2017 Portland Real Estate Market Forecast
Portland 2017 Home Price Prediction:
Zillow – 5.7% increase
VeroForecast – 11.1% increase
National Home Price 2017 Prediction:
Zillow – 3.2% increase
NAR (National Association of Realtors) – 4% increase
Corelogic – 5% increase
Freddic Mac – 4.7% increase
Four reasons why home prices will increase nationally in 2017:
- Basic supply verses demand. New home construction will stay conservative (while slowly rising) and is still historically low after the bubble crashed in 2008. You can tell from the below chart from the U.S. Census Bureau that new construction homes were built at a rate around 1,500,000 a year and in 2017, Forisk Research predicts new construction will hit or get close to that average mark. Forisk Research predicts that home builders will remain conservative despite increased demand for housing.
- The national unemployment rate is low and will continue to drop. The unemployment rate is currently 4.9% and is predicted to drop to 4.4% in 2017 according to a Statista study.
- While housing affordability is dropping, it is still far more affordable than historical rates. In the below chart, a shorter column means housing is less affordable, while a taller column means housing is more affordable. Given historical rates, housing will be relatively affordable for years to come. The data comes from the National Association of Realtors.
- While mortgage rates are going to climb in 2017, they are still historically low. The below chart is from Bank Rate and while we could see interest rates rise to 5% in 2017, that rate is not nearly high enough to cause a real estate market slowdown.
Four reasons why home prices in Portland will increase more than the national average in 2017:
- New home construction actually dropped in Portland in 2016 despite the overwhelming housing demand. See the recent article I wrote here. A lot of new apartment complexes were built, but very few homes. While there is a strong demand for apartments in Portland, the desire to own your home is even greater. There are many reasons for this decrease in new construction in Portland that I mentioned in article I wrote, but suffice it to say, none of those reasons will be easily reversed. Bottom line, there won’t be enough new housing construction in Portland in 2017 to help with the housing demand.
- Portland will continue to grow. In 2016 Portland was the number 2 moved to destination in the United States according to Atlas Van Lines and United Van Lines. This is a multi-year trend that will continue into 2017. At least 60% of those incoming residents in 2017 will want to buy a home and will not be satisfied with renting.
- Oregon job growth will continue. Depending on the report you read Oregon doubled or nearly doubled the national average job growth rate of 1.7%. How good is that? Best in the nation or second best, depending on the researcher.
- Exceptional neighbors. Large metro areas in Washington and California still have significantly higher average home prices than Portland and are also growing economically and in overall population. When both of our neighboring markets are doing well, it bodes well for Portland’s real estate market.
Summary: what can we expect home prices to do in Portland in 2017?
I do not believe we will see the 10% to 15% increases in home prices Portland has been seeing since 2012. Those price growth numbers are unsustainable over the long term and reflect exceptional (a perfect storm of) housing pressures. While we still expect to have fantastic population and job growth, the increased prices and increased mortgage rates will also cause some home buyers concern. I predict a 4 to 7% increase in home prices in the Portland real estate market in 2017. This begs the question, when is the best time of the year to sell your home in Portland? Read my comprehensive, month by month, answer to that question here. No one sold more homes in Portland in 2016. Let us know if we can help you in 2017.
January 4, 2017