Report: Portland has severe shortage of homes for sale
The supply of homes for sale in Portland has declined 31.6 percent since last April, the largest drop of any major city in the country, according to a new report.
And the resulting shortage has helped push Portland home prices up 15.1 percent to $325,400 over the past year, the second-highest increase reported by the April Zillow Real Estate Market Report. Only Denver was higher with a 15.2 increase.
The report also says the biggest decline in the Portland supply occurred in the most affordable homes. The number of homes in the lower third of the price range fell 39.8 percent since last April, compared to 39 percent for those in the middle third and 21.6 percent for those in the top third.
Although the situation in Portland is extreme, it is not unusual. According to Zillow, the number of home for sale have dropped and prices have increased across the country. There were 3.4 percent fewer homes for sale in April than last year, and prices have increased 4.9 percent to $187,000. Nationally, the number of entry-level homes for sale is down almost 8 percent over the past 12 months.
"The struggle will continue for home shoppers this summer," says Dr. Svenja Gudell, the chief economist for the online real estate resource. "New construction has been sluggish over the past year; we're building about half as many homes as we should be in a normal market. There still aren't enough homes on the market to keep up with the high demand from every type of home buyer. In many markets, those looking to buy a home in the bottom or middle of the market will need to be prepared for bidding wars and homes selling for over the asking price. This summer's selling season's borders will most likely be blurred again as many buyers are left without homes and will need to keep searching."
In addition to low inventory, the Zillow report says home prices are rising in response to a strong job market, higher-than-expected wage growth and persistently low mortgage rates.
Dave Nielsen, CEO of the Home Builders Association of Metropolitan Portland, says some local issues are affecting the Portland housing market.
"While there are some common factors our market shares with other markets facing similar issues around the country, two things that make our market worse are a lack of functional land supply and high government regulations and fees," says Nielsen. "Our National Association did a study and found that, on average, regulations add almost $85,000 to the price of a new home. That amount has increased over 30% in the last five years, meaning government is accelerating fees and costs faster than people's incomes are rising. The best thing government can do is to put more certainty into the development and building process, streamline regulations, and reduce fees and costs charged for new housing."
You can read the Zillow report at tinyurl.com/hdzwabu.