The Portland Metro Residential Market Action report is a monthly review provided by the RMLS, a database where real estate agents post home listings for the region.
Historically, springtime means an uptick in inventory in the Portland real estate market paired with more buyers beginning or restarting their home search. Looking at the latest data, the March 2022 (and 2021) numbers have not followed this trend. Inventory is at 0.7 months (compared to just 0.8 months in 2021, and 1.8 months in 2020). Days on market (DOM) decreased to 25 days (28.4% decrease from February), but could still be considered inflated in part due to a small number of overpriced homes driving up the average. Homes that are priced right are still selling at much faster rates than traditional/seasonal trends.
Three important data points from the report that I’d like to expand upon are inventory levels, median home selling price, and affordability. These metrics can help you decide the best time to buy, sell, or hold.
Inventory levels are a leading indicator of market strength. Inventory levels for February were reported at 0.7, meaning if no new homes came on the market, it would take 0.7 months until inventory sold out completely (at the current rate of sales). Inventory is slightly down compared to February (0.8) as we continue to see historically low inventory rates.
Median Home Selling Price
The median sales price for March 2022 was reported at $550,000, a 10.2% increase from March 2021. The Lake Oswego / West Linn area continues to report the highest median home selling price at $890,000.
Here’s what median home sale prices looked like across Portland proper:
West Portland: $580,000
North Portland: $537,500
NE Portland: $550,000
SE Portland: $490,000
With inventory levels remaining extremely low and relatively flat over the past several months, the biggest variables prospective home buyers are faced with are home prices and interest rates. Expect median home prices to continue to slowly rise in the short term as price is heavily driven by demand.
During the last Federal Open Market Committee (FOMC), the federal funds rate was raised by .25% to .25-.50%. This was the first Fed rate hike since the end of 2018. There are assumptions that the target rate could rise to 1.75-2.50% by the end of 2022, according to CME Group’s FedWatch Tool. From this same FOMC meeting, the Feds shared plans to cut their balance sheet which would take liquidity out of the system and weaken demand for stocks and other assets.
So, what does all of that mean for the housing market? Simply put, interest rates will continue to rise, making homes less affordable. The big question is – purchase now at relatively low rates but higher prices, or wait for prices to slow (or even fall) but at predicted higher interest rates?
I don’t have a crystal ball, but our assumption is that if rates continue to rise, demand will slow. Some homeowners who have been on the fence about selling may begin to list their homes, increasing the supply. As demand falls and supply increases, we would expect to see home values fall.
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