Migration is Impacting the Portland Housing Market
In the Portland real estate market inventory, overall, is tight. This is especially true in the spring and early summer months (but not so much in August, now is actually a pretty good time to buy). Find a top rated buyers’ agent, start looking for a home, and you may find that the best deals are on the market for a few days, moderately priced homes can sit for a month or two, and overpriced homes can sit for extended periods of time. Lower price ranges in town (anything under 300,000) moves a lot faster than any other category.
It’s challenging (especially in the lower price ranges), but not impossible, to buy a home under these real estate market conditions, so of course we’re always looking for a party to blame. Murky stories emerge, and chief among them is the belief that migration to Portland from places like San Francisco and Seattle is driving up demand for homes to unreasonable levels.
First off, it’s important to remember that the stories about the Portland real estate market are sometimes exaggerated. Yes, we see multiple-offer situations, so called “bidding wars”. And yes, Portland is a popular place to move to, but that doesn’t mean migrants are the ones causing the overall residential real estate shortage.
Last week, the Oregonian reported that “The Portland metro area grew from 2.2 million in 2011 to nearly 2.4 million in 2015, and most of that growth comes from people moving to the region from elsewhere.”
It sounds big, but that’s just 50,000 people per year; the number of households could be half that. What matters for real estate prices is not how many people are moving to the area, but whether those people are buying homes.
To figure out whether these new Portland residents are entering the real estate market and buying up homes, we can look at an Oregon Office of Economic Analysis report issued back in June 2017. It found that most migrants to the Portland metro area have a lower income than those already living here. That’s mostly because they also tend to be younger – entering college, or just starting careers.
According to economist Josh Lehner, these newcomers to Portland are less likely to be purchasing homes. They move into apartments or rent a room in a house, and many will move on to other parts of the country after they’ve spent a year or two doing that. (You may have noticed the Portland rental market is a lot tougher than the Portland real estate market.) Migrants are likely responsible for the tough rental market, and not the tough (at times) Portland housing market.
The boom in construction of new apartment buildings around Portland confirms this picture of migration to the city, and 2015 and 2016 were both record-setting years for the number of new apartment building permits issued, according to PortlandMaps.com
The Portland Business Journal also tracks new construction on its “Crane Watch” page. Filtering for “multifamily units” shows 20 sites where permits have been issued, construction is underway, or construction has been completed in the past year. Thirteen more sites have built or planned “mixed-used” buildings, most of which contain apartment units. This doesn’t even include the number of residential homes that are being converted into small apartment buildings, or the addition of Accessory Dwelling Units across the city. New Portland infill rules encourage both types of development.
So, if migration is not the primary culprit for a tight Portland real estate market, what is? The Oregon Office of Economic Analysis report cited a number of causes – all the usual suspects, in fact. Lack of new home construction (due to lack of available land in the city) as well as overall employment and wage growth are allowing current Portlanders to move into better homes (or buy their first one).
If you’re one of those Portland residents ready to buy your first home, or move into a new home, let my top rated Portland buyers team help you out! We’ll give you the straight story and get you into the right home – it just takes a little patience and a skilled team on your side.September 1, 2017