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In the real estate world, the big headline right now is that the portland housing market is cooling down. This is true for the Portland, Oregon metropolitan area as well, one of the areas we serve.
The short version is that there are more properties on the market but fewer buyers, so homes are taking longer to sell than they did last year. This trend will likely continue into 2023 as well.
Home buyers within the Portland, Oregon real estate market can actually benefit from this cooling trend. Below, we will examine three advantages buyers have today that they haven’t enjoyed for quite some time.
Through the second half of 2020, and for all of 2021, home buyers in the Portland area had to endure the real estate version of a foot race.
Strong demand and record-low inventory accelerated the housing market, forcing buyers to compete like never before. There was very little time to evaluate the merits of a particular property, or to “sleep on it” and get back to the seller later. Back then, you had to make an offer on the spot just to be in the running.
But fast-forward to the latter part of 2022, and you’ll see a very different story. As the Portland area real estate market continues to cool down, home buyers are finding they have more time to consider their purchase options. This allows for more careful consideration and discussion, important steps when making a home purchase.
In real estate terms, a “seller concession” occurs when a homeowner contributes money toward the home buyer’s closing costs or other upfront expenses. Seller concessions tend to be more common in a slower market, and less common in a fast-paced real estate scene. You can see where this is going.
A year ago, seller concessions were practically non-existent across the Pacific Northwest. Back then, sellers often had multiple offers to choose from, so they didn’t feel much pressure to make such concessions.
But it’s a whole new ballgame these days. As we head into the last two months of 2022, a cooler Portland real estate market is giving buyers more negotiating leverage. Among other things, that puts them in a better position to ask for a seller concession toward their closing costs.
In a slower market (which is what we’re seeing these days), homeowners sometimes go a long time without any offers. So they’re often more willing to contribute money to the buyer’s costs.
“The [home] buyer came back with a laundry list of things that my seller was willing to do and got done. Buyers are asking for repairs, they’re asking for closing costs. That’s becoming much more the norm.”
We talked about the fact that home buyers in the Portland area housing market have more bargaining power today than in years past. This trend can influence the way buyers are shaping their offers, and what they’re adding to those offers.
With a general cooling trend slowing home sales across the metro area, home buyers are currently in a better position to add protective contingencies to their real estate contracts.
A real estate “contingency” is a certain condition that must be met in order for the transaction to proceed. For example, a home inspection contingency allows buyers to back out of the deal if the inspector finds an issue they’re unwilling to accept. More importantly, the contingency allows the buyer to recover their earnest money deposit (as long as the contract is worded that way).
In 2021, when the Portland real estate market was much more competitive, home buyers often felt compelled to waive their contract contingencies. In other words, they presented “clean” offers that did not have any contingencies. Buyers felt that they had to do everything they could just to get the seller’s attention.
Today, the real estate market is shifting toward something resembling “normal.” And in a normal housing market, it’s common for home buyers to add certain contingencies to their purchase agreements. This is another benefit Portland-area home buyers have today that they might have lacked during 2020 and 2021.
In addition to the market-related trends above, Portland home buyers today don’t have to contend with rapidly rising home prices. In fact, house values across Oregon and elsewhere in the nation leveled off during the second half of 2022. That’s just one more way that the real estate market is moving in a more buyer-friendly direction.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.