How is the market shifting?
Let’s talk about the most common question we’re getting lately:
What is happening in the real estate market here in the Portland Metro Area?
To put it simply, the market has slowed down as a whole and less activity is taking place, but real estate is still moving. You might be surprised to hear that compared to this time last year, the average sales price has increased 7.8% from $570,600 to $615,000. In April 2022 we had an average sales price of $605,600 with less than 1 month of inventory.
Currently, the average days on market before an offer is accepted is 38 days with 2.4 months of inventory. The last time we had 2.4 months of inventory on the market was April of 2020 when the world was in shock from the hard hit of a global health crisis. As a response to that pandemic, our nation had to redefine what "home" meant and how it functioned. Here in Portland that meant in all of 2021, inventory levels never rose above 1 month.
Essentially, the Portland Metro Area has been experiencing an extreme shortage of homes (both new and resale) available for sale, leading to bidding wars and record low interest rates. As of July 2022, we started to see a market shift with inventory increasing to 2 months and now consistently staying between 1.8-2.4 months.
A major factor to the overall slowdown of the market and increase of inventory is rising interest rates, which have more than doubled since the start of the new year. This has caused a significant impact on buying power and affordability. Even with this slow down, average price as well as median home prices in October 2022 are still higher than they were in March and April.
Analyzing the numbers so we can predict trends and help you make the best financial decisions is a huge part of what makes us a valuable resource to our clients, family, and friends. If you ever have questions about the market or your specific housing scenario/goals, please don’t hesitate to reach out, reply to one of our newsletters, or schedule a coffee date.
We’ve all seen huge price increases this year on consumer goods. I was in shock at the grocery store the other day when a small bag of groceries cost $89 dollars. Inflation has been a big concern and that is why the Federal Reserve has implemented six rate hikes this year to help bring down inflation. We did see some relief on the inflation rate this past month, but we are expecting the Fed to implement another rate hike in December. Real Estate interest rates are more directly related to the 10-year treasury bond. In October of 2021 the 10-year U.S treasury yield was around 1.5% and now it is around 4.2%. “
’When Treasury yields go up, as we've seen very notably right now, it means that banks have to demand a higher interest rate from everyone that they're lending to, which means rates on mortgages go up, which means rates on auto loans go up,’ said Meghan Swiber, senior U.S. rates strategist at Bank of America.” *
Considering A Move
With all this in mind, if you're thinking about making a move, we would encourage you to get off the fence and start getting serious about it. We believe the next 3-4 months will provide homebuyers the opportunity to purchase without highly competitive bidding wars. For example, we were recently able to negotiate with a seller and secure a $150K discount off the list price for one of our buyers. And the more expensive the home, the more opportunity to get a better deal.
Right now we are seeing a trend of sellers being willing to help with closing costs, home repairs, and/or offer a decrease in purchase price. However, come spring when the market picks up, it’s entirely possible the increased interest rates will be normalized, and competition and concessions will be tougher.
Because many buyers are in a “holding pattern”, there’s a unique opportunity right now to get into the exact home you want with a great price and terms. If you can comfortably afford the monthly payment, we advise you to buy now and refinance later with a lower monthly cost. We are here to discuss your goals and dreams and look forward to serving you or a loved one soon.
Ushering In The Holidays
As we move into the holiday season and Thanksgiving week, we want to say a huge and humble THANK YOU to each and every one of you. We are so grateful for the relationships we’ve built over the years. To put it plainly, without your support, we don’t have a business and we are eternally grateful that you continue to invest in us through buying, selling, investing, or referring us. It has been another spectacular year and we wanted to do something a little different as a token of our appreciation.
We all know so many people in need here in our local communities, in our nation, and across the world. So, we will be looking into some organizations to give back to in the coming year as part of our continued mission to build up our community and our fellow humans. If you have an organization love, support, and want us to look into, hit reply and let us know! Thank you again for your trust in us. We wish you and all your loved ones a wonderful Thanksgiving.