In December 2017, I said we’d see a bit of easing in the market, with the median sale price increasing around 8%. I said we’d see some agents leaving the business, and some consolidation of real estate companies as the market slows.
I was right, kinda. Our market as eased considerably. We are still seeing some multiple offers; though only on properties that have been very well prepped for sale, priced properly and in desirable locations. The year to date median price has increased at 5.3%, so I was wrong about the 8%. That 5.3% is much closer to wage growth of 3.1% (national, local is assumed to be higher). When housing and wages grow at similar rates, we have a much more sustainable housing market.
We did see the introduction of the Home Energy Scores, required by the City of Portland, on homes being marketed for sale. The price of these quickly came down from $300ish to $150 or so. As often happens with new programs, there have been some bumps and of course, resistance. Portland’s housing stock is pretty idiosyncratic, making standardized evaluation a challenge. Nevertheless, buyers do now have more information about the energy efficiency of the homes they are considering. I expect we’ll see some fine tuning to the program and over time, buyers placing more value on energy efficiency.
Voters approved a hefty housing bond for Metro ($652.8 million), in addition to funds already at play from the 2016 City of Portland housing bond ($258.4 million). The housing crises continues, especially for those with very low incomes. Opinions vary greatly on how to best address the houseless population with regard to how resources should be spent and what kind of housing or shelters is best. It seems we need all the help we can get, from temporary shelters to transitional housing, construction of energy efficient permanent housing, resource centers with support services, laundry and showers and so on. I do hope we can find a path that makes a difference. An aside, I’ve noticed lots of successful programs in Clackamas County of late…
Interest rates have crept up. Earlier this fall, rates were over 5%. Rising rates are a sign of a healthy economy; remember, the government was keeping rates artificially low to stimulate the housing market. Expect more rate increases; maybe two increases by the FED in 2019. Rates probably won’t get above 5.5%, and may dip below 5% now and then. But remember, we had a housing boom with rates over 5%.
Buyers have more power in this market, than they have in a few years. This might only mean they can actually get an offer accepted. Or, they’ll be able to negotiate for more inspection repairs than in the recent past. Along these same lines, we are seeing more “contingent offers”, where a buyer has to sell their home in order to purchase a new home. If you’ve been sitting on the sidelines waiting for a bit more buyer friendly market, we may be there.
I am often asked what the “hot” spots are these days. We’re seeing lots of activity in St. John’s, Gresham, Milwaukie and out by the tech companies on the west side. These areas have desirable housing stock, and tend to be more affordable. Certainly, Portland’s close-in neighborhoods remain desirable…if buyers can afford them.
So, for 2019; slightly slower market, with market times closer to 60 days (currently 53). Buyers will have a bit more power, and more houses from which to choose. The median home price in the Portland area will rise 5%. The Portland area will continue to be a desirable place, with folks moving here from out of state. The volatility in the stock market, and slower growth in the global market will cut reduce the number of cash sales.
I remain honored to help folks with some of the biggest decisions in their lives, and humbles by the trust that is put in me. My business is based on referrals. I will always take good care of anyone you send my way. Be it selling, buying, or just curious, I’m always here to help.