The State of the Portland Area Real Estate Market
By now, you’ve heard the chatter, “The Portland real estate market is up.” While that sounds great for sellers, you may be wondering what it means for homebuyers.
To really understand whether buyers should be diving into the Portland real estate market or if they should try to hold out for better rates and/or more inventory, you have to take a careful look at all the factors in play and how these elements affect or compare against our local market behaviors.
Home prices are up
Housing prices have increased by an average of 13.7% in the greater Portland metro area. This has kicked things into high gear for sellers and for those thinking of selling in the near future. Though we may not be to pre-recession, bubble levels quite yet, the market is on a pretty steady upswing. (Just don’t expect that trend to last forever in light of the most recent interest rate hikes and the Fed’s desire to continue to slowly raise these rates.)
In fact, while we anticipate the state of the Portland area real estate market will still trend positively, we do anticipate sales activity to slow back to a more moderate pace and which may result in previously sidelined sellers putting their homes on the market, looking to cash in before demand heads back down again. When this happens we’ll see inventories rise at the same time as interest rates rise, putting the breaks on things, stabilizing the market overall and slowing growth a bit.
New homes on their way
We’re seeing an eleven percent increase in single-family home building permits, as reported by the US Census Bureau, in the greater Portland area. These area permits were granted for 497 single-family homes and are expected to affect area inventories only mildly.
Interest rates still relatively low
Even though we’ve seen some jumps in recent weeks, currently rates are hovering near the 4.5% mark for 30-year fixed rate mortgages, this is still historically low and unlikely to go back down significantly, anytime soon. They will continue to rise though, as the Fed attempts to sidestep another housing bubble, capping housing market enthusiasm and growth by raising rates slowly but steadily.
What this means to buyers is that your buying power is dwindling. If you’re looking to buy a house some time in the next three years or so, the sooner you get active in the marketplace, the better, maximizing your buying power and allowing yourself enough time to find just the right home in a low inventory market.
Fannie Mae and Freddie Mac – Goodbye?
Hoping to get the U.S. government out of the business of subsidizing mortgages, a bipartisan group of senators recently proposed an overhaul to the housing finance system (privatizing mortgage backed securities and shifting more mortgage and credit risk to the private sector), gradually eliminating the need for guarantors, Fannie Mae and Freddie Mac.
The effort is being touted as a way around future taxpayer funded bailouts, like those seen during the 2008 financial crisis. Even if it’s not this plan, most experts agree that a restructuring or phasing out will have to occur. This change, if it takes place, will no doubt impact first-time homebuyers and those with moderate incomes most.
Get your best rates – while you can
While nobody can predict the future, the indicators above make a pretty strong case for getting into the Portland area housing market, whether you’re a buyer or seller, to leverage your optimum buying and selling power now.
If you would like more information on how today’s market conditions will impact your real estate future, please call your Lee Davies Broker or Lee Davies directly to discuss how we can build the right team to serve you.