Congratulations, Portland, you’re number one. For home-price appreciation, that is.
The most recent S&P/Case-Shiller Index was published earlier this week, and it confirmed what many Portlanders already know. Home prices in the Portland area are rising rapidly.
In fact, Oregon’s largest city was #1 among the 20 metro areas tracked by this index, posting double-digit price gains from June 2015 to June 2016. (Those were the most recent figures available, due to a one-month reporting lag.)
According to the report: “Portland, Seattle, and Denver reported the highest year-over-year gains among the 20 cities over each of the last five months. In June, Portland led the way with a 12.6% year-over-year price increase, followed by Seattle at 11.0%…”
You can view the full report here, in PDF format.
Portland Home Prices Rising Rapidly in 2016
The chart below comes from a press release that announced the latest index results, issued on August 30. As you can see, Portland home prices are rising faster than all other cities in the Case-Shiller 20-city composite (and faster than most other cities in the U.S. as well). Home values in the city rose by a whopping 12.6% from June 2015 to June 2016, and they are still rising today.
It’s also worth noting that home prices in Portland are now higher than ever before, even during the last housing boom. And they’re expected to continue rising in 2017 as well, though possibly at a slower rate than in the last year.
Number Two for Home-Value Appreciation in 2017?
Home prices in Portland have risen steadily in 2016. We’ve covered that. But what about the next 12 months? What are local home values expected to do through the first half of 2017, and beyond? According to one real estate forecaster, Portland could be the #2 metro area in the U.S., in terms of home-price gains.
In July, the property valuation company Veros Real Estate Solutions published a forecast for major metro areas across the country. They predicted Portland would have the second-highest increase in home prices, from June 2016 to June 2017.
According to the Veros forecast: “The top forecast markets are showing appreciation in the 10% to 11% range … Seattle, Wash. (+11.2%), Portland, Ore. (+11.1%), Denver, Colo. (+9.9%) and other metropolitan areas in these same vicinities appear very strong over the next year.”
Market Needs ‘More Balance Between Supply and Demand’
So what’s going on here? Why are home prices in Portland rising so fast in 2016, and possibly next year? It’s a supply and demand story, as always. There is a high level of housing demand in Portland right now. Population growth, economic stability, and low mortgage rates have created a “perfect storm” for home-buying activity.
Inventory, however, is falling short. There simply aren’t enough homes for sale in the Portland metro area to satisfy buyer demand. This imbalance is putting upward pressure on house values.
The question is, when will Portland’s real estate market slow down? Will the cyclical “laws” of real estate bring a cooling period anytime soon? According to Tim Duy, an economics professor at the University of Oregon, the market won’t slow until inventory catches up to demand.
“There’s no fundamental law that says [the hot real estate market] has to end anytime soon,” Duy told The Oregonian, in June. “And it won’t end until we have more balance between supply and demand in the housing market.”