As a Portland real estate agent I get asked almost daily what is going on with the Portland real estate market? Will it continue to grow or is this a bubble that will burst?
I predict a slow down in 12-18 months but no bubble burst! The market currently shows prices have increased roughly another 10% over last year. Portland home buyers are having a hard time keeping up BUT with so little inventory the houses are still being gobbled up. A recent survey by the Oregonian stated Portland has 7 weeks worth of inventory. That is, if no more homes where listed from today on – the current remaining homes on the market would sell out in just 7 weeks! I think the greatest predictor of the market’s temperature is the inventory. I often use the example of 10 hungry people given 1 apple to buy- You may have 3 first time apple buyers who can’t afford the price but the other 7 have the income to buy and will bid the price of the apple up. Someone recently argued with me that Portland job wages will not sustain the home prices…I think the last few years have proven that theory wrong. Big names such as Google have recently opened offices in Portland increasing draw. I have helped many clients purchase homes in Portland who are working remotely for their previous employer in another city. It is common knowledge that most business can be conducted over the internet. AND again there is so few homes listed that you are bound to have multiple offers on almost every home listed.
I think we will gradually see as prices increase that instead of 15-20 offers on one home you will see more like 5 or maybe just 2 offers. As the prices continue to increase less buyers will be able to participate therefore competition will slow down and eventually prices will begin to taper. This does not mean loss in equity it just means we will see less equity growth so quickly. Too be honest that is a good thing! As a finance major in college we studied markets and trends. A gradual stabilization of the market is needed to avoid the dreaded bubble burst!
Another factor leading to a possible slow in the market is the federal interest rate. It was increased in March this year and is predicted to be increased again before the year is over, but as we all know they may not increase it. It all depends on how the Fed perceives the economy’s health. “Most forecasts call for a more modest rate increase over the next two years, but prices are expected to keep growing. The median Portland-area home price jumped 10.4 percent in March, year over year, and has surged nearly 72 percent since 2012, RMLS data show.” (Oregonian, Elliot Njus, http://www.oregonlive.com/front-porch/index.ssf/2017/04/tough_portland_housing_market.html)
Do I buy now or wait? Buy now! Portland home price’s where on the rise but have tapered slightly. Interest rates are steady so now is a good time to buy. If you wait, you may run the risk of paying more interest on your purchase. Some believe prices may fall but if interest rates rise, which they will, you may pay less for the home but more in interest. So I say don’t wait, buy now. And if your considering selling your Portland home- absolutely sell now!
Graphic credit: Koin 6 News Portland