Mid Year Market Update
It’s been over 5 years since the bottom of the 2008 crash and Portland’s real estate market is as strong as ever. Sellers continue to enjoy short listing periods and rising prices while buyers have learned to be relentless with tracking new listings, quick to schedule showings, and aggressive with offer terms. According to the RMLS, prices rose 10.7% over the last 12 months. Meanwhile, the number of new listings hitting the market dropped by 3.4% resulting in less pending transactions and 5.4% less closings over the same period. Basically, prices are up and inventory is down.
It’s common for buyers to get frustrated in this market, but it’s far from doom and gloom! The Home Team is actively selling homes below, at, and above list prices based more on true value than what price a seller wants to receive. Our buyers are successfully getting keys week in and week out. We have an upper hand on the competition because of our exposure to the current market trends through working with many sellers and buyers alike. Many of our listings sell with multiple offers in competitive situations, which means we are exposed to offer terms from many different brokers. We can see which terms resonate with sellers and which ones fall flat, and we use that knowledge to promote the most effective terms when writing offers with our own buyers, allowing our team to be the vanguard of buyer representation.
Summer is here which is often thought to be the peak selling season, but Portland’s Inner Eastside actually has more home sales in the spring than any other time of the year including summer. Last year 1,227 residential condos, townhouses and traditional detached homes closed in May and June [the majority of which went pending in April/May] versus only 993 in August and September [the July/August pending sales].
So, is it a good time to buy? We say yes. The pending statistics and below graph show the best time for sellers to list their home is spring. On the other hand, buyers have less buyer competition and more homes to choose from in summer.
Another buyer incentive to consider is mortgage interest rates have been falling over the past few months after a high last winter around 4.25%. Today we’re seeing interest rates back under 4% for the average 30 year fixed loan borrower!
The Big Picture… real estate provides people with homes and long-term investments. Buyers are increasingly hesitant because of the idea that prices have been on the rise for the last 5-6 years, but historical perspective is important to consider when analyzing one’s home as an investment. Prices have been on the rise since 2011, but had fallen for approximately 4 years before then. The average sales price in the Metro area in 2007 was $337,400. By 2011 that number had dropped to $271,800. It wasn’t before August 2013 that the average home price returned near pre-recession levels at $332,600. Between 2007-2013 Portland experienced a net zero increase in home values.
To take this a step further, the average sales price in the Metro area at this time is $423,800. While that’s $86,400 higher than in the pre-recession peak of 2007, it’s only an increase of less than 2% annually. Historically real estate appreciates at 3-5% per year nationwide.
Portlandia vibes act as a magnet to adventure seeking outdoors enthusiasts from all over the country. Our population continues to grow at over 1% per year fueled by the nearly 3% annual job growth. Annual salaries were up 7% from 2016 to 2017 and the economy is healthy. When it comes to real estate decisions, look at the big picture. We suggest buying a home if it’s at least a 3-5 year investment. The rental market is strong and many of our clients choose to become landlords instead of selling as soon as it comes time to move. There are lots of options within the market and the Home Team is here to help guide buyers and sellers every step of the way!