Portland Real Estate Market Update: Inventory Crisis
For many weeks now we’ve been tracking the trend of high demand for houses for sale in Portland, with inventory struggling to meet buyer’s needs. While the condo market has been weaker, houses are sought-after and fought-after, as bidding wars make for fast sales and happy sellers. In December 2020, we hit another record low for inventory in the Portland real estate market, as monthly RMLS data reports the lowest ratio of sales to listings in its history (RMLS as we know it began in 1991).
Inventory for December comes in at a staggering 0.8. This means more homes were sold than there are active residential listings at the end of the month. Compare this to a ratio of 2.2 in January 2020 (pre-pandemic times, if you can remember them). It’s also down by .2 from November, continuing the declining trend.
This downward trajectory seems bound to continue at least for now, as the newest numbers for this month come in. So far RMLS data shows that, for houses at least, inventory continues to decline steadily in January 2021. Inventory lost about 100 houses from this time last month.
While rising prices make selling a home enticing, right now buyers are motivated by low mortgage rates. In December, mortgage rates on average fell below 3% again, continuing 2020’s streak for some of the lowest rates in recent U.S. history. Even with soaring list prices, a savvy buyer can save a lot of money in the long run. And now may be the time to take advantage of that, since some experts predict mortgage rates may rise later in the year as vaccinations open up the economy. But what about home prices?
Are Home Prices Still Rising in Portland?
Over one-year median list prices have increased by 15.9%.
Low inventory and low mortgage rates are sure to keep demand high, driving up home prices for sellers. And since January is typically a slower month for home sales, things are likely to pick up in the spring. While the beginning of this year, with a pandemic in full swing, is still volatile, we still predict that home prices will continue to rise in 2021.
How Fast Are Portland Homes Selling Right Now?
Houses continue to fly off the market quickly right now. The middle of January saw a slight uptick but quickly returned to about where we were at the start of the month. It’s pretty normal for this time of year for homes to take longer to sell, since not a lot of people are dying to close on a home in the bitter cold right after the holidays. But compare this year with previous years:
As you can see, the normal rhythms of the market are clearly thrown off a bit this year. At this time in 2020, the average number of days on the market for a house in Portland was 130. Right now it’s hovering around 100, a decrease of over 25%. It’s clear that homes are moving, and fast. And until there’s an influx of inventory, you can expect that trend to continue.
What About the Portland Condo Market?
As in previous months, condos continue to be the exception to the rule of low inventory. The number of condos on the market has been fairly steady all year, and this month is no different. The same can be said for how long condos stay on the market (the average as of right now is 120 days).
Portland Real Estate Market Neighborhood Statistics
- Sales are going strong in West Linn/Lake Oswego, who saw pending sales up 57.1% since 2019
- West Linn/Lake Oswego also saw the greatest percentage growth in price at 11.4% for the year. Tigard/Wilsonville is trailing them only slightly, though, at 11.3%.
- For December, Beaverton/Aloha saw the fastest selling houses, at an average of 23 days on the market.
- The area with the longest average number of days on the market was West Portland, at 78 days. This is in large part due to their collection of high-end luxury homes that take longer to sell.
- The most new listings in December were seen in Southeast Portland, totalling 213. Southeast had 4,475 new listings total this year, second only to West Portland at 4,572.
Is Portland in a Housing Inventory Crisis?
In the midst of a full-blown pandemic and a rocky change of administrations, it’s easy to feel reactionary to a statistic like the Portland real estate market’s record-low inventory. And certainly the unforeseen pandemic leaves everyone with a lot of guesswork on their hands. But before jumping to drastic conclusions, let’s take a careful look at the numbers. It’s possible that low inventory has more to do with demand than supply.
New Listings vs. Active Listings
This graph clearly shows that the number of active listings in 2020 dropped considerably in 2020 from previous years. But the latest RMLS data for new listings complicates this picture a bit. It actually shows that the number of new listings in 2020 hasn’t been too far off of the general trend seen in 2018 and 2019. In fact, new listings are up 37% from what we saw in December of 2019 (1,740 versus 1,270).
This is still a decrease of 22.3% from November 2020, but that’s to be expected this time of year. Pending sales increased 13% from December 2019, and closed sales increased a whopping 26% from December 2019. So it’s safe to say that there are homes out there, and people are buying them – fast.
For the whole of 2020, new listings decreased a total of 5.3% when compared to 2019, with the biggest dip coinciding with the initial onset of the pandemic and its restrictions. But with pending sales up by 7.9% and closed sales by 7.8%, we can’t conclude that fewer people are selling because of the pandemic. It may, in fact, be that more people are trying to buy.
Since new listings (recently) are more than catching up, could low inventory be the result of so many aspiring buyers’ and sellers’ plans being derailed by the events of 2020? We may not know the full effects of the pandemic on the Portland real estate market for some time. For now, though, it’s safe to say it will remain a strong seller’s market, with plenty of potential for 2021.
Thinking of taking advantage of that market? To get the most out of selling your home, check out our top 1% sellers agents today.January 29, 2021