Location, timing, and price are three key factors when you buy a house. The location of a property and the timing of the purchase have a huge influence on the price of the home. The price of the property, in turn, influences the potential ROI from the investment.
Of these three factors location, timing, and price, location is probably the easiest one to wrap your head around. It is fairly easy to decide where you want to buy your next home. Knowing the right time to buy is much harder.
Price is the key factor for deciding the right time to buy or not to buy a home in any market. However low property prices are not always a sign that you will make a profit if you buy in a market. High prices also don’t indicate that the timing is wrong.
Everything must be judged in the context of the larger forces driving the value of homes upward or downward. Real estate prices do not exist in a vacuum. They are influenced by everything that affects the area’s economy and the lives of the people who live there.
To decide if you should buy in a specific location, what time to buy in the location, and at what price, you must understand the economic dynamics of the area. Based on this, is now a good time to buy a home in Portland, Oregon?
The current state of the housing market in Portland, Oregon
Buying a home in a seller’s market is always challenging and for the past six years, the Portland housing market can be rightly classified as that. House prices started increasing significantly in 2014. After a slight lull in 2016, the trend returned in 2019 and home prices have been climbing at full throttle ever since.
Here is a summary of the situation:
- Due to an extreme shortage of housing inventory, competition among buyers has driven the median sales price of a house to $505,000, 17.4% from last year’s figures.
- Between January and August 2021 alone, the number of homes sold has been higher or equal to the total number of homes sold every year for the past four years.
- The sale to list price ratio for most homes has been 100%; that means homes are selling at their listed price or higher.
- In August 2021, the average DOM (Days on the Market) for residential properties dropped to 23 from 41 (August 2020). Homes spend less than a month on the market before they get a favorable offer.
What is driving the real estate market in Portland, Oregon?
Between 2017 and 2018, Oregon’s job market was the fifth fastest-growing market in the USA. More importantly, the state was second in the number of private employers. Most of these jobs were in big cities like Portland. Other drivers of the housing boom in Portland are:
Due to skyrocketing rental rates in the San Francisco Bay Area, several high-tech companies have opened offices or completely relocated to Portland. Google was one of the first big tech companies to make the move and others soon followed suit.
Portland is a cultural city and very family-friendly. These qualities are attracting millennials to this part of Oregon. Many of these young adults are not just making a temporary move but they are buying homes and starting families.
High student population
Portland has a massive student renter population because of the over three dozen public and private universities located within 150 miles of the city. The STEM and IT programs of some of these institutions are attracting students looking to enter the local IT market.
People fleeing water-starved areas like Palm Springs are moving into Oregon. While Ashland, Astoria, Newport, and Waldport are also favorable locations, most of these people are settling in Portland because of the opportunities there.
Should you wait or should you buy now?
The truth is real estate prices in Portland will not go down any time soon. The reasons for this are not hard to understand.
The things that make Portland a great location also create problems for the city. Sandwiched between the ocean and high mountains, it does not have room for growth like inland real estate markets. Furthermore, much of the available land is protected forests.
Adding new units to Portland’s existing housing supply is hard because large-scale housing developments require a lot of land. The Land Conservation and Development Commission will not issue building permits unless a development meets its long-term plans.
For the foreseeable future, relative to strong migration, the housing supply in Portland is going to continue to lag behind demand. As long as Portland is producing buildings at a slower rate than people need them, prices will keep rising. The policies that make this situation possible will not change any time soon.
In conclusion, if you have been thinking of buying a Portland, Oregon home, the best time to do it was yesterday and the next best time is today.