Portland Home Prices Skyrocket with Record-low Real Estate Inventory

With fewer houses on the market and more people looking to buy, Portland homes are selling well over their listed prices.

PORTLAND, Ore. — Portland’s home real estate market appears to be getting hotter: in December, the area’s real estate inventory dropped to a record low – and experts don’t expect it to improve much when January’s numbers are released.

“I think we were all a bit surprised about this happening because a lot of us, you know, we’re nervous about how COVID is going to affect real estate,” said Alexsis Woolsey, a sales executive with Ticor Title.

According to the Regional Multiple Listing Service, the real estate inventory in the Portland metro area dropped to 0.8 in December. This means if no other houses were listed for sale, the number of available houses would sell within 0.8 months, or about 24 days.

Portland’s real estate inventory has been steadily decreasing since April, when it was 2.4.

Woolsey said the combination of fewer homes on the market and more people buying as they try to take advantage of low mortgage interest rates are what’s causing homes to sell so quickly.

To give some perspective, in January 2020, there were 2,884 listings put on the market and 1,738 sold. In January 2021, 2,600 listings were put on the market and 1,810 sold, according to RMLS.

Woolsey said sales will be pending within hours of homes going on the market. That’s how competitive things are right now.

“I would say it’s a fantastic time to be alive if you’re a seller because you have your pick and it’s unbelievable. Because of the lack of options that buyers have, they are willing to pay more than premium for that house,” said Andrew Finkle, owner of Finkle Real Estate. He has seen this competition play out with his clients.

In a recent situation, he had a client who paid $920,000 to purchase a home that was listed for $850,000.

He’s also represented the seller in a transaction that earned more than $100,000 of what its listed price was.

“I was selling a place for $699,000 and we had 12 offers and the highest offer was financed and they had escalation up to $857,000. We were listed at $699,000 and we ended up taking actually a cash offer at $800,000 for finance purposes,” Finkle said.

Woolsey explains it as basic supply and demand.

“When there are a lot of buyers in the market looking for a home that’s going to increase prices because there’s a lot of people who want to buy, so, you know, a lot of homes are receiving multiple officers and going for well over asking, which indicates a strong seller’s market,” she said.

In January 2020, homes were selling for an average of 98.82% of the listing price. In January 2021, that number jumped to 103.9%, according to RMLS.

The situation isn’t unique to Portland. According to Realtor.com, national real estate inventory in the U.S. declined by 39.6% over 2020. Their records show that the average home in the U.S. spent 66 days on the market in December 2020, which is 13 days less than the previous year. In the 50 largest U.S. metropolitan areas, homes spent an average of 56 days on the market in December 2020, 12 days less than in December 2019.

The finalized Portland January report from RMLS hasn’t been released yet, but preliminary numbers show the average number of days homes were on the market in January 2021 was 39 compared to 63 in January 2020.

Woolsey said the median number of days on market usually serves as a better indicator of how quickly things are selling, since there are always specialty properties that can take longer to find a buyer. In January 2021 the median days on market for homes in Portland was 11 days. In January 2020, the median days on market was more than triple  that – 38 days.

By looking at the preliminary January numbers, Woolsey said real estate experts expect the inventory rate to remain about the same or think it could drop even lower.

Finkle says more houses tend to go on the market starting in April and he’s hoping that’s the case this year. For now, he said it’s a crazy market out there and for people looking to purchase a home, it’s going to take a lot of patience, a lot of persistence, and oftentimes, multiple offers.

This article was written by Amanda Arden. The source can be found here.

Portland Homes for Sale Dip to Lowest Level Ever

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This 1,801-square-foot home built in 2015 in Bethany sold for $520,000 on Nov. 30, 2020. Portland metro’s average sale price reached $521,200 in November 2020. Cinnamin Webb of Redfin

Portland metro has never had so few homes for sale as seen in November, handing even more power to sellers and forcing buyers to face bidding wars or wait for more owners to list their residential property, which requires them to have confidence that they can find another place to live.

The logjam is long familiar to home shoppers competing in the Portland-area market. Basement-level inventory has been pushing prices higher for years.

But in November, inventory fell again, to the lowest reported in the 30-year history of the Regional Multiple Listing Service (RMLS), and the average sale price reached $521,200, a 12.7% increase over November 2019.

The 2,238 Portland metro homes put on the market last month were a 36.3% plunge from the 3,515 listed in October, according to RMLS.

If sales continue at the same pace, it would take just one month to sell all the homes on the market, according to RMLS.

Six months of inventory is an indicator of a market balanced to both buyer and seller.

Inventory is calculated by dividing the active residential listings at the end of the month by the number of closed sales and homes proposed and under construction.

“Never on record have we had only one month of inventory,” says Dustin Miller of Windermere Realty Trust in Lake Oswego, reacting to the RMLS report. “We are still reeling. Fortunately, the median sale price [$457,000] went down a tad from October [$460,000], which is in part due to the number of high-end listings.”

The median sale price is the point in the middle in which half of the properties sell at a higher price and the other half at a lower price.

When compared to the previous 12 months, the median cost to buy a Portland metro home jumped 6.5%, to $435,000, according to RMLS.

“We are advising clients to list while inventory is still low, rather than risking that after a [coronavirus] vaccine is made widely available that folks might come to market at normal rates again,” says Melissa Dorman of Living Room Reality, who is licensed in Oregon and Washington.

“Higher inventory might decrease the heavy bidding wars we see right now,” she says, adding, “in no event do I see the Portland market trending down anytime soon.”

In November, 109 houses and condos sold for more than $1 million and 15 of those sold for over $2 million, says Miller.

“That can really skew the average sales price a bit, but if it keeps up, I would consider it a real trend, at least for the near future,” he says.

Two listings for more than $2 million sold quickly and for cash. “Cash is king,” says Miller.

Beth Benner of Living Room Realty predicts it will take much of 2021 at least for supply to catch up with demand. “Buyers are coming to Oregon from larger, more expensive cities,” she says, “as they can work from anywhere and Portland still seems ‘affordable.’”

In November, 2,745 residential properties in Portland metro changed hands, a 13% decrease from the 3,155 closings in October 2020, but a 25.3% jump from the 2,191 closings in November 2019, according to RMLS.

Benner also says first-time buyers working from home have found they need more space than a studio condo and the lowest mortgage interest rates in history can make a home payment less than rent, if the buyer has a down payment.

A 30-year, fixed interest rate is in the 2.7% range as of Dec. 10, according to the Federal Home Loan Mortgage Corporation, known as Freddie Mac.

Some buyers, not wanting to miss an opportunity for rock-bottom rates in a market with little inventory, are offering full asking price or more. For that, they expect most of the repairs found during an inspection to be paid for by the seller, say real estate agents.

If repair negotiations don’t please the buyer, there could be a “sale fail,” in which the buyer backs out, and the property bounces back on the market, says Miller.

Ilyse Ball, principal broker of the I Realty team, RE/MAX Equity Group, has noticed buyers digging in their heels when asked to absorb the full cost of repairs.

“Buyers are less willing to take on updates and repairs. They are walking away if they feel a home needs work,” she said in May. “With prices rising over the past few years, people are getting pickier, and with stay-at-home conditions, it may be daunting for buyers to think about workers in their home.”

In Portland metro, the 2,557 homes with an accepted offer, called pending sales, in November dropped 20.1% compared to the 3,199 offers accepted in October 2020, but were a 12.4% jump from the 2,274 offers accepted in November 2019, according to RMLS.

The average time Portland metro residential properties were for sale last month before receiving an acceptable offer was 41 days.

Compounding shortages in homes for sale is a growing population, owners unwilling to sell during the coronavirus pandemic and September wildfires that destroyed more than 4,000 Oregon dwellings.

The biggest factor of not selling, according to national real estate database analysis, is concern of not finding another home.

Many home shoppers have widened their search and are moving out of metro areas.

Interest in suburban living, with homes on larger lots, has been growing for a few years, say real estate professionals, but the coronavirus amplified the desire for more square footage as well as a relaxing backyard to replace weekend getaways.

“The suburbs have clearly benefited this year from urban flight and the general implications from the pandemic related to work-from-home opportunities,” says Jim Arnal of Living Room Realty.

— Janet Eastman | 503-294-4072

jeastman@oregonian.com @janeteastman

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