Inventory is Up in the Portland Real Estate Market
Spring and early summer housing inventory is low, but in late summer and fall the Portland real estate market inventory typically shoots up (and it has already started). Article photo is from today, 07/28, the 97213 zip code, using our own home search program. Quite a bit to choose from, right? It is like that in most parts of the Portland metro right now.
Portland Real Estate Inventory Trends
According to the most recent RMLS Market Action Report for the Portland Metro region, inventory is right about where it usually is last June — if you’re just looking at the past two years. In 2015, June inventory was at 1.6 months; last year, it was 1.5 months, and this year it is at 1.6 months again. This number means it would take 1.6 months to sell through the available inventory.
Inventory usually extends to about two months or even three in the fall and winter, which can make the home buyer process a lot easier.
New home construction is still slow, but another source of inventory is traditionally the “move-up” home seller. These sellers are also buyers, looking to move out of their current home and into another one in the same area.
Some real estate agents are worried that low inventory is scaring move-up sellers off, because of fears that they won’t find anything to buy in their price range. This creates a bit of a self-perpetuating cycle, with new buyers unable to come onto the market because existing homeowners won’t sell and look for a new home in a higher price range. Let’s take a look at the anatomy of a move-up homeowner, and what might motivate them to sell this late summer.
Who are the move-up homeowners, and when will they sell?
Generally, as a real estate agent in Portland, I see two main types of move-up homeowners: first-time homeowners ready for more bedrooms in a family-friendly neighborhood, and retired folks ready to scale down and move into their second or even third home.
Statistically, most homeowners stay in their homes 5-7 years (according to the National Association of Realtors and others). Move-up homeowners in Portland, then, are most likely to have purchased their home somewhere between 2010 and 2012, when the market was significantly less competitive. In fact, home prices were just about at the lowest point in decades, after the 2008 housing crash — which impacted the Portland real estate market for years.
If Portland homeowners fall into the national trend, that is, selling their home after 5 to 7 years, we could be seeing a relief to the low inventory situation soon, with move-up homeowners cashing out significant equity. In 2010-12, the median home price in Portland hovered between $225,000 and $250,000. Compare that to this year, when the median sale price for a Portland home is $375,000.
Where move-up homeowners are looking for homes
Generally, people ready to get out of their starter homes or retire want to be in the Portland suburbs. That’s a good thing, because while the equity on their current homes has been building, the cost of their neighbors’ homes in Portland has also exploded. Average year-to-date sales price for a home in the Portland Metro area was $427,000 in the May RMLS report. Luckily, outlying areas still have affordable, newer homes with more square footage, as well as condos and townhomes perfect for quiet retirement close to the big city. Just to name a couple:
- Beaverton is a hotspot for just about anyone seeking high quality of life in the hills west of Portland. Great schools, and strong job growth with companies like Nike and Intel. In 2016, Beaverton was ranked No. 9 on Money Magazine’s list of the top 50 best small cities to live. Year-to-date average sales price (as of May 2017): $358,100
- Tualatin, just southwest of Beaverton, has also been a popular moving destination, according to U-Haul. In 2016, the city ranked second out of US cities with a population between 10 and 50,000, for the volume of incoming movers. People from Portland are moving up to homes in Tualatin because they’re affordable and because the culture and amenities are very similar to what Portland has to offer! Year-to-date average sales price (May 2017): $425,000 , including homes in nearby Sherwood, Tigard and Wilsonville.
- Milwaukie and Oregon City to the southeast are historic small towns on the Willamette River with room to grow. Their own charming downtown and easy access to downtown Portland make these cities attractive to working families as well as retirees. Year-to-date average sales price (May 2017): $385,000 (Oregon City and surrounding regions), $415,000 (Milwaukie and surrounding regions).
Move up – In this economy?
Outside of home values, general stability in the US and Oregon economy has been helping some homeowner feel confident in selling their current home. Getting into another home, even in the competitive Portland market, is significantly safer financially than it has been since the housing crash. Here’s why:
- Better jobs, better pay. In 2016, Oregon passed minimum wage legislation that will increase the minimum wage in Portland incrementally over the next several years. Economists expect this movement to positively affect workers at all wage and salary levels. In addition, according to the Oregon Office of Economic Analysis, Oregon is expected to continue to see healthy jobs gains, keeping in pace with its growing population.
- Decreasing debt. Again according to the Oregon Office of Economic Analysis, the average total debt (credit card, student loan, mortgage, etc.) held by Oregon residents hit is most recent peak around 2009, when debt was about 110% of income. Fortunately, that number has gone down in recent years, to about 90% of income, with mortgages representing just 70% of income on a continuing downward trend. When people are earning enough to pay off their debts, they tend to be willing to borrow more — in other words, buy a home.
- Low mortgage rates. Since the beginning of the year, the average mortgage rate has hovered around 4%. With mortgage rates so low, who wouldn’t want to sell their current home and buy one more suitable for their needs? Check out our blog post on recent mortgage rate trends here.
Hopefully, with all these forces encouraging homeowners to sell their homes and move elsewhere in Portland, the real estate market may start to see a little more slack in inventory as we move into fall.
Are you a Portland homeowner ready to move up? Are you looking to buy your first home in the Portland metro area? Are you ready to cash in on your equity and move somewhere else? Check out our listing package, and secure a top buyers’ agent, before you make another move!July 28, 2017