2022 Portland Real Estate Market Forecast (Prelim.)
The Portland real estate market has been on a wild ride since early 2020. The real estate market here was actually slowing and becoming more affordable back in 2017, and that trend continued until the pandemic hit. Year zero, or 2020, was the most unusual in my real estate career (licensed for 18+ years now in town). 2021 returned to seasonal selling norms (slow in winter, fast in spring, slower in the late summer months), and those market trends look like they will continue in 2022. Every year since 2003 (when I started keeping track) the Portland real estate market has followed the same seasonal trends, even in the previous hottest (2006, 2016) or slowest years (2008-2011). So if you’re interested in the Portland real estate market forecast for 2022, don’t forget to check out the best time to buy or sell a home in our market (seasonal trend reports), because I fully expect them to continue.
How have Portland real estate market forecasts fared in the past?
For many years now we’ve been forecasting out the Portland real estate market. I’m proud to say my forecasts are often closer to reality than the national big players. Typically though, while no one entity is correct all the time, looking at multiple forecasts will get you close to the truth.
National Real Estate Forecasts for 2022
|Real Estate Company||Increase in Home Prices|
While more real estate players will make predictions in the coming months, the above companies represent some of the biggest players in the real estate market. Zillow, of course, is the number one home search portal. Freddie Mac is a publically traded, government-sponsored mortgage backer with trillions (not just billions) in managed assets. Corelogic is one of the biggest data providers for the entire real estate industry, holding significant data on 99.999% of homes built in the U.S.
Home Prices Will Keep Rising in 2022
Clearly, no one so far is predicting any sort of drop in home prices in 2022. While many real estate analytics thought there could be a major wave of foreclosures after the pandemic hit in 2020, that has not and will not happen. How do we know? National statistics are kept on mortgage forbearance rates, the number of homeowners that are behind on their payments. Yes, that number skyrocketed in 2020, setting off alarms, but the mortgage forbearance rate has plummeted since then and keeps dropping. The threat (or opportunity) has ended.
Threat of Increased Mortgage Rates is Keeping some 2022 Predictions Low
Obviously, there is a huge difference between Zillow’s 2022 real estate forecast and the rest of the field. This is due to the ongoing threat of increased mortgage interest rates. Low mortgage interest rates (under 3%) are a big part of the recent home buying spree, and mortgage backers (like Freddie Mac) are more concerned that these mortgage rates will increase in 2022 to help offset the economy’s recent rising inflation. Rates approaching 4% are possible in 2022, but a smaller increase to a touch above 3% is more likely. The Mortgage Bankers Association is predicting a 3.6% rate in 2022.
Small Cities will See the Biggest Housing Price Increases in 2022
If you look at Realtor.com’s current hottest real estate market report, you won’t see any big cities listed like Chicago or San Francisco. You won’t see Portland listed or Seattle. But you will see a collection of small to mid-sized cities across the country. It has been decades since the major cities saw the most growth. After the major cities, the trend moved to the medium (like Portland), and now it has moved on to the small. The hottest real estate markets in the country right now are made up of cities with populations in the hundreds of thousands (or less).
Home Building will Thrive but Not in Significant Quantities
Home buyer demand means anything home builders manage to build will likely sell and for ever increasing prices. However, the dramatically increasing cost of building materials and the dramatically increasing wage shortages (especially among manual labor occupations) means not a significant number of homes will be built. At least, not enough homes will be built to dampen demand. For these reasons and more, new construction has been sluggish in Portland for the last few years and the trend will likely remain the same in 2022.
2022 Portland Real Estate Market Forecast (Preliminary)
The Portland real estate market will increase by 9% in 2022. That’s my early prediction and forecast, we always follow up with a final 2022 real estate market forecast in December. Despite all of Portland’s recent problems, people are still moving here and the population has increased (slightly) and not decreased. The pandemic raised the value of home in the eyes of the entire country and set us on a wild home buying spree that increased prices across the U.S. and by more than 15% in Portland, Oregon. I do not believe the increased value home buyers are placing on their next residence is over. More and more companies are letting their employees work from home, changing the landscape of our natural daily habitat and increasing the value of home in everyone’s eyes. The 15% plus increase in Portland home prices, the boom, is likely going to be past us in 2021, but in 2022 the effects will linger and I don’t see anything in the cards that will stop home prices from increasing significantly in Portland, Oregon.
August 13, 2021