2025 Portland Real Estate Market Forecast

This one is going to be a challenge.

It is an election year. The economy is in turmoil.

The Portland and national real estate market has been unsettled since 2020. It boomed until mid-2022, then screeched to a halt with historic (in terms of the fast rate of increase) interest rate hikes. The 2023 Portland real estate market was slow, prices stopped rising in the city property (but not in the suburbs). The first five months of 2024 mirrored almost exactly the first five months of 2023 (check out and bookmark our Portland real estate market monthly reports) Then the market dropped harder than 2023 as we moved into summer, into June and July of 2024 (thing are very slow right now). Inventory is high, price drops are common, and a lot of nice homes aren’t selling. Please note that I am initially writing this forecast in August of 2024, but will come back and update this same article a few times as we approach 2025, feel free to bookmark this page for updates.

The Near Horizon

Despite the tough (unaffordable for buyers, difficult for sellers to sell) real estate market we find ourselves in, I believe a dawn is coming.

Hope #1

They have been talking about interest rate drops since early 2023 and they haven’t materialized yet. But it seems a near certainty now that this fall the Feds will drop the rates. The further the rates drop the better off the real estate market will be. Lower rates will help first time home buyers afford homes they cannot right now. Lower rates will help homeowners who feel stuck in their current low payment mortgages to believe that they can sell and afford to buy somewhere else. I would not underestimate the effect lower rates will have on this real estate market, and those lower rates are almost certainly coming soon.

Hope #2

The buildup effect. This summer marks two years of high interest rates. Of home buyers who wanted and were ready to purchase, but suddenly could not because of rate jumps. It marks two years of home sellers who were about to sell but with the sudden rate increases decided they had to stay home and couldn’t afford to move anywhere else. Most people are aware that the real estate market here hasn’t been good for a while, but may not realize this one important figure. For the last two years, there has been a dramatic reduction in transactions. Less people selling, less people buying, fewer transactions across the board.

Let’s take a normal, boring year in real estate for an example. In July of 2018 a total of 3,071 homes went pending in our metro area. In July of 2024, that number was 2,191 (numbers from RMLS Market Action Report). For the last two years, since the fast interest rate hikes, we’ve had on average in any given month about one-third less transactions everywhere. 1 out of 3 people who would have normally bought or sold a home, said, “no thank you” to this difficult real estate market. According to NAR, annual existing home sales hit a low in 2024 not seen since 1995, even worse than the 2008 crash era. Pending contracts in May 2024 was the lowest number since 2001. International buyers down to the lowest level since NAR started tracking that statistic in 2009. Of course, the US population has steadily increased since 1995 as well. In the last two years there have been 7 million new babies born in the US, 3 million marriages happened, 50 million changed jobs, etc. Many of these people need or want to move into a new home.

People will always want and need to move homes. The desire for homeownership and to relocate to a new location or a different type of house does not go away. It only builds as it gets delayed. This buildup is real and waiting.

You have to combine this pent up demand with a near zero increase in supply. New home construction rates have stayed low in Portland for many years and due to the urban growth boundary are unlikely to ever keep up with demand. Demand here refers to the desire to own your own detached home, not the demand to rent a high rise apartment (of which Portland has increased plenty of supply), or own a condo in a high rise (don’t get me started about the desperate situation nearly every Portland proper condo owner is in).

Despair

Despair is probably too strong a word here, but I’m sticking with the theme. Any unpleasantries in our local metro real estate market involve Portland city proper and not its suburbs. This is simply a statistical reality since 2020. Portland city proper population has remained flat or possibly declined (there are conflicting reports) since then. No one is suggesting it is on a growth pattern. Meanwhile, every Portland suburb has not stopped growing in population and is continuing to grow today. Population growth or decline has a huge impact on any local real estate market. Combine this with some of the highest effective local tax rates in the country (only for people who live in Portland city proper) and with Portland’s recent rise in unemployment (ranking on a national level), we have a recipe for despair (again this is only for Portland city proper and not its suburbs). These effects are strong enough we cannot give one forecast for the Portland metro. There is a Portland proper forecast, and a Portland suburb forecast and the two cannot be the same.

Other Ingredients

Real estate commission rules across the country have changed. We now charge 1.7% to sell a home, and that’s it. We do not offer or include buyer’s agent commission when listing a home for sale. The seller will no longer sign contracts to pay both the seller and the buyer’s agent commission. This sounds dramatic, but unfortunately for sellers and many who want to see the overall cost of commissions go down, it is not. Everyone I know in the industry simply expects buyers agents to submit their commission requests along with their offers. The offer then and the commission the buyers agent is requesting, is all negotiable and not preset (the seller no longer offers this upfront). No one I trust expects the effect amount of commission the seller ends up paying to change – at least not for a while. Buyers agents are expected to submit commission requests based on amounts they’ve been getting for years. It will take a long time for those expectations to go down. The vast majority of home buyers use Realtors to represent them in their purchase. While this could change, it certainly would not change quickly. There are many dangers and pitfalls of self representation. Regardless of the nuances here, I do not expect this significant change to have a significant impact on our real estate market or any other in the nation in 2025.

The presidential election, while dramatic and rightfully so, is a known quantity. I’ve been licensed here for over twenty years now. Every presidential election there is a bit of a slowdown around the election itself (in the fall) and a little extra slow down in the few months that follow (the winter), but by spring everyone is looking forward again and focused on their own lives and what they can control. In terms of the real estate market alone, it is good that these elections occur in what is already a slower time in the market (the fall and winter) and by the time we get to our high point in the industry (the spring and early summer), the population has largely moved forward (in terms of real estate alone).

Forecasts

Here I’m going to put and update local and national real estate forecasts from various sources, including my own forecast.

National Real Estate Market Forecasts

Portland Real Estate Market Forecasts

Bullish on the Portland Real Estate Market for 2025

If you’ve been following my decades-old blog, you will know I am not always bullish on our local Portland real estate market. But I am for 2025, because of the two “hope” reasons I wrote about above. I believe that those two factors, lower rates, plus built up demand (combined with ongoing lack of supply) will propel the real estate market forward in 2025. It will push up every Portland suburb (and they are already faring well) in a significant fashion, and it should be enough to even improve our difficult Portland proper real estate market. However, if you’re thinking of selling (and can choose your timing), do so in the spring, and if you’re thinking of buying, it is almost always best to do so in the late summer, fall, or winter months. This is true over and above our annual real estate market trends, whether they are up or down.

Buy Now or Sell Now

Don’t listen to the jokers in our industry who always have three reasons ready for why you should either buy or sell – right now. Watch the market, listen to trusted and patient sources who will tell you when it isn’t a good time to buy or sell.

Here, and Ready to Help

For over twenty years now, I’ve had the joy of watching and assisting hundreds (actually thousands now) of people buy and sell in our metro. I’m still here and the market is slow. We have our own ups and downs in this industry. Whether I’m busy or slow, my hand-picked team and myself is here to help. Have a question? Ask. Need a home value, want to tour a home? We’re ready to help. Give us a call today at 503-714-1111 or chat with the bot on this site. We’ll give straight information and advice on your real estate journey. We’d love to connect today.