The numbers for the housing market for the second quarter of 2022 are showing signs of a returning stability to the market. Considering the low median days on market and the economic fluctuations brought on by the Covid pandemic, the housing market in Portland, OR, is holding up exceptionally strong this year. Home prices are rising and it’s starting to take its toll on buyer demand but despite that, we are looking at another year of a strong real estate market.
The markets are expecting another bump in the 1-day Fed Funds rate by 75 basis points post Federal Reserve’s next meeting that is scheduled on July 26 and 27. This will certainly dictate if the Fed ends up buying more mortgage-backed securities for their portfolio. In layperson’s words, if the Fed is successful in getting ahead of inflation, this will likely cause interest rates to drop. That could possibly open the doors again for buyers who were hesitating or unable to participate in the housing market at higher rates. To get a deeper insight into Portland’s housing market, let’s look at some statistical analysis of the data we have received so far.
Median Sold Price
The median sold price for Portland in the second quarter of 2022 is $610,000, up 6.5 percent from the previous quarter and 9.8 percent from the same time last year. This indicates that housing prices are starting to stabilize as the market shifts rapidly. With fall looming around the corner, we are already seeing a shift from last year’s trends and home prices are expected to increase slightly. The competition is gradually beginning to wane as more buyers are rethinking their decision due to rising prices.
Portland’s median sold price did not experience much fluctuation throughout 2021, but from what we can see, home prices are going up and that is pricing some buyers out of the market. Sellers are already experiencing a dip in their offers from buyers and as demand continues to fall, some have even resorted to reducing their asking price. The seller’s market had a long run in Portland in the post pandemic era but the market is starting to shift rapidly and we are seeing the demand for houses simmering down.
Number of Homes Sold
7,091 homes were sold in the Portland area during Q2 of 2022. That is 26.3 percent higher than the previous quarter which saw 5,222 homes being sold. Although when compared to same time last year, we are looking at a 11.5 percent decline in the number of homes sold. This is mainly because the rise in interest rates priced out many buyers from the market even with minimal gains in the inventory.
For Portland, this means that sellers who were unable to land an ideal offer in the last quarter can still have many opportunities to make some money in the coming months. It’s worth noting that the rate at which new houses are being built is consistently going down as supply chain disruptions continue to make new construction harder. The fluctuations in oil prices have had a significant impact on the market too which continues to see more and more supply orders. What does this mean for sellers? Well, a shrinking housing inventory is bound to increase your property value in the coming months.
Median Days on Market
The median days on market for Portland in Q2 of 2022 remains the same as last quarter. It’s important to remember that the Median Days on Market are the total number of days the house is on the market from listing to the closing of the home. The average home sat for about five days on the market since the beginning of the year. This means, sellers have had a much easier time dealing with real estate this year as there is no shortage of bids from buyers.
Furthermore, the average days on market for Q1 and Q2 of 2021 was the same as this year, which goes to show you that houses are selling fast. Many buyers are not taking any chances due to the possibility of interest rates going up later this year.
There is growing speculation that the Fed Funds rate will increase by 75 basis points following their July 27 announcement. This will inevitably streamline the demand further as buyers who were relying on low interest rates will start backing out. Markets and investors across the nation are closely watching for any surprises and trying to figure out if the Fed will succeed in their inflationary control measures. But from what I can see, the market is shifting due rising home prices and falling demand, so you can expect the days on market to go up as fewer buyers can afford to purchase homes.
According to experts’ predictions, the mortgage rates for the state of Oregon are expected to rise further this year, which is close to 6 percent at the time of writing. Keep in mind that a 1 percent increase to interest rates has the same impact as an 11 percent increase to home prices. So if you are planning on buying a home in Portland in 2022, now is the time. For now, the market remains hot despite the fluctuations in the economy and inflation rate – one of the important factors that dictate mortgage rates in our country.
The Future of the Market
Q2 of 2022 has given us many signs that the Covid pandemic’s effect on Portland’s economy and housing market are starting to taper off. We are seeing the housing market approach a neutral point with home prices rising throughout Q2 and the trend is expected to continue in Q3. Homes are sitting on the market for longer and we’re even seeing price reductions as sellers try and catch up to the changing market.
Home prices should continue to grow 3-5 percent during the rest of this year and into 2023, so even if your house stays on the market longer than you anticipated, the chances of you making good money in the future remain high. On the other hand, buyers must make themselves familiar with what a good offer looks like. It’s imperative to understand the market conditions before thinking about investing in real estate.
Both buyers and sellers must learn from their agents about what their best options are. First-time home buyers may feel the pressure from the housing crunch but if they continue to be patient, they can lean on their savings to close a good deal. That said, I highly recommend these clients get in on the action as soon as possible.