Will Portland Have Another Record Year for Home Prices?

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The year 2016 will be remembered as the year that Portland saw record home price increases.

We saw the year start out in January with a median home price of $310,000; by December it had gone up to $347,000 according to the RMLS.

It might not sound like much, but this 13% increase left only Seattle as the frontrunner for highest home price increases in the nation. If you look at the Case-Schiller Index, Portland had the largest gains in home prices in the nation for 11 straight months starting in October 2015!

By October of last year, the median Portland home price had hit is most recent peak: $405,900. Then things began slowing down as they typically do in the winter real estate market.

The only thing missing from the picture that the Oregonian reported on last month was that this isn’t the first year this has happened in Portland. In fact, since 2012, Portland home prices have been going up 10% to 15% every year.

We know what’s driving this trend — more people are moving to Portland, and the housing supply is limited by its nature and by Portland’s slow to negative growth in new construction.

See my exact prediction on how high prices will rise in my 2017 Portland real estate market forecast.

Yes, there are still pockets of Portland where you can buy a decent home for under $350,000, but everyone can agree that prices have gone up in pretty much every neighborhood. What remains unclear is whether the trend of rapidly rising home prices will continue.

If they do, real estate experts worry that we will have another housing bubble on our hands. That is, if local employment wages do not go up. When prices increase too fast and too high, it usually means people are buying homes that they can’t afford, and that the real income isn’t there to back up those costly mortgages.

Home prices cannot rise faster than incomes and inflation indefinitely, but that doesn’t mean a crash is necessarily in the cards. Although mortgage rates did remain low for most of 2016, it’s tougher now to qualify for those mortgages than it was prior to the housing crash. Now that mortgage rates are beginning to climb again, they could deter even more buyers, slowing down home-price increases in 2017.

As a Portland real estate agent, I predict a slower increase in home prices this year than last. Home buyers are still eager to get their hands on the Portland market. However, if sellers start asking too much, they will look elsewhere — which is why we’ve also seen exceptional growth in Portland suburbs this year. Average home prices have gone up 10% in Tigard and Wilsonville this past year; 11% in Beaverton, and numbers upward of 12% in Milwaukie, Gresham and West Portland.

Meanwhile, two Portland metro real estate zones were tied for the highest average home price increase in 2016: 13.9% in both Hillsboro/Forest Grove and Lake Oswego/West Linn!

Ready to sell your Portland home this year? We charge less and pay more to help sell your home. Need a price report that shows how homes in your neighborhood have been selling? Contact your local real estate experts — we’re happy to help.

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