The Portland Real Estate Market: Everything You Need to Know

Portland, the largest city in Oregon, has been highly regarded for its beautiful landscapes, vibrant culture, booming tech industry, and culinary scene. Therefore, it's no surprise that its housing market has experienced significant growth. One of the major reasons for this is because of population growth, as more and more people have been moving to Portland.

If you want to know whether it's a good idea to invest in the Portland real estate market, you're in the right place. Here's everything you need to know about the city's market trends, statistics, predictions, and more.

An Overview of the Portland Real Estate Market

The Portland housing market has had to endure a number of challenges over the past year. A few of these challenges consist of high mortgage rates and a decrease in buyer demand and purchase plans.

The COVID-19 pandemic caused a decrease in prices and sales across the country, including Portland. It's important to note that Portland's median home value is still above the national housing market. However, Portland is still a much more affordable option than its neighbor in the Pacific Northwest, Seattle.

Another crucial consideration is that housing market conditions will differ depending on the specific neighborhood in Portland; for example, Southwest Hills is much more expensive than Centennial.

Portland Housing Market Trends

The state of the market is often determined by the trends it experiences. Trends often impact one another and work hand-in-hand. Therefore, by being aware of and able to identify current market trends, you'll be able to make informed decisions when it comes to investing in property.

A few of the most common trends dominating the Portland real estate market include:

A Decrease in Portland Housing Prices

According to the Portland Metropolitan Association of Realtors, the median sold price in Portland Metro in April 2023 was $519,000. This is a 7.32% decrease compared to 2022. When looking at the average sold price of homes, we're looking at $577,500, which is an 8.75% year-over-year decrease.

Increase in Portland Housing Supply and Demand

Portland's housing market has cooled off. The number of available homes for sale and the amount of time properties are staying on the market has been increasing.

However, in the midst of this, neither home prices nor mortgage interest rates have dramatically decreased from a year ago and don't appear to be going down any time soon. Although there is still competition in the Portland property market, the increase in the supply of homes gives buyers more options and power.

Homes stayed on the market for an average of 47 days in April 2023, up from 21 days on average in 2022. Furthermore, 1,707 reported closed sales represent a 40.56% year-on-year decline.

Despite the addition of 2,653 new listings to the market, there are still not many houses for sale in the Portland metro area. Finding a home that meets all of your requirements might be difficult in a city with a competitive housing market such as Portland.

It would take almost seven and a half weeks to sell all of the available homes if sales stay at the April 2023 rate of 1.9. To put things into perspective, a market is believed to be balanced when there is approximately four to six months of inventory.

Unemployment Trends

Over 60,000 more jobs were added to the non-farm sector in December 2022, bringing the total to 1.27 million. The Bureau of Labor Statistics reports that Portland had a 4.1% unemployment rate in December 2022.

There has been an increase of 0.6% since last year. In December 2022, the national unemployment rate was 3.5%, which is a 0.4% decrease from December 2021.

Additionally, Portland had 14,300 construction jobs in December 2022, which represents an increase of 1,900 construction jobs when compared to 2021.

Factors Affecting the Portland Housing Market

The following are some of the most prevalent factors affecting the Portland real estate market:

Limited Inventory:

In Portland, the number of houses on the market has not kept up with demand. Multiple offers on properties are common as a result of the lack of inventory in this competitive market. Home prices increase as a result of inventory shortages.

Population Growth:

Portland's population has increased steadily throughout the years due to a number of factors, including a strong job market and an appealing quality of life. The inflow of new inhabitants has raised housing demand, resulting in rising prices.

Interest Rates:

The housing market is heavily influenced by mortgage interest rates. Lower borrowing rates increase demand by making homeownership more accessible. On the other hand, fluctuating interest rates may make things less affordable and potentially weaken the market.

The Job Market and Economy:

The technology and renewable energy industries have experienced the most growth in Portland's economy. Furthermore, the presence of major companies and a strong employment market have attracted young professionals, increasing housing demand.

Lower Cost of Living:

Many people relocate to Portland, Oregon, because of its lower cost of living. Did you know that Oregon doesn't levy sales or use tax? It is one of five states in the US to do this, making it a favorable area for people looking to invest in property.

When it comes to the property tax rate, Oregon's rate of 1.04% is close to the national average of 1.08%. In terms of the average amount of property taxes collected, Oregon is placed 15th out of the 50 states. When looking at property taxes as a percentage of median income, it is rated 16th among the 50 states. The average annual income in Oregon is $73,097. Compared to neighboring cities such as Seattle, Portland has substantially lower average home prices.

Will the Housing Market Crash in Portland?

When the global pandemic occurred in 2020, the entire real estate market came to a standstill, including Portland. To try and hedge the financial impact of the pandemic, the Fed decided to lower interest rates.

This only resulted in more people buying homes, which ultimately led to an increase in prices. Now that the effects of the COVID-19 pandemic are cooling down, people are worried about the market crashing. Is this a possibility?

While there have been many changes in the Portland real estate market in recent years, the market is not expected to crash anytime soon. We are currently experiencing a cool market because of factors such as low inventory, high home prices, rising interest rates, and more. This has resulted in a decrease in overall home sales and new listings compared to previous years.

Experts don't expect the Portland real estate market to change drastically in the near future. However, from the above-mentioned factors, interest rates are expected to drop, which will result in increased demand. With an expected increase in demand, there's no need to worry about a market crash or housing bubble. Another reason why a recession isn't anticipated is because of the drop in the employment rate and the increase in salaries and wages.

All in all, the Portland market is expected to rebound between 2023 and 2024.

Portland Housing Market Statistics

The increased property prices and low supply of inventory indicate that Portland is a seller's market. According to The Portland Metropolitan Association of Realtors, the following statistics relate to April 2023:

• In the past year, the average sales price has decreased from $632,900 to $577,500.
• The median sale price of $519,000 is a decrease from last year's $560,000.
• The number of pending sales decreased from 3,005 to 2,164.
• The number of closed sales decreased from 2,782 to 1,707.
• The month's inventory increased from 0.8 last year to 1.9 in April 2023.
• In April 2022, there were a total of 3,684 listings, which is more than the 2,653 recorded in April 2023.
• The average number of days on the market increased from 21 in April 2022 to 47 in April 2023.

Portland Housing Market Predictions

Predicting the future of real estate markets is not easy, which is why it's crucial to get an expert's opinion. According to data from Zillow, it's clear that the value of homes in Portland has experienced a decline; however, a slight increase in Portland home prices is expected between 2023 and 2024.

Overall, the market is expected to remain competitive, as many homes are currently selling for close to their asking price.

Portland's housing market is heading toward growth and stability because of its strong economy, desirable location, and low unemployment rates.

If you're interested in the specifics of what the future has to hold for the Portland real estate market, take a look at the following predictions from Oregon Realtors:

1. Prices will Stabilize as Inventory Increases

Even though the housing supply has been increasing, the market is still far from balanced. Furthermore, while home prices are currently declining, they are still far too high to be considered affordable.

As the number of inventory increases, buyers will start to gain more power, meaning that sellers will have to consider accepting less than 100% of their asking price; however, they'll still be able to sell it for a price close to their asking price. Therefore, even though we're in a seller's market, you can expect it to become a steadier seller's market.

2. Construction Costs will Increase as There Are Continued Supply Chain Issues

Many newly-developed houses and buildings were left without essential appliances, such as microwaves, fridges, dishwashers, etc in 2022 because of supply shortages in China. As these supply chain issues continue, people can expect the costs of construction to increase.

Most of these supply issues are a result of the COVID-19 pandemic; however, the effects are still expected to continue for some time in the future. These high construction costs could also result in smaller houses being built.

3. The Number of Buyers Will Increase as Inflation Slows Down

As the Federal Reserve starts to get control over the inflation rate, buyer demand and participation will increase. Eventually, this will lead to lower interest rates, which will increase the amount of refinancing and lending.

In fact, many experts believe that lenders are going to have their hands full. This will give lenders the upper hand, allowing them to come up with innovative lending solutions.

4. The Online Market Will Offer More Affordable Housing Options

As the online presence of middle housing units is increasing, more buyers have the opportunity of owning a home. These middle housing units consist of condominiums, homes of zero lot lines, as well as townhomes. Therefore, they're more affordable.

Final Verdict

As you can see, the Portland real estate market has been quite competitive and dynamic in recent years. The current appreciation in the value of property can be attributed to limited housing inventory, the strong job market, and the city's growing population. Current factors affecting the Portland housing market suggest that the industry is more favorable towards sellers at the moment.

However, you can expect to see a more balanced market as new housing projects and developments come to fruition. Therefore, if you're looking for the ideal time to invest in Portland property, make sure to stay up to date with market trends, mortgage rates, and other economic factors affecting the housing market.

FAQs

Is it a Good Time to Invest in Property in Portland, Oregon?

Home prices are lower now than they were at this time last year due to the falling prices of property in the Portland area and have decreased by 8.7 percent since last year. However, if you intend to finance the purchase, rising mortgage rates will reduce your purchasing power.

Overall, the decision to invest in a home should be based on your financial and personal position. If you have a steady job and way of life, a solid credit score, and enough money saved up for a down payment, investing in a property could be a good idea regardless of the state of the market.

Are House Prices Declining in Portland?

Yes, home prices are declining in Portland; however, the April 2023 median sale price of $519,000 is still fairly higher than the nationwide median.