Top 5 Portland Real Estate Market Stories of Summer 2021
It’s been a roller coaster ride of a year for the Portland real estate market. After over a year of a global pandemic, demand for single family housing shot through the roof, and Portland’s supply struggled to meet that demand. All year we’ve been monitoring the effects of this situation on the market. Accordingly, the top real estate market news stories of 2021 tend to revolve around the inventory crisis. Keep reading to find out crucial takeaways from the market so far this year.
1. Low Inventory Drives Home Prices Up
Since the year’s start, inventory in Portland has hit record lows, the lowest point being May. Our monthly RMLS report calculates the ratio of new listings to closed sales at the close of each month, and that ratio hasn’t come out to anything over 1.0 since October 2020. In fact, many months, including June most recently, saw a number less than 1.0 – meaning, more homes sold than came on the market.
The lack of inventory means more competition among buyers. And more competition means prices go up. You’ve likely seen local news horror stories about outrageous bidding wars. Now, those should be taken with a grain of salt, as the news tends to cherry pick the most striking cases. But it’s true that home prices rose considerably this year. Median sales price for homes in June was up 20.1% from June of 2020. With home prices rising so quickly, Portland’s affordability suffered.
The tough competition also means that homes sold faster this year, also breaking records. Homes are flying off the shelves as buyers become quick to make an offer in the hot seller’s market. Total market time for June dropped to only 21 days.
2. Biden Administration Pushes Initiative for Downpayment Assistance Programs
Rising home prices affects low income buyers more than anyone, and many feel they are being squeezed out of the market. As a response to this issue, the Biden administration is attempting to make good on a campaign promise to encourage home ownership. Two pieces of legislation make up this push.
First, The First-time Homebuyer Act secures a $15,000 tax credit to those who bought their first home after December 31, 2020. To be eligible, you must meet an income requirement and not have owned a home in the past 3 years. This Act has been introduced to Congress, so it’s officially in circuit as a bill. However, Congress hasn’t moved on it since its introduction in March.
Second, the Downpayment Toward Equality Act proposes an even more drastic form of downpayment assistance – in the form of direct money in grants that can be applied to your downpayment. The legislation could mean income qualifying individuals up to $25,000 to buy their first home. One stipulation: their parents can’t have owned a home either. The idea is to encourage home ownership in communities that have struggled to achieve it. This piece of legislation sat in draft form for a while. But on July 15, Senator Maxine Waters introduced it, making it a bill.
3. iBuyers Slowly Recover from Pandemic Slump; Try to Capture More of the Market
iBuyers like Redfinnow, Zillow Offers, and Opendoor seem to poke their noses in everywhere these days. If you’ve been following our blog at all, you know how we feel about them. The short answer is: they don’t have the seller’s best interest in mind. Their business model basically consists of trying to give you the lowest possible amount so that they can then turn around and sell your home for a profit. They also usually charge exorbitant fees.
On top of that, some of these iBuyers use dodgy techniques to hook you. We’ve found Zillow’s Zestimate to be wildly inaccurate, for example. And they do that on purpose to get you excited. Once they finish their appraisal, expect that number to drop considerably.
While iBuyers have made serious inroads in recent years, they didn’t prove immune to the affects of the pandemic. In the second half of 2019, iBuyers represented 0.8% of the market. That fell to 0.3% at the end of 2020. But according to a recent Redfin report, that number steadily crept upwards in the first quarter of 2021.
4. More Dense Housing Coming to Portland
Put plain and simple, to solve this inventory crisis Portland needs more housing. And like it or not, that’ll probably mean more dense housing like high rises and ADUs. Building up rather than out is a concept you might hear bandied about fairly frequently. But it’s soon becoming part of official Portland policy.
In August of 2020, the Portland City Council approved the Residential Infill Project, a major project that outlines the Council’s plans for urban development. This plan is slated to take effect in fall of 2021 – so, soon. Many of the changes you’ll see favor dense housing. They allow things like two ADUs on a property (rather than one), for example. You can also expect to see more duplexes, triplexes, etc. mixed in with single family housing.
5. New Construction Held Steady – And May Even Rise Soon
Back in 2020, everyone was concerned that new construction would take a big hit, including us. And it seemed to be heading in that direction, with the number of residential permits plummeting from 2019 to 2020. And lumber prices skyrocketing in the spring had plenty of people nervous. But sales of new construction homes in June held steady, making up 6.7% of all home sales – slightly lower than average but not by an alarming amount. In July, the city issued 65 new residential construction permits, the vast majority for townhouses and single family units.
Add to that the fact that a big construction project may be on the way. Plans are in the works to transform the former Alpenrose Dairy facility in Southwest Portland into a 193 home subdivision. That would mean a sizeable influx of new single family housing into Portland’s tight real estate market.
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We’re here to keep you up to date on Portland’s latest real estate news. You can trust us for accurate data both locally and nationally. And if you’re ready to get in on the action firsthand, contact our top 1% buyers agents or top 1% sellers agents today!August 2, 2021