Portland Real Estate Market Update- July 2021

Last month, we discussed “Are we near the peak of the market?” and as July’s metrics came in, we are seeing a slight slowing trend in the market.  Pending sales were down 5.1% in July from June and we have started to see more price reductions including new construction.  We are seeing fewer offers on listings as well.  There are often still multiple offers in most cases, but not as many offers nor is the price getting pushed so far over asking as we saw a few months back.  It’s hard to say if it’s just a summer slowdown as people are taking more vacations and resuming some regular activities or more of an ongoing trend. 

Interest rates remain exceptionally low at just under 3% yet that doesn’t seem to be driving more demand.  For those sitting on the sidelines waiting for the craze of the market to pass, now might be the perfect opportunity to make a move while rates remain low.  The average sales price was actually down 0.7% in July compared to June which is another sign that the market is cooling a bit.  Prices are expected to continue rising, but the at which they rise is expected to drop drastically.  Per CoreLogic, from May 2021 to May 2022, homes prices are forecasted to have grown by just 3.4 percent.

When there is an adjustment in the market, we can see temporary price drops that may appear as though prices are going down, but it’s a short-term correction of over pricing.  Long term, we still have a housing inventory deficit from the previous recession which will keep inventory low over the next 5-10 years as homes can’t be built fast enough to keep up with the growing demand. 

Below is a housing affordability index which shows that based on median family income, median home price, and current interest rates, affordability is stronger now than it was from December 2016 to March of 2019