Predictions for the Portland, Oregon real estate market suggest that home-price appreciation could slow to something approaching a normal pace in 2017, following two years of above-average gains.
Home prices in the Portland metro area rose by double digits during 2016. In fact, the city posted one of the largest gains in the country over the last 12 months.
According to Zillow, the median home value in Portland rose by nearly 15% from December 2015 to December 2016. By way of comparison, prices nationwide rose by 6.5% during the same 12-month period.
Local homeowners might appreciate these gains, and the extra equity they bring. But it’s not so great for the broader Portland economy. Rapid home-price gains (that outpace wage growth) can lead to housing affordability issues, which in turn can depress the broader economy.
The good news is that the Portland real estate market could be moving toward a state of normalcy, where price growth is concerned.
Portland Real Estate Predictions Suggest Return to Normalcy
Over the last few decades, home prices in the U.S. rose by an average of 3.1% per year. During 2016, house values in Portland rose by more than 14%, according to Zillow. From a historical perspective, that’s an abnormal rate of growth, and it far exceeds any increases in household incomes.
In its 2016 State of Housing Report, the Portland Housing Bureau stated: “The average Portland household can only afford to purchase a home in eight of the city’s 24 neighborhoods.”
This is what happens when rents and home prices rise much faster than household incomes. Affordability drops, and “average” residents have a harder time finding suitable housing.
Housing costs in the city have risen fast enough to warrant government intervention. In December, the City Council unanimously approved a measure designed to offer more affordable housing to local residents.
So it’s actually heartening to see a more conservative prediction for the Portland real estate market in 2017. If local home values do rise by 5% to 6% in 2017, as Zillow’s economists have suggested, they’ll be much closer to the historical average mentioned earlier. And that’s a much-needed return to normalcy.
Home Prices Expected to Continue Rising
Matthew Gardner, chief economist for Windermere Real Estate, recently offered some additional predictions for the Portland real estate market in 2017:
“I expect to see [home] price growth starting to taper … Given that interest rates are now likely to rise at a faster rate than previously forecasted, I believe there will be some slowing in price appreciation, but values will still increase at rates that are well above the national average.”
This echoes the Portland real estate forecasts from other sources as well. The general consensus among economists and housing analysts is that home prices in the city will rise more slowly in 2017 than 2016, though they will likely continue to outpace the nation.
Disclaimer: This article includes forecasts and predictions for the Portland, Oregon real estate market in 2017. Such statements were provided by third parties not associated with our company. We have compiled them here as an educational service to our readers.