For a long time we’ve been hearing how the major housing markets in the Pacific Northwest (like Seattle and Portland) have been on fire with fierce competition and limited supply.
For the most part, that’s still true. But the real estate market in Portland, Oregon is currently undergoing some changes. Home-price growth has slowed considerably over the last year or so.
Portland Housing Market Cools Down in 2018
Portland’s housing market has experienced double-digit annual price growth in recent years. Home values rose 11.4% in 2016 alone, according to a report from the real estate data company Clear Capital.
This above-average growth was largely the result of a skewed supply and demand situation. Plenty of people were looking for homes, but supply was very limited. Thus, home prices rose rapidly and outpaced the national average by a good ways.
While there is still an imbalance between supply and demand, the Portland housing market appears to be cooling down a bit in terms of home-price appreciation. According to the real estate information company Zillow, the median home value for Portland, Oregon rose by around 2.5% over the last year (reported in May 2018). That’s an average rate of growth, if you look back over the last few decades. This follows above-average annual gains during previous years.
So clearly we are witnessing some changes in Portland’s housing market. Evidently, a lopsided supply and demand picture can only boost prices so far before they begin to slow.
The Affordability Factor
Affordability has a lot to do with this. Over the last couple of years, a rising chorus of local officials and housing advocates have pointed to an affordable housing crisis in Portland, Oregon. Portland’s Metro Council is even considering a bond measure for the 2018 general election, which would dedicate funds for the creation and preservation of up to 2,000 affordable homes in the Portland area.
So perhaps this is a situation where the unwillingness or inability of home buyers to pay ever-rising prices is, in fact, slowing home value appreciation.
Whatever the case, it’s clear that home prices in the Portland, Oregon housing market have slowed considerably over the last few months. And that’s a good thing, from a sustainability standpoint.
Competition Remains High Among Home Buyers
Home sales have declined a bit as well. According to the Regional Multiple Listing Service (which serves the Portland metro area), home sales in the area dropped by 4.9% in March 2018 compared to a year earlier. But this could be due to the shortage of homes for sale, more so than weakening demand.
In fact, demand among buyers remains very high in the Portland housing market. According to a recent article on OregonLive.com: “The slim supply of homes for sale means those on the market are typically spoken for quickly. Bidding wars remain common, particularly on Portland’s east side.”
So even though home prices are rising more slowly, and sales are down, there’s still a lot of competition among buyers. Anyone planning to buy a home in Portland during 2018, or even 2019, should start early and have plenty of patience. In a tight housing market, it can take some time to find a property that checks most of your boxes.