Despite ongoing concerns about the demand for houses, Q1 of 2022 has indicated another year of a strong real estate market. Rising house prices, lowered volume, and a shortening days on market indicate a fierce demand for housing—and, of course, increased profits for sellers!
Portland Rain Isn’t Driving Away Buyers
It is fairly normal to see prices and volume drop a bit at the end of each year. Many people are focused on time with family and friends, spending is directed at presents or holiday travels, and the huge expenditure associated with purchasing a home or the effort of moving out of one is usually the last thing on people’s minds. That said, it is a time when the market tends to shift gears, preparing it for a potentially fast rebound in the next quarter.
The Portland Metro area certainly did well, having a very brisk start to the year that indicates a thriving market that shows no signs of stopping. As we analyze Q1 and make estimations for Q2, it is important to remember that each market is a microcosm of the larger market, and it’s subject to slumps as well as huge gains.
The Median Sold Price
The median sales price in Portland has done very well during the last year. Q1 of 2021 saw a modest median sales price of $515,000. By the end of the year in Q4, the median sales price had risen to $554,736, a price increase of approximately 8%. These gains can sometimes stagnate a bit between the fourth quarter of the previous year and the first quarter of the new year, but that wasn’t the case for Portland.
Portland’s median sold price in 2022 for the first quarter was $570,000, a rise of three percent during a time when any gains can slow down. This bodes especially well considering the spring and summer are times when competition is at its fiercest, and home prices almost always rise during these times. Given the rise during the winter, the prices may rise even higher in the months to come.
The Total Number of Homes Sold
5,137 homes were sold in the first quarter of 2022. This, like nearly all markets, is a sharp decline from the number of homes sold in Q4 of 2021. Q4 saw 7,070 homes sold, meaning that there was a considerable decrease in sales. However, since home prices went up during this same period, this doesn’t mean there is any lack of demand.
What this does mean for Portland is that those who haven’t sold yet can still find very favorable opportunities to make some money. It’s also important to note that between 1950 and 2009, 20 million homes were built every year. However, after the housing crash, that number dropped to 5.9 million homes built in total, between 2009 and the present. This means that there are barely any new homes being added to each market and, furthermore, the homes that are for sale are the only ones available.
What this does mean for Portland is that those who haven’t sold yet can still find very favorable opportunities to make some money. That gives a lot of power to each seller, knowing that their house can’t be outcompeted by a new construction home. Overall, sellers are expected to see some very favorable outcomes for their listings, and with very little competition in their way.
The Median Days on the Market
At the beginning of 2021, the average home sat on the market for five days. That means, between listing and selling, everything happened in less than a week. In Q4, that number grew to eight days, most likely due to a slowdown of both buyers’ speed due to the holidays, as well as companies being closed or having less staff due to the holiday season.
Further proof is that the average days on market in Q1 of 2022 is five days, exactly the same as this time last year. This shows that the demand and competition for homes are equally strong as it was this time last year.
The Mortgage Rates
The mortgage rates for the state of Oregon are 4.86% for a 30-year fixed mortgage, a slight rise from rates of 3-4% this time last year. This increase matches with the Fed rate increase early in 2022, but these numbers are still historically low compared to the 10-15% of the past. This indicates that both individual homeowners and investors alike will continue to speed up their home selection process and be less picky about it, indicating another year for a strong seller’s market.
The Overall Future of the Market
The second quarter in Portland will likely be a continuation of another very strong year for sellers and buyers alike, in their own ways. Buyers will continue to be able to take advantage of very low interest rates for their mortgages, paying less for their homes over time than they may have previously. This is a seller’s market though, and that means that those who are selling their houses in the Portland market can demand top dollar for their items.
Even if your home is on the market longer than you’d like, that time is still working in your favor, so long as prices continue to rise by 3-5% every quarter. When it comes to being a buyer, it is important to find ways to be competitive and to work with the current market conditions. It is vital that buyers and sellers discuss the market conditions prior to moving forward with a move.
Buyers need to have a clear understanding of how to prepare and then what a winning offer looks like in this market. Sellers need to ask their agent about their options, especially if they need the funds from the sale of their current home. Contingencies are rarely accepted so what are the other options for a seller who wants to buy. There are some bridge loan-type products as well as rent backs and other options. Again, call me to discuss the details of this market and how to make it work in your favor.