rather than later could have more buying power, and more homes to choose from within their price range. You never want to rush into a major financial decision like home buying. But you do need to consider the potential cost of waiting.

3. What are the 2017 loan limits for Portland, Oregon?

The current (2016) conforming loan limit for a single-family home in Multnomah County is $417,000. Anything above that is considered a “jumbo” mortgage. The current VA loan limit is also $417,000. The FHA limit for a single-family home in the county is $368,000.

As for the 2017 limits, we’ll have to wait a bit longer to find out. The Federal Housing Finance Agency typically announces the next year’s conforming loan limits in November. Following that, HUD will probably announce the revised 2017 FHA limits in December. We will update this page when new the new figures are announced.

Related: Portland home prices and FHA limits

Bottom line: If you need a mortgage loan to buy a home in Portland in 2017, you’ll encounter some kind of limit on the amount you can borrow. Homes that exceed these limits generally require jumbo mortgage loans, and you might have to make a larger down payment in order to qualify. This is why most home buyers in Portland stay within the limits for their particular mortgage program (VA, FHA or conventional).

4. How much can I afford to buy in Portland?

When you apply for a mortgage loan, the lender will compare your recurring monthly debts to your monthly income. This is known as the debt-to-income ratio, or DTI. This ratio helps lenders ensure that you’re not taking on too much debt. So that’s one of the factors that will determine how much you can borrow.

As to how much you can comfortably afford, that’s something you must determine for yourself. Start by taking a good look at your current monthly expenses and income. Focus on your non-housing expenses, for starters. Figure out how much you spend on non-housing costs like car payment, credit card bills, groceries and lifestyle expenses. Subtract that number from your net monthly income (or take-home pay), and then work down from there to determine a maximum mortgage payment. Be sure to account for savings and retirement contributions, as well as a financial emergency fund.

Many financial advisors recommend spending no more than 33% of monthly income on mortgage payments, but this is just a general rule. You’ll want to do the math to find out what works for you.

Related: Income to buy a home in Portland

Bottom line: Getting pre-approved for a mortgage loan is a great place to start. This will help you determine how much you can afford to buy in Portland, based on your loan amount. Pre-approval will help you narrow down your home search. It will also make you more competitive, as a home buyer. (Sellers will take your offer seriously if it’s supported with a pre-approval letter.) Please contact us if you’d like to get pre-approved for a loan.

5. What are mortgage rates expected to do in 2017?

The average rate for a 30-year fixed mortgage loan has been hovering at or below 3.5% since June, according to Freddie Mac. The general consensus is that rates will stay low through the end of 2016, and into the start of 2017. The long-range forecast suggests a gradual rise in mortgage rates as we progress through 2017.

The Mortgage Bankers Association (MBA) expects the average rate for a 30-year fixed home loan to reach 3.7% by the end of 2016, and to continue rising gradually throughout 2017.

Here is their quarterly outlook for 30-year mortgage rates, issued in September:

  • Q1 2017: 3.9%
  • Q2 2017: 4.1%
  • Q3 2017: 4.3%
  • Q4 2017: 4.4%

Of course, the MBA made a similar prediction at the end of 2015, and mortgage rates actually declined over the course of 2016. So these forecasts don’t always prove accurate.

Need a loan? Will you need mortgage financing to buy a home in Portland in 2017? We can help. Sammamish Mortgage has been serving buyers across the Pacific Northwest for more than 20 years. We offer a wide variety of mortgage products and programs with flexible qualification criteria. Please contact us today with any financing-related questions you have.