What I said last year: It looks as though interest rates are set to creep up in 2022 (though I’ve been saying that for years). We’ll continue to see housing prices increase; both rental and purchase. With eviction moratoria sunsetting, we may see some increases in rents as properties turn over. We’ll also see the median purchase price increase, though not as quickly as in 2021. Outdoor living spaces will continue to be popular as COVID sticks around. The popularity of suburbs and ex-urbs will continue, along with vacation homes. Portland’s inner city will get cleaned up a bit. We’ll start to see some slight progress in homelessness as both the designated villages and new affordable housing projects come on board.
How’d I do? I wasn’t far off, though interest rates more than “crept up”. They jettisoned up past 5% and got as high as 7%. This indeed slowed the market a bit. Housing prices increased rapidly in the first part of the year, offset by slowing in the second half. The median year to date price increase for 2021 was 8.1%. Outdoor living spaces are still popular, as are the suburbs. Some of the boom towns in the pandemic have seen some marked slowing (Boise, ID for example). Portland’s inner city is getting cleaned up a bit, and there is renewed energy and funding designated to address the huge homelessness population.
Hot Spots (and not spots): Suburbs, ex-urbs and recreational property hot. Downtown, high rise condos not so hot. If you’ve been wanting a pied-a-terre in town, now is a good time to buy.
Moving and such: Indeed, we moved our Portland Metro office to the Hanna Building (You might know it as the Jantzen Building, designed by noted architect, Richard Sundeleaf.) Our new address is 541 NE 20th Ave, Suite 210, Portland, OR 97232. That was a huge undertaking. Then, in early fall, we consolidated our Sellwood and Portland Metro offices; more moving activities, but we’d gotten good at it.
Art show! We were thrilled to bring back our charity art show, and enjoyed having it in our new space. With fewer walls, displaying the art was a challenge, but one we solved. Self Enhancement Inc was the beneficiary, and we were glad to raise over $8000 for them. Thanks to those of you who joined us, and especially to those of you who bought art.
My 2023 predictions:
Our post-holiday pick up will come later than sooner, but by mid-February it will be an active market. Sellers will still have a bit of an advantage in the market due to low inventory. Buyers will have a tad more power than in past years, allowing them time to contemplate a purchase, inspections on their purchase and even some negotiating room on repairs. Prices on building materials will ease a bit. Interest rates will settle somewhere between 5% and 6% - the stability of which will bring more buyers back into the market. I expect we’ll continue to see an increase in the median sale price, but not at the astronomical rates of a few years ago.
Interest Rate affects: Higher interest rates affect the real estate market in a variety of ways. Obvious, is making the same house cost more when financed at a higher interest rate. Another factor is making existing homeowners less interested in moving. That is, if your current home has a 3% interest rate (the artificially low rates of the past several years means most financed homes were either bought with, or refinanced into a low rate), even selling and buying a home of the same value would have a marked increase in monthly cost (due to higher rates). Add in that values have increased rapidly in the past years, buying the same home would cost more due to both higher rates and the increase in real estate values. That disincentive to move will continue to limit the number of available homes for sale.
Housing Providers: Though the State of Oregon allows a rent increase of up to 14.6%, market forces will keep rents from going up that such. Tenants are valuing more space (work from home is here to stay, even if only part time), cooling and pets. Though most pandemic protections for tenants have sunseted, a few remain in place especially around tenant screening. Please be sure to be in compliance.
I remain honored to help folks with some of the biggest decisions of their lives and humbled by the trust placed 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 am always here to help.
