State of the Market, August 2017 – Is the Portland Housing market cooling?
Summer 2017 is quickly coming to a close and it is time to stop and reflect on how the Portland real estate market is faring and my early predictions for 2018 Portland market.
There had been predictions of home sales slowing in 2017 but we are only just starting to see that. Snow bogged down the market for most of January and February, which is unusual for Portland, leading to a bottleneck of hungry buyers and anxious sellers. The thaw gave way to a multiple offer situations driving prices up quickly. All signs pointed to 2017 being even crazier than 2016.
Prices and stiff competition among listings remained at levels seen in 2016 late winter and spring this year. It even had me face-timing out of town investors while walking through the latest listing in the Williams corridor in the snow and ice this past February. Fast forward to summer and July actually saw a slow in sales. The whispers around the water cooler are that homes have stayed on the market for more days and price reductions are picking up. We are also seeing sellers more willing to accept contingent offers where before those offers could be avoided given the large amount of offers on the table.
Market Action Index: The Market Action Index answers the question “How’s the Market?” by measuring the current rate of sale versus the amount of the inventory. Index above 30 implies Seller’s Market conditions. Below 30, conditions favor the buyer. (Altos Research, Inc.)
In June the increase in home prices year over year was around 8 – 9%, according to the S&P CoreLogic Case-Shiller index, compared to 10-12% in Portland’s 2016 real estate market. The national average for price growth is between 5-6%. Although, Portland is still among the top fastest growing real estate markets in the nation, the intensity at which prices where increasing in 2015 and 2016 is softening . When asked if I think we are becoming a buyers market I would say no, but it is more “buyer friendly.” I have recently experienced that we are up against fewer offers and have more leverage negotiating repairs while representing a buyer.
What are the key factors for the slow down?
- The average Income in Portland is not rising at the same rate as our home prices.
- Fewer people are moving to Portland than in previous years. Bend actually had a higher population growth than Portland this past year.
- Inventory is up, when inventory is up there is more to choose from. Buyers have more options giving them more leverage amid slowing competition.
- Interest rates are on the rise. The Fed has raised the rate two times this year and has hinted at raising them a third time before the year is out.
My 2018 Market prediction: I think this fall we will continue to see a more “buyer friendly” market. Come January and February we will likely see the rush that comes after the lull from the Holidays and another strong Spring. We will continue to see prices grow robustly in Portland but I think the days of seeing double digit price growth may be over for now…I predict another 7-8% price growth come next June.
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