In some ways, the Portland real estate market of 2017 will resemble 2016. Strong demand and limited supply will continue to push home prices upward.
But there’s also some change in the wind. Here are three ways the Portland, Oregon real estate market could change in 2017.
1. Home prices will rise more slowly (but will keep rising).
The general consensus among housing analysts and economists is that home prices in the Portland metro area will rise more slowly in 2017 compared to 2016. But they’ll probably keep rising, and they’re expected to outpace the national growth average over the next 12 months.
Portland, Oregon experienced one of the largest home-price increases during 2016, with prices rising well into the double digits. But we probably shouldn’t expect such large gains in 2017. House value appreciation in the area is expected to slow down a bit over the coming months. This is just one of the ways Portland’s real estate market could change in 2017.
In December 2016, the economists at Zillow posted the following message on the company’s website: “Portland home values have gone up 17.0% over the past year and Zillow predicts they will rise 6.4% within the next year [through December 2017].”
This is actually a good thing. Most experts agree that the Portland real estate market needs to cool down, in order to avoid affordability problems. So maybe this is just a return to normalcy, after a period of overheated growth.
2. Mortgage rates will rise above a new threshold.
This is a trend that’s happening right now, and it could change the Seattle real estate market in 2017. In November of 2016, mortgage rates began rising steadily and crossed into a new threshold.
According to Freddie Mac, the average rate for a 30-year fixed home loan rose to 4.16% during the week ending on December 16th. That was it’s highest level since 2014.
The chart above, courtesy of Freddie Mac, shows mortgage rate trends over the course of 2016. You can see the upward trend over on the far right side. We will begin 2017 with a “new normal” for mortgage rates, and this too could affect the Portland real estate market in 2017.
3. Loan limits will rise in response to higher housing costs.
Conforming, FHA and VA loan limits will all go up next year. Federal housing agencies announced these changes in November and December. Loan limits for the entire Portland metro area will rise in 2017, in response to the rapidly rising home prices mentioned earlier.
Here are the changes for next year:
- FHA loan limits will increase to $408,250 in 2017 (up from $368,000 in 2016). That’s for a single-family home.
- Conforming and VA loan limits will rise to $421,100 in 2017, an increase of more than $7,000 over 2016.
All of these changes could affect the Portland real estate market in 2017.