Thinking about buying a home in Salem, Oregon in 2018? If so, you should know that the local real estate market has changed significantly over the last few years. This is especially true when it comes to home prices and inventory. Prices have gone up, while inventory has dropped.
Here’s a look at current real estate market conditions for those who are planning to buy a home in Salem in 2018.
The Cost of Buying a Home in Salem, Oregon
In cities across the Pacific Northwest, home prices have risen significantly over the last couple of years. This is true for the major population centers like Seattle and Portland, as well as medium-sized cities like Salem. Annual price growth in the region has far outpaced the national average for the last two years.
So, how much might you pay when buying a home in Salem in 2018? The median home price (which is basically the midpoint for the real estate market) rose to around $260,000 at the end of 2017. And house values in Salem, Oregon are expected to continue rising in 2018.
According to the real estate data company Zillow, the median home price in Salem rose by 12% over the last 12 months (as reported in January 2018).
That’s some significant appreciation, especially when you look at the averages for the last couple of decades. In “normal” years, home prices in the U.S. tend to rise between 3% and 5% annually. The double-digit gains reported for the Salem, Oregon real estate market far exceed these historical averages.
That’s the first thing you should know about buying a home in Salem 2018. House values today are much higher than they were just a few years ago. Still, Salem is considered to be a fairly affordable real estate market, in relation to median household incomes in the area.
The good news, for those planning to buy a home in Salem, is that prices appear to be slowing down a bit. The economists at Zillow predict that the median home value will rise between 5% and 6% over the next 12 months (into the start of 2019). That’s closer to the historical averages mentioned earlier. So the Salem real estate market could be getting back to normal, at least in terms of annual appreciation.
But the inventory situation is still abnormal.
Housing Inventory Is Still Below “Normal”
This is another important trend for those planning to buy a home in Salem, Oregon in 2018. Like much of the Pacific Northwest, this housing market is currently experiencing an inventory shortage. There is still plenty of demand from home buyers, but not enough properties for sale to satisfy that demand.
This is true for much of the country right now, but the shortages are most pronounced within the major cities of Oregon and Washington.
A “balanced” real estate market is said to have around a 5- to 6-month supply of homes for sale. As of December 2017, Salem had around a 1.8-month supply of homes for sale. So from an inventory standpoint, it’s still a sellers market.
Higher Loan Limits Are Available in 2018
Here’s more good news for Salem home buyers. Loan limits across the state of Oregon have been increased in response to significant price gains. This is true for FHA, VA and conventional mortgage loans. This means borrowers have higher financing capacity, without having to use a jumbo mortgage.
The conforming loan limit (for a conventional or “regular” mortgage) was increased to $453,100 for 2018. This limit applies to Salem and all of Marion County, Oregon. Anything above that amount is considered a jumbo loan.
FHA loan limits were increased to $294,515, for a single-family property.