Despite a widespread perception that the city of Portland is “dying” and unsafe, record numbers of new residents are flooding into the city.
The influx of people looking to buy homes continues to drive the market up in the Portland metro area, and the supply of available homes is significantly lower than the number of buyers. This tension continues to make Portland’s housing market super competitive.
According to a report released this week, the average cost of a home in the Portland area is now an astounding $542,000.
With supplies low, potential buyers are scrambling to stand out to sellers who are flooded with offers. Buyers must move quickly and be aggressive with their offers in a market where an offer below the asking price will likely never even be considered.
Inventory is so low that if no new houses came on the market, the existing supply would be sold in less than a month. The Oregonian newspaper reported that according to John L. Scott Real Estate, the Portland region is essentially “sold out” of homes up to the $1.5 million price range.
Experts worry that with the combination of the buying frenzy and high prices first-time home buyers, who are often a lower income than existing homeowners, are being completely squeezed out of the market.
Although on average a home in the Portland area is on the market for 42 days, some sellers are reporting homes that get acceptable offers approved in as little as three days.
This is causing some existing homeowners to stay in their homes rather than trading up as they might have done in the past. Where it used to be relatively common to put a house in the market contingent on the purchase of a new home, now existing homeowners are inclined to either stay in place or secure their new home before putting their current home on the market to avoid finding themselves homeless.
With the average apartment in the city of Portland around $1,495, it makes little sense for a homeowner to move to a rental unit where they won’t be building up equity.
Several factors are impacting the Portland real estate market, including the ongoing flood of people moving to Oregon from other states, historically low interest rates, and the desire for more indoor and outdoor space as people consider ways to continue working from home even after the pandemic restrictions are lifted.
The Oregon Employment Department released a report earlier this month that looked at the impact of the COVID-19 pandemic on Oregon’s housing prices. State economist Damon Runberg wrote:
"In an unexpected turn, we have seen a large increase in the demand for housing during this pandemic recession. The high demand has led to historically low inventories of residential real estate for many communities across the state. High demand and low inventory are leading to dramatic home price appreciation, further increasing concerns around housing affordability."
This has impacted the Portland metro area where home prices have always been the highest. Increasingly, the suburbs and rural areas are struggling with low inventory and high prices as people get priced out of the metro area or seek larger properties for their home offices.
Interest rates also continue to drive housing prices. With lower interest rates, borrowers can afford to spend more on the home itself
There has never been a better time to buy a home and secure a lower interest rate. Nationally the rate for a 30 year fixed rate mortgage – the gold standard for home buyers – is currently hovering around 3.05% according to the Federal Home Loan Mortgage Corporation (Freddie Mac).
New housing construction simply cannot keep up with current demand. This means for the foreseeable future, potential home buyer need to jump on any houses that interest them immediately and come in with a pre-approved loan and a bid for the full asking price.
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