It’s become somewhat of a tradition this time of year for me to write a market update that focuses on the all-consuming question: When are house prices in Portland going to go down???
My latest blog covers two related topics: the pending state-wide rent control legislation and development going on in the city of Portland. Even though these topics might seem a little dry, they literally could impact every single person in the city of Portland, either directly or indirectly, whether you are a renter or a home owner, along with many people throughout the state.
Debates about rent control legislation are raging
The market as a whole always slows down in winter, but residential inventory has risen dramatically in the past month. There are lots of reasons for that… seasonality, a re-balancing of the market, affordability, etc.
What’s notable is that quite a few former rentals are going on the market, or will be soon, which is likely a “straw that broke the camel’s back” reaction by landlord-investors to a bill that recently passed the Oregon Senate and is now being considered by the House.
I haven’t written a blog in a while! To my ones of erstwhile readers, my sincerest apologies.
Late 2018 brought on lots of change for my household in the form of 2 puppies and the beginning of a major remodeling project, which I’ll write more about once we’ve actually broken ground, so stay tuned.
That wasn’t the only reason for the hiatus. In addition to my regular real estate activity (and last year was bustling!), I’ve been working on launching a brand new home search platform and website that will offer some great tools for active home buyers, window shoppers, prospective sellers, and home owners that like to keep up with their neighborhoods. Hopefully that will be coming very soon, so stay tuned for that, too!
For right now, it’s time to talk about the real estate market, and see some puppy pictures. All my conversations lately revolve around these two subjects, so it’s just about all I can write about!
About 10 months ago I wrote my most popular blog article that was all about trying to do the impossible - predict when housing prices would fall.
So, in the interests of self-interest, I figured I'd do a follow up. Hey, if everyone liked the first one, then why not take advant... er, I mean, why not provide even more valuable information to the discerning public?
It's not surprising that interest rates are starting to rise. We just haven't seen significant increases in a while because of a little event that happened around 2008.
But now, since the start of 2018, the average rate for 30-year fixed rate mortgages has climbed 50 basis points (that's 0.5% in finance parlance). It looks like sub 4% rates are a thing of the past. Sub 5% rates might soon be a thing of the past.
If mortgage rates continue to rise, which seems fairly likely, then affordability is going to further erode. And, this is happening during a serious housing shortage all around the Portland area.
What does it all mean for prospective buyers and sellers?
I know, it's only August! How dare I say "end-of-summer"???
The sad fact that I had to face when looking at market stats is that we have only 1 month left until it's officially fall. As I write this, I feel like Don Henley's "Boys of Summer" should be playing in the background.
And I have yet to do All The Things! You know, like fulfilling my dream of dining on every restaurant patio in Portland. Or seeing the Portland Japanese Garden expansion and renovation. Or, well, just going outside... more.
Hey, let's start talking about something cheerier than summer ending. Market statistics always makes me super happy, so here we go!
You may not have noticed, but home values in Portland have been on the rise for awhile now.
Rising prices are fueled by low inventory. Low inventory is caused by renters in Portland shifting to homeownership along with a massive migration of people into the Portland area. Both of those groups of people tend to look for homes in the more affordable range, leaving Portland with a decent amount of options if you can spend over 600K but not a lot to choose from below that mark.
I get asked all kinds of questions by prospective buyers, sellers, friends, acquaintances, and random people I meet at open houses. The one question that I've been asked more often than any other lately is:
When are house prices in Portland going to go down?
I'll totally admit that the first time I heard this question I immediately thought, erroneously, that it was a joke. I still remember the days when the prevailing point of view was that the only guarantees in life were death, taxes, and that housing prices always go up, never down.
Then, of course, 2006/2007 happened. Then banks started failing and the stock market crashed in 2008. Then more banks failed. Then we all watched as the nation slowly tried to dig itself out of a hole that, for awhile, seemed to have no bottom.
Here we are, 10 years later, and sometimes I forget that there are plenty of people out there that didn't grow up learning the "house prices always go up" wisdom, which turned out to be not so wise.
So, let's dump any past (failed) prevailing wisdom and any assumptions we might have and instead take a look at... the data!
It's been nearly a decade since the beginning of the nationwide banking emergency that triggered the Great Recession. So it's about time to take a hard look at what's going on today. This isn't about getting all gloomy-doomy. I think it's better to think and talk about the data so that maybe we can keep ourselves from falling down the rabbit hole again.
Because buyers could use some good news!
In a couple of weeks, when the official market data comes out for May, I'll be writing up a more complete market report. But I wanted to quickly write a few words of encouragement for any buyers out there that have been frustrated by the low inventory situation that we've been in for awhile now.
Inventory in the month of May was higher than ANY OTHER MONTH since the housing bust - 1593 units were listed for sale in the 4 quadrants of Portland. This is exciting news!