Summary: With only four months left until the end of the year and start of a new one, we thought it might be helpful to publish an updated housing market report for Oregon home buyers. Here are five things you should know when buying a house in Oregon in 2019 and 2020.
- Oregon home prices are slowing down, but still rising
- Loan limits have increased
- Mortgage rates are also expected to rise
- A down payment of 20% is not always necessary
- Housing inventory is still tight in most cities
1. Oregon home prices are slowing down, but still rising.
Home price appreciation has been the big story in Oregon for the last couple of years. Housing markets across the state have outpaced the national average, in terms of price appreciation. This is true for the broader Pacific Northwest as well.
In fact, Washington and Oregon posted the biggest year-over-year gains of any state in the country, during 2016 and 2017. And while prices appear to be slowing down a bit, they are expected to continue rising throughout 2020.
That’s the first thing you should know about buying a home in Oregon in 2019 and 2020. If you postpone your purchase until later in the year, you could encounter higher housing costs.
2. Loan limits have increased.
As we’ve written in previous blog posts, the loan limits for Oregon have been increased for 2019. Federal housing officials increased the limits for conventional, FHA and VA loans, in response to rising home values.
In 2019, the conforming loan limit for most counties in Oregon rose to $484,350. FHA loan limits will range from $314,827 to $477,250, depending on the county where the house is located.
Note: Home buyers with sufficient income can borrow more than these maximum amounts. When a home loan exceeds the limits for the county where the home is located, it is referred to as a jumbo mortgage loan.
3. Mortgage rates are also expected to rise.
As if rising home prices weren’t enough to get the attention of Oregon home buyers, economists are also predicting a gradual increase in mortgage rates. Freddie Mac expects mortgage interest rates to average 4.1% for 2019, dipping to an average of 4.0% in 2020 for 30-year fixed-rate mortgages. Related: Best loans for Oregon buyers
This is another important trend to watch, as it could affect anyone buying a home in Oregon in 2019 and 2020.
4. A down payment of 20% is not always necessary.
Surveys conducted by real estate industry groups over the last year have shown that many home buyers think they have to put down at least 20% when buying a house. But that’s not true.
These days, some mortgage programs allow for a down payment as low as 3%. The FHA requires just 3.5% of the purchase price. The VA home loan program for military folks offers 100% financing.
Additionally, home buyers are often able to use down-payment funds from a third-party donor, in the form of a gift. This is something to be aware of when buying a house in Oregon in 2019 and 2020.
5. Housing inventory is still tight in most cities.
The supply-and-demand situation in housing markets across Oregon has been lopsided in recent years. There has been plenty of demand from buyers, but not enough inventory to meet it. These supply shortages have boosted home prices while fueling fierce competition among buyers.
And while these trends will likely continue in 2019 and 2020, to some degree, they should improve somewhat. New home construction has ramped up over the last year or so, but it’s still not enough to balance the real estate market.
For many years, many centers throughout Oregon have been experiencing a shortage of inventory. Many buyers have been in the market, but tight inventory to serve them.
Yet while the majority of these markets are still relatively low in inventory, historically speaking, the state has seen some growth in housing supply over the past couple of years. These days, buyers in certain parts may have more homes to choose from.
While the inventory crunch is most severe in Portland, similar conditions have been reported in other parts of the state. This too will affect those who are planning to buy a home in Oregon in 2019 and 2020.