There are a lot of things to be thankful for in Portland this summer. Vaccination rates are up, pandemic restrictions have lifted, and the housing market has gotten as hot as the weather. And it’s a seller’s market to be sure with the demand for properties soon to surpass the available housing stock.
One of the drivers behind this upward surge in demand is the low-interest rates available on mortgages. This has people looking to take advantage before the Feds raise interest rates, which could happen as soon as late 2022. We also don’t know if or when the next housing crash could occur. Regardless of what lies ahead, right now things are looking good for the Portland housing market and the Pacific Northwest in general.
Whether you’re a first-time buyer, are looking to upgrade to a bigger home, or are downsizing to a smaller one, these three housing stats affect the Portland real estate market right now. We’ll take a look at the data and compare it to the first quarter numbers of 2021.
Note: The stats are for all of Portland Metro and include Multnomah, Clackamas, and Washington counties.
Median Sold Price
Based on the statistics, the median sold price in the second quarter of 2021 reached $505,900. The median price differs from the average price. It’s the halfway point in the column with higher prices above and lower prices below. The average price, by contrast, is the total amount of all real estate sale prices divided by the number of areas in that specific locality. It’s more helpful to focus on the median price because it provides a clearer picture of the real average. This is because it removes the very high- and very low-priced homes from the equation.
That said, if we compare the second quarter median price of $505,900 to the first quarter median price of $475,600 we see an increase of $30,300 or about six percent. Compare the Q2 number for 2021 to the second quarter of 2020 where the median price was $443,000 and that’s an increase of $62,900 or roughly 14 percent. That’s a significant rise and it’s a strong indicator that it is indeed a seller’s market in Portland much as it is in other parts of the country. So, to put it simply, demand is exceeding supply. That’s good for sellers, but can put buyers in a bit of a pinch.
Number of Homes Sold
Next, let’s look at the number of homes sold by quarter. During the second quarter of 2021, there were a total of 12,622 units sold in Portland. The bulk of those units being two- to four-bedroom dwellings. When we compare that number to the first quarter of 2021 where there were 6,715 units sold we see a pretty large increase of 88 percent. Looking back at the second quarter of 2020 when there were 7,034 homes sold and comparing that to 2021 Q2 numbers, it’s an increase of nearly 80 percent. This is encouraging news for homeowners looking to take advantage of a hot market.
Can we conclude from these numbers that everything’s coming up roses in the City of Roses? Not quite. With growth comes growing pains and there are a few obstacles to watch out for in the coming months. For example, with the high demand in a market in short supply, competition can get brutal. With some homeowners willing to make cash offers well over the asking price, this is good for sellers but increasingly difficult for many buyers especially coming out of an economic downturn.
Median Days on Market
With such high demand, it is interesting to look at how long homes are staying on the market before being snapped up by eager buyers. When we look at Cumulative Days on the Market, or CDOM, we’re talking about the total number of days the house is on the market from listing to sale. In the second quarter of 2021, that median number was five — just one day less than the preceding quarter. Compare that to the eleven-day CDOM of Q2 2020 and that number was almost cut in half just a year later.
An even more amazing number is the drop from Q1 2020 and its median of 22-days on the market to where we are now. Yes, these numbers can make us feel a little giddy, but again, there are both advantages and disadvantages. We’ll take a look at those next.
Upside and Downsides to an Up Market
The obvious disadvantage in rising home prices and short days on the market means that not everyone who wants to buy a new home will be successful. Those who can afford to make an offer for thousands over the asking price stand a better chance of closing the deal.
The advantage not only goes to the seller in a market such as this, but investors also see opportunity. Fewer homes for sale makes Portland prime for investors to purchase real estate. The latest numbers from Fortune Builders show about a four-week supply of available housing in the Portland Metro area. Portland needs housing and investors should be stepping in to get it built. It’s also a good time for developers to invest in more affordable housing options.
One reason for the shortage of homes is the number of out-of-state buyers looking to relocate to Portland. While population growth has slowed recently, which could be an effect of the pandemic, Portland’s total population grew by 435,000 from 2010 to 2020.
From 2019 to 2020 the population saw a 0.7 percent increase with net migration contributing to 90 percent of that growth. Net migration is the number of new residents moving into the city minus the number moving out. Portland’s appeal to out-of-state buyers looking for a change will likely continue.
The COVID-19 pandemic affected our lives and the economy in many ways. For one, mortgage rates have been kept low and will probably stay that way for the foreseeable future. As of this writing, the average rate on a 30-year fixed-rate mortgage sits at 2.822 percent with the average rate on a 10-year fixed-rate mortgage rate at just over two percent.
It’s easy to see why people are anxious to lock in a low rate on the purchase of a new home. Many of us have spent a lot more time at home due to the pandemic than we would have otherwise and that’s caused us to rethink our live/work situations.
Some of the effects of the pandemic may fade away, but others are here to stay. It’s difficult to gauge what the future will hold but it appears as though the housing market in Portland is going to stay strong in the near future. The challenge is in meeting the demand. The best advice for sellers is to strike while the iron is hot while for buyers it’s to be patient.
The data used in this article was obtained from multiple sources. It is subject to change over time and is used here to present a snapshot of the real estate market in Portland as of July 2021.