Low supply creates housing gridlock
The Portland area is experiencing a gridlock of homebuyers because of rapidly rising housing prices, according to some local real estate agents.
We are virtually sold out of inventory, and theres a pipeline of stalled buyers, said Lennox Scott, chairman and CEO of John L. Scott Real Estate.
According to Scott, the competition for available housing is so intense that existing homeowners who want to move are hesitant to put their homes up for sale. They are afraid their homes will sell before they can find and buy their next one a Catch-22 that is keeping more and more homes off the market.
Multiple bids are commonplace at the first weekend open houses, driving up home prices and discouraging buyers who have been outbid, said Israel Hill, managing broker of John L. Scott Northeast Portland. This is especially true for homes near employment centers.
The result is shrinking inventory, which is increasing the competition for available homes even more.
Some buyers in the outer areas are hesitant to compete, and we are seeing more agents waiting until Monday to inquire on availability and scheduling showings only after a confirmation of no offers, Hill said.
Millennials hit hard
The situation is especially hard on millennials, the large block of young people approximately between the ages of 18 and 33.
According to a recent survey, 81 percent of millennial renters in the Portland region eventually want to purchase a home, but affordability is their biggest obstacle. Ninety percent of regional millennial renters say they simply cannot afford to buy.
The survey also found that regional millennial renters saved an average of $2,590 for the downpayment on a home. However, the average down payment currently is $41,935 and going up as prices increase.
The national survey was conducted by Apartment List, an online rental resource. It involved 30,000 renters and includes an analysis of 93 metropolitan regions in the United States. The survey found that 79 percent of millennials across the country eventually want to buy a home, with 77 percent saying affordability was the biggest problem especially in the West.
In nearly all the metros we looked at, affordability was the No. 1 reason for delaying homeownership, but millennials on the West Coast struggled the most: Portland, San Diego, Seattle, Los Angeles and San Francisco all had more than 80 percent of renters listing affordability as a concern, according to the survey.
Portland becoming more unaffordable
The newest monthly report from the Regional Multiple Listing Service shows why affordability is such a problem. It found that median home prices in the Portland region increased 9 percent from $289,000 in March 2015 to $315,000 last month.
The RMLS report also found that market time decreased to 51 days this March, with inventory decreasing to 1.3 months. As a result of the shrinking inventory, there were fewer transactions during the first three months of 2016 compared to the same three months last year.
For the Portland metro area, the RMLS counts home sales in Multnomah, Washington, Clackamas, Yamhill and Columbia counties in Oregon, and Clark County in Washington. Median home prices varied widely throughout the region in March 2016. The highest was $527,500 in the Lake Oswego/West Linn area. The lowest was $208,500 in Central Vancouver.
In Portland, the highest median home price was $486,300 in West Portland, which includes downtown. The lowest was $300,000 in Southeast Portland. The price was $360,000 in North Portland and $350,000 in Northeast Portland.