The Portland Metro Residential Market Action report is a monthly review provided by the RMLS, a database where real estate agents are required to post home listings for the region.
Historically, as we move into the winter months we will see higher inventory as there are fewer buyers and therefore homes stay on the market longer. October’s report confirms the start of the winter trend with a 9% increase in inventory and a 14.8% increase in days on market compared to September.
Three important topics 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 October were reported at 2.4, meaning if no new homes came on the market, it would take 2.4 months until inventory sold out completely (at the current rate of sales). This is the highest reported inventory level since April 2020.
Median Home Selling Price
The median sales price for October 2022 was reported at $537,000. While it’s a 4.1% increase from October 2021, it’s a 2% decrease compared to last month. The Lake Oswego and West Linn area continue to report the highest median home selling price at $795,500.
Here’s what median home sale prices looked like across Portland proper:
West Portland: $624,700
North Portland: $510,000
NE Portland: $555,500
SE Portland: $450,000
Focusing on Affordability
With median home sale price flattening out and inventory slowly climbing, interest rates are currently the most impactful variable for affordability. Take a look at the example below using 2021 and 2022 data with a 30 year loan term and 20% down payment. While the median home price has only risen 4%, the total monthly mortgage payment has increased a whopping 50% due to the increase in interest rates.
You may have heard the term “marry the house, but date the rate” recently. This is the advice of many mortgage lenders who recommend buyers take advantage of the increase in inventory and flattening of prices even with high interest rates. “Date the rate” simply means refinance in the future once rates have gone down.
“According to a formula from the National Association of REALTORS®, buying a house in the Portland metro area is affordable for a family earning the median income. A family earning the median income ($106,550 in 2022, per HUD) can afford 83% of a monthly mortgage payment on a median priced home ($548,000 in September). The formula assumes that the buyer has a 20% down payment and a 30-year fixed rate of 6.11% (per Freddie Mac).” RMLS 2022
We can’t predict the future, but our assumption is that rates will continue to slowly rise or plateau and demand will continue to slow. Most of the demand slow down will be driven by potential home buyers holding off on purchasing until rates decrease. As demand falls and supply increases, we would expect to see home values plateau or decrease.
If you’re thinking of buying, get in touch with a mortgage lender to see what your financing options are. Our network of trusted lenders have been proposing some unique solutions to combat high interest rates.
If you’re thinking of selling, patience and pricing is key. This is a completely different market than sellers were faced with 3 months ago. Make sure your real estate agent is utilizing the most effective marketing tactics and channels to get your home seen by the most potential buyers.
Reach out if you’re interested in learning more about the Portland Metro real estate market. I can be reached anytime via email (email@example.com) or call/text (503-545-5094). You can also stay in touch by following us on Instagram!