Home bidding wars reach outside Portland
With so few homes for sale in the Portland region, multiple bids are now being made on houses far away from the most popular close-in neighborhoods.
According to Michie Megan, a John L. Scott real estate agent in Lake Oswego, more and more buyers are willing to make compromises, like a longer commute, to own a home.
Because of the shortage of homes, people who work in Portland are bidding against each other in cities that are many miles away, including Gresham, Wilsonville, Woodburn and even Washington cities north of Vancouver, Megan says.
A good example is one of her clients, Sara Forrest. When the 30-year-old military veteran decided it was time to buy her first home, she wanted to remain in the kind of walkable Southeast Portland neighborhood where she was renting a small apartment.
After discovering there was nothing nearby in her price range, Forrest expanded her search to St. Johns and Milwaukie. But every time she made an offer, she was outbid by people willing to pay tens of thousands of dollars over the asking price.
Some were bidding $30,000 to $50,000 more, Forrest says. My lease was up and I had to cast a much wider net, and started looking in places like Newberg, Forest Grove, McMinnville and Vernonia. And even then, there was still a lot of competition for the available homes.
Forrest finally got lucky when she bid $15,000 over the asking price on a small house near I-205 and Southeast Division Street. Although one person outbid her, that deal fell through and Forrest was able to move into the house several weeks ago.
Although Forrest is pleased with the additional room and large back yard, the commute to her job in Lake Oswego is now much more time-consuming, especially on those times when I-205 is very congested.
My commute went from 20 minutes to sometimes over an hour, says Forrest, who still considers herself fortunate. She credits the Veterans Administration loan program for allowing her to buy her first house.
Im really worried about whats happening in Portland right now, with rents going up, and all the older homes being demolished and replaced with more expensive ones. By owning, Im not going to be paying much more than renting, I have more control over my life, and Im building equity, Forrest says.
Low inventory, high prices
The most recent figures released by the Regional Multiple Listing Service confirm what Realtors are saying. The RMLS May Action Report says the average sales price in the Portland region in May topped $400,000 for the first time. The $402,500 price was 1.2 percent higher than the $397,700 average in April, and 12 percent higher than May 2015.
We are still seeing over 60 percent of the homes coming on the market sell within the first 30 days; many within the first week, says Lennox Scott, chairman and CEO of John L. Scott Real Estate. A healthy/normal market would have 30 percent selling in the first 30 days. Price appreciation continues, especially near job centers, where homes coming on the market are snapped up instantly by the backlog of buyers.
The RMLS report says much of the increase is because of the lack of homes for sale. Although new listings increased slightly from April to May, they were still lower than in May 2015.
Portlands market continues to experience low inventory, high rents and many disappointed buyers, as bidding wars spread from the close-in metro area to outlying regions such as Gresham and Oregon City, says Michelle Maida, managing broker at John L. Scott Woodstock. Theres still only about one months supply of homes for sale in the under-$750,000 level in the metro area, she says.
Despite the difficulty of finding homes, many are set on owning rather than renting. The historically low interest rates make buying a better alternative to the high rents, Maida says.
The real estate tracking firm Zillow reported June 15 that homebuyers in Portland can expect to break even compared to renting in one year and 10 months. Thats because mortgage rates are so low and rents are so high, although Zillow admits many potential homebuyers cannot take advantage of the situation because they have trouble saving enough money for a down payment.
Median home sales prices varied wildly throughout the region in May. According to the RMLS report, the highest price was $511,000 in the Lake Oswego/West Linn area, followed by $490,500 in West Portland and $480,000 in the North Washington County/Sauvie Island area. The lowest median price was $178,800 toward Mount Hood, followed by $236,000 in central Vancouver and $238,000 in Columbia County.
Although the areas with the lowest prices are the farthest away from major employment centers, Megan says she has clients who are willing to commute even longer distances. For example, one client with a job in Tualatin is currently looking on the Oregon Coast.
He says as long as he has to commute an hour each way, he might as well live on the coast, Megan says.