Portland Real Estate Market Update, November 2022
In recent updates, we’ve reported that Portland’s real estate market has shifted from the hot seller’s market we’ve been navigating for the past two+ years into buyer’s market territory. Inventory has climbed and prices are starting to drop. While it is normal for fall to be a better season for home buyers and spring to be a better season for home sellers, the drop this year has been drastic due to rising interest rates and has dampened everyone’s forecasts for 2023. Read our full 2023 Portland real estate forecast here.
Portland Real Estate Activity Continues to Decrease
To get more specific about the across-the-board decreases we’re seeing, the most recent RMLS report shows that at the end of September 2022, new listings totaled 3,151, a 16.2% decrease from 3,760 in September 2021. For pending sales, the market saw a decrease of 36.8%. 2,003, as compared to 3,170 in September 2021. Closed sales went from 3,167 in September 2021 to the current 2,237.
The graph below shows the trajectory of the recent drops in new listings as compared to 2021 and 2020. These drops are noticeably below what we saw in 2021, and we’re also moving into the time of year when the market naturally cools.
A Massive Drop in Pending Sales
Pending sales have dropped even more than new listings. The chart below explains the real estate market downturn in one clear picture.
What’s Causing the Cooling in the Real Estate Market?
Reasons for the slow down are inflation and rising interest rates, which have impacted affordability and created a cloud of uncertainty for buyers. For now, many are taking a wait-and-see approach, anticipating a possible recession. Some buyers are backing out of their contracts for new construction homes due to labor costs and supply chain issues driving up materials costs, not to mention rising interest rates, leaving builders high and dry with in-progress projects.
But are we headed for a recession? There seems to be no straight-ahead answer to that question because we haven’t seen an inflation rate like the one we’re living with right now in four decades. Generally, six months of economy shrinkage, which we’ve seen in the first half of 2022, would equal a recession. Many experts say we will, without a doubt, experience “a whopper of a recession” in 2023.
Add to this complicated economy the continuing rise in interest rates to around 7%. Compare this to the 3.4% rate this same time in 2021 and the 2.9% rate this same time in 2020, and it’s easy to see why many home buyers are backing off.
Home Price Increases in Portland for 2022 are No Longer in the Double Digits.
In the spring months of 2022 alone, Portland home prices increased in the double digits, but with recent price drops, as of the end of September, 2022, RMLS reports that the average sale price increased 8.2% from $570,200 to $617,000 for the year. This is likely to drop a little further before the year is done.
Using data from Fidelity National Title, we can see from the graph below how the number of homes with price decreases have risen by 57.58% with a 7-day average and 51.1% with a 90-day average. This means more than half of the homes active on the market in Portland have had a price drop.
Portland’s Cooling Real Estate Market Translates to More Days on the Market
As is typical when the market cools, homes stay on the market a bit longer, with buyers backing off and taking more time to shop and make offers.
In recent days, Fidelity reported an average of 58 days on the market.
Portland’s Real Estate Inventory has Plateaued and is about to Drop
It is normal for inventory to hit a high water market in Sept. or Oct. (this year it will be Oct.) and then drop as we approach the holidays. Inventory will start to decline rapidly over the next few months as home owners cancel their listings (and some go pending). Less new homes will hit the market over the next few months and inventory will likely bottom out in Dec. and Jan. like it always tends to do.
For those home sellers that hang in there, often it can lead to a sale prior to the holidays as their competition drops off.
What’s the Future of Portland’s Real Estate Market?
Read our full 2023 Portland real estate market forecast here. We breakdown the forecast into city center vs. suburb and luxury vs. starter home prices, so no matter where you are or what you’re considering selling or buying, you can get a reasonable idea of what might happen in the upcoming year.
An Experienced Realtor Can Navigate Any Market
Not sure how to approach the current Portland real estate market? Whether you’re buying or selling, our experienced agents can help. We’ve seen a lot in our almost twenty years of working in the Portland metro area, and we’ll give you advice you can trust. Call our top 1% buyer’s agents at 503-773-0000 or our top 1% seller’s agents at 503-714-1111 today. You can also chat with the bot on our site. We look forward to connecting with you!October 17, 2022