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Outlook: Oregon Homes and Mortgages Will Cost More in 2018

A trio of recently updated mortgage rate forecasts — along with a home price outlook for Oregon — suggest that home buyers and mortgage shoppers could see higher costs ahead. Collectively, they make a strong case for buying a home sooner rather than later.

Outlook for Oregon Home Prices Through Fall 2018

It’s no secret that homes are getting more expensive in Oregon. House values have risen steadily over the last couple of years, largely the results of a skewed supply-and-demand situation. Short supply and strong demand are boosting prices across the state.

But what does the future hold? What is the outlook for Oregon home prices and mortgage rates in 2018? According to recent forecasts, both are expected to rise over the coming months.

Let’s look at house values prices first. According to the real estate information company Zillow, the median home value for Oregon reached $314,000 as of October 2017. That was an increase of nearly 10% over the same month a year earlier. Looking forward, their economists expect prices to rise by around 3.7% over the next year or so (ending in October 2018).

Related: Are mortgage requirements easing?

So while they expect home prices in Oregon to slow down a bit, they also anticipate a continued upward trend stretching into 2018.

This outlook should come as no surprise when you consider the current supply and demand situation. Housing markets across the state of Oregon are experiencing low levels of supply, relative to demand. In some of the hottest markets, like those in and around Portland, there is currently less than a two-month supply of homes. A six-month supply is considered to be a well-balanced market.

Live Oregon Mortgage Rates Dec, 14, Sat, 2019

Mortgage Rate Forecasts from Three Sources

That’s the home price outlook for Oregon, stretching and 2018. On the mortgage side, we have three recently updated forecasts that suggest rates will rise over the coming months.

The first mortgage rate forecast comes from the personal-finance company Kiplinger. In September 2017, their analysts predicted that 30-year fixed mortgage rates would average 4.3% in 2018. (They were averaging around 3.8% when this article was published, according to Freddie Mac.)

In September, the company stated: “In 2018, look for the effects of the Fed’s short-term rate hikes and securities-purchase reductions to boost long rates by another 0.4 percentage points.”

The economists at Freddie Mac offered a similar prediction recently. They expect the average rate for a 30-year fixed home loan to average 4.0% for 2017, and 4.4% during 2018.

The Mortgage Bankers Association (MBA) outlook anticipates even higher mortgage rates in 2018. Their long-range finance forecast, updated in September, predicts that 30-year loan rates could average 4.5% during the first quarter of next year, and rise steadily after that.

Granted, these are just forecasts. They are the equivalent of an educated guess. So we shouldn’t get too wrapped up in the exact numbers being projected here. The general consensus is that rates are expected to rise gradually between now and next year. That’s the key takeaway.

Buying a House Now Versus Waiting

Rising house prices are arguably the biggest concern for potential homebuyers in Oregon. Some aspiring buyers are already grappling with affordability issues, following the significant price increases seen over the last couple of years.

Related: Buying your first home in Oregon

A continuation of this rising trend could further reduce affordability for some home buyers across state. So a case could be made for buying a home sooner rather than later.

Disclaimers: This article includes projections and outlooks for the Oregon real estate market through 2018. Such predictions were provided by third parties not associated with our company. We have compiled them here as an educational service to our readers.

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Have questions? Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region. Please contact us if you have mortgage-related questions.

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