The numbers for the housing market in Portland showed growth in the fourth quarter as they have throughout the year. Homes are commanding higher sales prices even as both the number of sales dipped and the median days on the market increased.
The best news is for sellers who are generating sales prices well over their asking price in many cases. With higher prices resulting from shrinking inventory, a housing shortage could be on the horizon. That said, low interest rates are prompting many to buy now as high prices are inspiring sellers to get their homes on the market fast. Here’s a deeper dive into the numbers and what they mean for both home buyers and sellers in Portland.
2021: Another Fantastic Year for Real Estate Sales
Interest rates remained low throughout 2021 and that made a huge difference in the growth of single-family home prices. In fact, it produced the highest number of SFH sales we’ve seen in the past decade and a half. These historically low interest rates kept the foreclosure rates low which prevented another crash in the housing market.
It is perhaps because of the pandemic that home buyers were quick to act. With mortgage interest rates so low, folks were keen to act before the Fed raised them. The result is more homeowners and sellers who got well over their asking prices in many cases. Of course, sellers were happy to get that extra money as well, but more homeowners means more people paying property taxes, and communities across the country benefit from that.
Another way COVID-19 assisted the market was that many people were forced to reduce spending on other things. Going out to dinner and the movies, and taking vacations was put on hold for much of 2020. As a result, people were able to save more and put it towards a home purchase in 2021. A shortage of housing stock also created a seller’s market where home sellers were able to entertain higher offers with their homes spending less time on the market. All in all, the housing market was a bright spot in what had otherwise been a pretty dismal year thanks to the pandemic and its many variants which we are still dealing with as the new year begins.
It was because of all of the pandemic anxieties that the Fed kept interests as low as they have. This prompted many people to take advantage of those rates. The result is what will turn out to be the highest number of sales since 2006. If housing stock remains in limited supply, prices will stay high and days on the market low.
Median Sold Price
Looking at the numbers for the real estate market in Portland for the fourth quarter shows an eleven percent in the median sold price of $555,000 compared to the Q4 2020 number of $490,000 . If we look at the median sold prices for homes in the fourth quarter of 2021 compared to the previous quarter, we see an increase from $550,000 to $555,000. Not a huge gain but a nine percent increase which is great considering just how well the market did in the three quarters leading up to it. If we compare the 2021 Q4 number to the same period of 2020 when the median sold price was $490,000, that’s an increase of 12 percent. That’s good growth, of course, and not out of step with the rest of the country in 2021.
When we talk about the median sold price this is different from the average sold price. The median price indicates the halfway point in pricing between the high and low numbers. It provides a better picture of the actual sales price than the average because it removes the outliers of the highest and lowest sale prices.
Number of Homes Sold
Next, let’s look at the number of homes sold in Q4. In the fourth quarter of 2021, that number was 7,000. Compare that to the 8,221 homes sold from July through September of 2021 and that’s a decrease of about 15 percent. So, while prices remain high, the number of single-family homes sold has dropped. This could be a signal that the market is cooling off a bit. It could also be a sign of a housing shortage. Not a huge shortage but it is a sign of stiffening competition for available housing stock in a hot market.
Median Days on the Market
With a high demand for homes comes increased competition but it also results in quick sales with homebuyers making offers well over the asking price. When we look at the number of Days on the Market for the fourth quarter, which was seven days, we see an increase of two days over the previous quarter’s number of five but no change from the fourth quarter of 2020. Even with the increase, it’s a positive sign that the market in Portland remains healthy. It’s important to remember that the Median Days on the Market are the total number of days the house is on the market from listing to the signing of the contract.
While the interest on mortgage rates remains low, there have been changes early in 2022. For example, a few rates surged upwards to levels we’ve not seen since the early part of 2020. The average for a 15-year, fixed mortgage just last week was 2.76%. That’s an increase of nearly 20 points over the first week of the year. While the monthly payment will be higher, this rate is lower than that of the 30-year mortgage which was at a 3.49 percent average at the beginning of last week, another nearly 20 percent increase.
The Future of the Market
The current year will likely be another strong one for the real estate market and it will also remain a sellers’ housing market. We can expect home values to rise as well, perhaps by double digits. That is going to price some folks out of the market, but if the job market continues to grow, with a little patience, things will start opening up for everyone. That said, a continued housing shortage would take the shine off that bright future, for sure. In conclusion, the housing market in Portland looks good for 2022.
The data in this article was obtained from several sources. It’s subject to change over time and is presented here only as a snapshot of the Portland, Oregon real estate market in December 2021.