Expect housing prices to skyrocket
Home prices in the already overheated Portland area housing market are expected to skyrocket when the rains let up in the spring, according to local real estate experts who have reviewed the most recent supply and demand figures.
The Portland metro housing market continues to be red hot on a seasonality basis, but this winter will be even more intense given the decrease in the number of homes for sale in a market that was already experiencing dangerously low inventory levels, says Lennox Scott, chairman and CEO of John L. Scott Real Estate.
There is more pressure on new listings than we had last winter, and a higher number of homes are selling within the first 30 days, Scott says. This is setting the stage for a frenzy market in the spring of 2016. Even if interest rates go up slightly, buyer demand and low inventory still push prices up.
According to the most recent Regional Multiple Service Listing (RMLS) report, Portland area home sales in December were the strongest on records dating back to 1992. But that left the inventory at just 1.2 months worth of homes, the lowest amount since at least 1999. Largely because of the shortage of available homes on the market, the median sale price rose 8.1 percent from $285,500 to $308,000 over the year.
The price increases are happening as regional leaders are struggling to find housing for lower-income residents. The Portland City Council and Multnomah County Board of Commissioners have declared housing states of emergencies. Mayor Charlie Hales and Multnomah County Chair Deborah Kafoury have promised to spend $30 million in the fiscal year that begins in July to cut homelessness in half, primarily by building more affordable housing. A number of Portland-area lawmakers are supporting bills in the 2016 Oregon legislative session that begins Feb. 1 to limit renter evictions and allow cities to require some affordable units in new housing projects.
But little has been proposed so far to help potential home buyers who are facing the most competitive market since before the Great Recession especially those looking to buy in close-in Portland neighborhoods. According to the RMLS report, the median home price in Portland ranged from $317,000 to $412,800 in December 2015.
Appreciation and inventory continues to dwindle during the holiday season, says Michelle Maida, managing broker of John L. Scott Real Estates Woodstock Portland Office. The appreciation is hovering at about 7.5 percent for all close-in Portland except North Portland, which continues in double digits.
There is a little more on the market that is still in the affordable range of $300,000 to $450,000, Maida says.
Some areas outside Portland are equally expensive. For example, the median home price in the Lake Oswego/West Linn communities was $450,000 in December. It was $362,000 in the Tigard/Tualatin/Sherwood/Wilsonville area.
But in general, area home prices were lower outside Portland. For example, the median home price in the Beaverton/Aloha area was $279,500 in December. It was $258,000 in the Gresham/Troutdale/Sandy/Corbett/Fairview area.