Like many cities across the country, the real estate market in and around Portland, Oregon is experiencing something of a paradox in 2023. Home prices have begun rising again, despite the fact that higher mortgage rates have softened demand among buyers.
This ongoing trend will affect anyone who is planning to buy a home in the Portland metro area through the rest of 2023 and into 2024.
We recently published a detailed outlook for the Portland real estate market, covering a variety of housing-related factors. Today, we will focus on the counterintuitive combination of rising home prices amid slower sales.
Home Prices Rising Again in Portland, Oregon
According to Realtor.com’s latest housing market update, published in early August 2023, list prices in the Portland area are on the rise again.
The company reported that the median list price for the Portland-Vancouver-Hillsboro metro area climbed to $640,000 last month. That was 6.8% higher than a year earlier. This shows that there is some upward pressure on home prices across the Portland-area real estate market.
The latest figures from Zillow also show that home prices are turning north again. By their estimation, the median home value for Portland, Oregon has risen for the past three months in a row. When this article was published, in early August 2023, the median price point was approximately $538,000.
Price reductions have also become increasingly rare, perhaps because sellers sense they are gaining leverage due to reduced inventory. Roughly 18% of homes had a price reduction in July of 2023, which was 10 percentage points lower than a year ago.
A Slower Pace Compared to a Year Ago
Historically speaking, rising home values tend to be associated with a competitive market where homes are selling faster than usual. But that’s not the case within the Portland metro area (and most other cities across the country).
The median number of “days on market” within the Portland real estate market has increased over the past year, indicating a slower pace of home sales.
According to the August 2023 Realtor.com report mentioned earlier, the median days on market for the Portland metro area increased by eight days, year over year, to land at 38. This metric shows that it’s taking longer to sell a home these days, when compared to a year ago.
So why are home prices in Portland, Oregon rising at a time when there are fewer buyers and slower sales? In a word, inventory.
Tight Inventory Conditions Persist
Despite the overall market slowdown that has occurred over the past year or so, Portland-area home prices are currently climbing due to an ongoing inventory shortage.
The total number of active real estate listings in the area has declined by 6% over the past 12 months, according to Realtor.com. And the local housing market was already tight a year ago. So we have a situation where a constrained real estate market with limited supply has become even more constrained. That same trend has affected many cities across the U.S.
To put it differently, the upward pressure brought on by tight inventory conditions has surpassed the downward pressure caused by higher mortgage rates and reduce demand. That’s why home prices in Portland, Oregon (and many other housing markets across the country) are starting to creep upward again in summer 2023.
From an analysis standpoint, it’s a somewhat confusing time in the real estate market. The “paradox” mentioned above is due to many overlapping factors, including high inflation, higher mortgage rates, and shifting supply and demand factors. All of which have affected the housing market in different ways.
Advice for Portland-Area Home Buyers in 2024
What does all of this mean for home buyers in the Portland area? Is it a good time to buy a home right now? And what about 2024? What kinds of conditions might home buyers encounter over the coming months? How can they increase their chances for success?
First of all, home buyers should be aware that house prices in Portland could rise steadily through 2024. Historically, home prices in this metro area hold their value well over the long term. The post-pandemic downturn was something of a rarity. And if prices do continue rising, home buyers in Portland might want to make a purchase sooner rather than later.
Buyers will also need to be patient when it comes to searching for a home. The Portland real estate market is less competitive now that it was a couple of years ago. But inventory levels have declined since the start of the year, making it harder for buyers to find a suitable property within their budgets.
Lastly, don’t let the general cooling trend of the past 12 months fool you. There is still plenty of demand for homes in the Portland area. So things could get more competitive in the months ahead.
The best advice we can offer is to research the market where you plan to buy, pay attention to rising prices, and give yourself plenty of time to find the right house.
Need mortgage financing? Getting pre-approved for a mortgage loan can give you an advantage when buying a home in the Portland area. It helps you narrow your housing search to a specific price range, while increasing the chance that your offer gets accepted. Please contact us if you have mortgage-related questions or would like to get pre-approved.