It has been a while since we took a forward-looking view at the real estate market in Portland, Oregon (one of the primary markets we serve). And a lot has changed since our last forecast report, published back in October. Back then, this market was cooling down considerably. Now, it appears to be heating back up again.
Here’s an updated market report and forecast for the Portland-area real estate scene, extending into 2024.
Home prices will level off, and then rise at a moderate pace.
The median home value for the Portland-Vancouver-Hillsboro metro area peaked at around $575,000 last summer. Since then, prices have declined a bit from their all-time high.
This downturn was not limited to the Portland metro area. Housing markets all across the country have experienced a price “reset” in recent months, following the unprecedented gains of the past few years.
As of June 2023, the median home value for the Portland, Oregon metro area was around $550,000. House values appear to be leveling off right now, mirroring a trend seen in many U.S. cities.
But they probably won’t remain flat for long. Going forward, local home values will likely start rising again, though at a slower pace compared to the past couple of years. We can probably expect to see mostly steady price appreciation well into 2024.
Zillow recently issued a forecast for the housing market in Portland, Oregon. They predicted that the median home price for this metro area would rise by around 2.8% from May 2023 to May 2024. That pace would be more in line with historical norms going back several decades.
Supply levels will remain low for the foreseeable future.
Supply levels within the Portland-area real estate market declined sharply during the pandemic, and then rose again during 2022. But it’s still a very tight housing scene where inventory is concerned. In fact, supply levels started to decline again during the past few months.
At the start of 2023, the Portland housing market had about a 2.5-month supply of homes for sale. That was a big improvement over the all-time low of 0.6 months at the end of 2021. But it’s still considered low by historical standards.
And over the past few months, supply levels in the area have fallen even further.
Of course, housing market conditions can vary from one city or community to the next, even within the same metropolitan area. But for the most part, the Portland metro area real estate scene is still experiencing a shortage of supply relative to demand.
Tight inventory conditions can affect the real estate market in a number of ways. Here are some of the trends we tend to see when supply levels decline steadily:
- Limited inventory leads to increased competition among buyers.
- High demand and low supply can drive up home prices.
- Sellers have more negotiating power due to limited options for buyers.
- Homes may sell quickly, resulting in a fast-paced market.
- Multiple offers on properties become more common.
It’s hard to say what inventory levels will do going forward. Some real estate market predictions suggest that low supply levels will continue to be an issue for a while, in the Portland area and nationwide.
Mortgage rates have something to do with this. According to recent reports, many homeowners who would otherwise consider listing their homes for sale are reluctant to do so because of their low rates.
For example, a person who bought a home in 2020 or 2021 might have a mortgage rate less than half of today’s current average rate. And that might make a person reluctant to sell their current home and buy another.
According to a Wall Street Journal article published back in September (when rates were climbing steadily):
“Homeowners with low mortgage rates are balking at the prospect of selling their homes to borrow at much higher rates for their next homes, a development that could limit the supply of houses for sale for years to come.”
Portland housing market will remain competitive for buyers.
What does all of this mean for those planning to buy a home in the Portland area later this year, or in 2024?
For one thing, it means you could encounter stiff competition from other buyers, especially within the lower price range. The real estate market could also begin to favor sellers again over the coming months, due to an ongoing inventory shortage. Portland home buyers should be prepared for this dynamic.
According to a May 2023 article from housing economist Jeff Tucker:
“April data indicate that housing has returned to a seller’s market. Buyers flock to open houses at this time of year in hopes of securing a home in time to move in by early summer, yet this year will see far fewer new listings…”
Despite these challenges, savvy home buyers can still find and purchase a property in the Portland area. You just have to stay on your toes and be ready to move swiftly when the right home comes along.
If you’re going to use a mortgage loan, get pre-approved ahead of time to expedite your home search. Pre-approval could also increase the chance of getting your offer accepted. Make your initial offer as strong as possible, by basing it on recent and comparable sales in the area.
It has been a while since we took a forward-looking view at the real estate market in Portland, Oregon (one of the primary markets we serve). And a lot has changed since our last forecast report, published back in October. Back then, this market was cooling down considerably. Now it appears to be heating back up again.
You might also consider limiting the number of contract contingencies, since they could make your offer less appealing to sellers. Home buyer contingencies tend to be more common in a slower market, and less common in a competitive, fast-paced market.