The Current Health of the Portland Market

I like to use the Case-Shiller monthly report to examine the health of our market and to examine where we're headed. Based on the most recent report, we look to be headed in the right direction.

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To examine the market on a monthly basis, one tool we like is the Case-Shiller S&P Index that you can get online. It continues to show us appreciation across the country at a healthy 5%. The report is broken down into 10 and 20-city composites, with Portland in the 20-city composite.
 
Portland is leading the way in this report. The 20-city composite was actually down slightly in this last report from 5.1% to 5%, but Portland is at 12.4% appreciation. Before you overreact to that, understand that we were even higher than that at one point. We're starting to see it trend downward, but that's a good thing.
 
The report also notes that most analysts are expecting the Fed to raise interest rates this December. Even if they do, though, the impact on mortgage rates and the mortgage industry are going to be so minimal that we'll still see these historically low rates, so there's nothing to get too worried about.

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Portland is leading the way.

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We also get questions all the time about whether we're in a bubble that's going to pop soon. We're so programmed with bubbles these days that I believe we just overreact. We know we're not in a bubble by looking at outstanding mortgage debt and seeing that we're about 12.6% lower than what it was at its peak in the 1st quarter of 2008, and we're not seeing much growth there.
 
In the video above, you can see a table that demonstrates how healthy the indexes are compared to the peak of the market in 2006 and the trough of 2012. We're starting to see the market shift, and we need to see the market shift. We're not seeing up to 10 offers on almost everything, and that's a good thing.
 
If you have any questions at all about where our market is going and what it means to you as a buyer, seller, or homeowner, give me a call or send me an email. I'd love to hear from you!

Structuring an Offer in Portland With Our Current Market

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You’ve found the perfect home, and you’re ready to write an offer. What should that offer look like relative to price? The answer depends largely on the market. In today’s real estate market, we’re not seeing those situations where you can be much - if at all - under the asking price. If it’s a beautiful home in a great area, expect to pay more than asking price.
 
One of the ways we reiterate this information is our Market Overview Report. This month for Northwest Portland, the report shows a list-to-sales price ratio of 97.7%; so we’re getting 97.7% of asking price with an average sales price of $557,000. There are also 142 homes for sale on the market, with 229 currently pending. That’s 161.3% of the overall market with a 1.37-month level of inventory.

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IF YOU'RE READY TO WRITE AN OFFER, EXPECT TO PAY MORE THAN ASKING PRICE.

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For Northeast Portland, we’re seeing a list-to-sales price ratio of 99.1%. That’s telling you that many homes are selling for well over asking price. There are also 175 homes for sale, with 353 pending in the spring market, so 201% of that whole market is basically pending. And, finally, it shows a month of inventory number of .93 - not even a month’s worth of inventory.

These numbers explain how the market is so explosive right now. We like to use this information we produce monthly to understand the market a bit more specifically from our point of view, which we can then turn around and use to educate our clients. They can then see factually what’s going on in the market and why their offer needs to be strong. If you want to know what’s going on in a different part of Portland than where you live, for instance, it’s a great way to keep your finger on the pulse.

Shoot us an email if you’d like to see this report delivered to your own inbox, and if you have any other questions don’t hesitate to call.

Is the Portland Market Heading Towards a Bubble?

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Portland is continuing to see an explosive real estate market. I’ve mentioned this before, but we are part of a 20-city composite for a Case Shiller S&P index that looks at national housing trends. The data that just came out last week shows the overall index leveling off a little bit. In January, we saw a 5.7% appreciation average across the 20 cities and that’s dipped down a bit to 5.4%.

However, in Portland we are still continuing to lead the pack with a 11.9% appreciation rate. We attribute our continued growth to a strong job market, strong housing demand, and the high quality of living we have here in the Pacific Northwest.

What’s also interesting is that mortgage defaults continue to be low, much lower than they have been in the past. We are at about a .75% default rate, which is a good place to be. Year-over-year price changes within that 20-city composite have remained very stable, right around the 5-6% range. 

I get asked if we’re headed toward a housing bubble quite often, and my answer continues to be no. There are so many other factors that are propping up the real estate market. Our appreciation rate may not continue to be 11%, and it shouldn’t, because it’s not healthy. However, there is a huge upside to our market, and homes are still as affordable as ever.

For someone making a 20% down payment, their mortgage payments would only take about 15% of their income. Just 10 years ago, that figure was near 25%. A middle income family doesn’t need to stretch their wallet in order to buy a home, a statement that has been echoed by the National Association of Realtors’ Chief Economist, Lawrence Yun.

If you have any questions for me about the Portland market, don’t hesitate to reach out by phone or email. I would love to hear from you.

Inventory Levels Are Incredibly Low in Portland

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Today, we’ll talk about the dynamics of the Portland real estate market. We’ll also examine why our inventory levels are causing relative appreciation in our area.   

Portland continues to experience a brisk, fast-paced real estate market. Part of that is due to healthy job growth, and Portland has also been ranked as one of the best places to live in several publications. There aren’t many homes for sale, but demand is skyrocketing.

If a real estate market has less than 6 months of inventory, it’s considered a seller’s market. In a seller’s market, home prices go up. A neutral market has 6 to 7 months of inventory, and home prices will only appreciate due to inflation. A buyer’s market has more than 7 months of inventory, and prices will depreciate.
 

Portland is in a firm seller’s market. Beaverton has less than a month of inventory. Northwest Portland has a month-and-a-half of inventory. Northeast Portland has about a month’s worth of inventory, and North Portland has 6/10ths of a month of inventory. This is what we’re seeing across Portland, especially in entry level price ranges.

Since homes are in such high demand, if you’re a buyer, you will probably face multiple offer situations. We recently helped a client make an offer on a property. He’s in escrow right now, but he had made 7 other offers on different properties before this one was accepted. It’s very competitive right now.

If you have any questions, give us a call or send us an email. We would be happy to help you!

Why 2016 Is the Year to Buy in Portland

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Is 2016 the right year for you to buy a home? The short answer is yes.

Here’s why: the S&P Shiller numbers show that in October of 2015, Portland saw an annualized appreciation rate of 10.9%. Along with Denver and San Francisco, Portland is leading the nation in home appreciation. From an investment standpoint, this is a fantastic time to buy.

If you buy now instead of waiting for a year, you will save a lot of money. Today, you can get a $250,000 home with a 4.01% interest rate. Your monthly payment would be $1,195. If rates go up as they’re projected to, that same home will cost $263,250 with a 4.8% interest rate. Your monthly payment will go up to $1,381 if you wait a year to buy a home. 

If you get in the market today, you will save a lot of money. Don’t wait for next year. If you look at it from a monthly standpoint, you can go out to dinner or make a dent in that car payment with the money you saved. Annually, that money can go towards a vacation or pay off a couple credit cards. Over 30 years, if you buy now, you will save $67,032.

As you can see, it’s a great time to be in the market. If you have any questions, give us a call or send us an email. We would be happy to help you!

What Can You Expect from the Portland Market?

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Portland's market is still going strong as we wrap up the summer season. Today, we take a quick look at what current conditions mean for you and the future of our market.

Right now, it's still very common to see multiple offers on any given properties. In fact, some buyers are even willing to waive appraisals and look for ways to leverage themselves against the buyers they are competing with. It's very competitive these days, and it can be difficult to get into a home unless you get creative.

When multiple offers are as common as they are now, I like to look at the S&P/Case-Schiller Home Price Indices. This is a national report that we get every month and the one we got at the end of July showed that, nationally, single-family homes were at a 4-5% appreciation rate. That's a much better rate than we saw in 2013. Over the next two years, we're expecting home prices to slow a bit, as they've been rising rapidly over the last few years.

 Portland has seen an appreciation level of about 7.4% over the last year or so. Because home prices keep rising, many people in our area have asked if this is a bubble. Frankly, I don't think so; there's a difference between the makeup of the buyer today and the buyer leading up to the crash. Back then, you didn't need much of a down payment or any at all, and generally people weren't as qualified. Today, the buyers are highly qualified and ready to go!

If you have any questions about where our market is heading, don't hesitate to give me a call or shoot me and email. I would love to hear from you!

How Does Portland Real Estate Compare to the Rest of the Country?

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Today I will be discussing something a little different than what I usually cover. Today I'll be discussing the S&P Case-Shiller Home Price Index Report. This report covers the entire US, so we can compare our Portland market to the rest of the country. This report is made up of 2 composites, a 20-city composite and a 10-city composite. Portland was part of the 20-city composite, which makes it pretty fascinating to me.

Some of the highlights of the report were:

• On average, the cities in the study appreciated by an average of 4.5%
• The report also shows how the housing recovery is slowing down, but this should not be alarming because the recovery has been swift as of late
• In the last twelve months, the Portland market has appreciated by 6.8%
• In 2015 I think we could expect appreciation right around 5% in the Portland area, which is a healthy amount of appreciation

Hopefully you have found this information helpful, and if you have any other questions, please don't hesitate to contact me.

What Type of Market are We Seeing in Portland?

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A lot of our clients here in Portland have been asking us whether we're in a buyer's market or a seller's market. The short answer is that we are in the midst of a seller's market right now. 

However, there are some fundamental differences between this market and the one we had in 2006. Asking price is absolutely critical in our market. You cannot ask too much or it will sit and go stale. Presentation is also key because buyers expect the best, and if you don't deliver curb appeal you could miss out on a sale.

Another factor in our market right now is that we only have a 2.3 month supply of inventory. Keep in mind that this is an average, so this isn't true for all neighborhoods and price points. Also consider that the average home price in Portland is up to $332,000, and a year ago that price was at $310,000. These prices are impacted by supply and demand, so a low inventory with a high demand will eventually raise prices up. We're also seeing multiple offers on some homes, and that tends to push prices up as well. 

In the last 12 months, we've seen a 6.2% appreciation in prices and home values.

Interest rates are also at historic lows, so now is the time to take action and get on the market whether you're a buyer or a seller. If you're a buyer, you'll probably find that you'll pay less on a mortgage than what you pay monthly for rent. 

Please don't hesitate to contact us if you're thinking about buying or selling your home in Portland. We're always willing to help you in any way possible!