Here are the Market Statistics for February 2023. The average and median sale prices decreased by 5.3% and 3.7% respectively. While buyers and sellers will look at these numbers differently, I’m curious to see if this will be a continuing trend or simply the result of our unusually slow winter sales cycle. I believe it will be the latter, with prices rising moderately over the next few months.
Here’s an overview of the Portland, Oregon residential real estate market as of the end of January, 2023. Please keep in mind that Real Estate is Local. These numbers reflect the activity in the Portland Metro Area. If you’d like more specific information about your property or a specific neighborhood, Let’s Talk. Please reach out to me at 503-720-9393 or JonCohen@Windermere.com.
Inventory: The Sellers’ market continues as the inventory of homes sits at 2.7 months at the end of January and exceeding 2-months of supply for the 5th month in a row. For comparison, a balanced market is 4-6 months of inventory. Last year at this time, inventory was 0.8 months. Going back to January, 2020, pre-pandemic, inventory was 2.2 months, another sign we are moving back toward a more normal market.
Average and Median Home Price: While demand remains high, the supply of homes still is not sufficient to satisfy all buyers. We saw a decrease in the average price of homes in the entire metro area from $586,000 to $532,900 – a 9.2% drop from this time last year. However, the median price of metro area homes is now $489,500, down from $512,000 at this time last year decrease of 4.4%. This may be an indication that more lower-priced homes came on the market toward the end of 2022 as investors no longer wanted to be landlords, or simply wanted to cash out of their properties while prices were still high.
Days on Market: Although demand for homes remains high, higher mortgage interest rates and a more typical slowdown toward the end of 2022 have pushed the average number of days homes are on the active market to 65 days, up from 38 days in January 2022. Comparatively, the average days on market in January 2020 (pre-pandemic) was 74 days.
(Data and graphs provided by RMLS)
Two Reasons Why Today’s Housing Market Isn’t a Bubble
You may be reading headlines and hearing talk about a potential housing bubble or a crash, but it’s important to understand that the data and expert opinions tell a different story. A recent survey from Pulsenomics asked over one hundred housing market experts and real estate economists if they believe the housing market is in a bubble. The results indicate most experts don’t think that’s the case (see graph below):
- The recent growth in home prices is because of demographics and low inventory
- Credit risks are low because underwriting and lending standards are sound
If you’re concerned a crash may be coming, here’s a deep dive into those two key factors that should help ease your concerns.
1. Low Housing Inventory Is Causing Home Prices To Rise
The supply of homes available for sale needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation.
As the graph below shows, there were too many homes for sale from 2007 to 2010 (many of which were short sales and foreclosures), and that caused prices to tumble. Today, there’s still a shortage of inventory, which is causing ongoing home price appreciation (see graph below):
Inventory is nothing like the last time. Prices are rising because there’s a healthy demand for homeownership at the same time there’s a limited supply of homes for sale. Odeta Kushi, Deputy Chief Economist at First American, explains:
“The fundamentals driving house price growth in the U.S. remain intact. . . . The demand for homes continues to exceed the supply of homes for sale, which is keeping house price growth high.”
2. Mortgage Lending Standards Today Are Nothing Like the Last Time
During the housing bubble, it was much easier to get a mortgage than it is today. Here’s a graph showing the mortgage volume issued to purchasers with a credit score less than 620 during the housing boom, and the subsequent volume in the years after:
This graph helps show one element of why mortgage standards are nothing like they were the last time. Purchasers who acquired a mortgage over the last decade are much more qualified than they were in the years leading up to the crash. Realtor.com notes:
“. . . Lenders are giving mortgages only to the most qualified borrowers. These buyers are less likely to wind up in foreclosure.”
A majority of experts agree we’re not in a housing bubble. That’s because home price growth is backed by strong housing market fundamentals and lending standards are much tighter today. If you have questions, let’s connect to discuss why today’s housing market is nothing like 2008.
Portland Metro Area Real Estate Inventory/Median Home Price/Days on Market Through February 2021
Here’s an overview of the Portland, Oregon residential real estate market as of the end of February, 2021. If you have any questions about your property or the market in general, let’s set up a time to talk.
Inventory: The Sellers’ market continues and for the 2nd month in a row the Portland metro area has a 1-month inventory of homes available for sale. With the high demand among buyers, this means that the current homes for sale will be sold and/or under contract within one month. For comparison, a balanced market is 4-6 months of inventory. Last year at this time, inventory was 2.2 months; and in 2019, we had 3.3 months of inventory.
Median Home Price: The continued high demand for homes pushed the average home price in the metro area to $528,500, a 14.8% increase over February 2020. The median price of metro area homes is now $470,000, up from $407,500 at this time last year, and increase of 15.3%.
Days on Market: The low inventory of homes, interest rates below 3% for the first two months of the year, and continued high demand for homes has pushed down the number of days homes are on the active market. The average days on market has dropped from 68 days in February 2020 to just 42 days in February 2021.
(Data and graphs provided by RMLS)
Here’s what I’m doing in my business to protect my clients, myself, other Realtors and their clients, and our community against the spread of coronavirus.
We are all concerned about controlling the spread of coronavirus in our communities, around the country and around the world. We are all making sacrifices to reduce the likelihood of contracting or spreading the virus and #FlattenTheCurve. However, many people still have a need to be active in the real estate market. Some buyers are facing an expiring lease, or must reinvest the proceeds from a prior sale to avoid unwanted tax consequences. Some sellers are forced to move because their jobs are taking them to a new town or new state, while others have moved to assisted living facilities and must sell their home to cover the costs. Whatever the reason, I have found that some people need to buy or sell even at this difficult time.
So, here are the steps I’m taking in my business to protect against the spread of coronavirus:
- If the sellers are living in the house, all showings are by appointment only, and I am present for each showing to ensure compliance with the steps below (and I will keep my distance while the visitors are in the house).
- Wearing my own disposable gloves and shoe covers, I turn on all the lights in the house prior to the scheduled visit, and turn off the lights after the visit, in order to reduce the need for others to touch the switches.
- I give every visitor disposable gloves and shoe covers to where during their visit, and provide a trash can at the front door for proper disposal. This will give comfort to the seller that the guests are not tracking any infection into the house, and they will be touching doorknobs, cabinets and drawers with gloves, not their bare hands. This will also allow visitors to open doors, cabinets and drawers with less worry about coming in contact with the virus.
- I wipe down all doorknobs, counters, faucets and light switches after the guests leave the house.
- Open Houses – Following the recommendation of the Oregon Association of Realtors, and in line with the ban in Seattle, I am not hosting open houses at this time. I will not be surprised if Oregon implements a statewide ban on public and broker open houses in the near future.
- I contact the listing agent and ask what measures they and the sellers have taken to protect visitors to the house, and then discuss the response with my buyers to be sure they are comfortable.
- I ask my buyers to drive themselves to each property and meet me there so we don’t put each other at risk.
- I provide disposable gloves and shoe covers for each person and for each property.
Social Distancing is a term we have come to know too well in the past few weeks. Embrace the concept, keep washing your hands, and take care of yourself and your families.
- Every year United Van Lines conducts their National Movers Study by tracking their customer’s movement state-to-state over the course of the year.
- While Vermont claimed the top spot, Oregon slotted into the #2 ranking of states with the highest percentage of inbound residents.
- The most common response for why someone relocated to another state was for a new job or company transfer.