March typically launches the prime-time real estate market, which spans about eight months. What’s ahead? The average price for a Portland area home rose to $542,000, according to the latest housing report, which benefits sellers and keeps pressure on buyers to act fast, make concessions and select from a small amount of homes for sale.
“The biggest story continues to be the lack of inventory, which has been historically low for nine months,” says Suzanne Page, a broker with John L. Scott Southwest Portland.
Since June 2020, the supply of homes to sell has lingered around one month, which means if sales continue at the same pace, it would take just one month to zero out all the available residential properties on the market.
A market is considered balanced between buyers and sellers when there is four to six months of inventory.
The limited amount of residential properties available “continues to backlog our buyers, creating this crazy, pent-up demand,” says Page. “And I don’t see it slowing down. Overall, the influx to the Portland metro real estate market is greater than the exodus out.”
Prices are escalating, according to the latest Regional Multiple Listing Service (RMLS) report.
“A 5.3% [average sale price] appreciation in a month? For February? Are you kidding me?” asks Dustin Miller of Windermere Realty Trust in Lake Oswego after reviewing the February RMLS report. “Last we did near that for the average price was March 2016 and the median price [which increased 4.2%] did that last in March 2020. This is real estate in the new era. If you blink, it moves.”
Most homeowners are receiving multiple offers within the first couple of days, and potential buyers whose offers were not accepted continue to search, with new buyers joining the line, say experts.
But the limited number of homes for sale affects sellers, too.
Owners, fearful of not finding another place to live, are borrowing from their retirement funds, tapping their home equity or finding a short-term bridge loan to use as a down payment for their next home before listing the old one.
Page has owners who prepared their property for sale and even had real estate photos taken, but have not yet listed it on the market. “They’ll be ready as soon as we find their new home and their offer gets accepted,” she says. “That’s a big topic in our office, developing buy-sell strategies that are unique to each of our clients.”
The buying frenzy fueled by low inventory was also boosted by people wanting a more accommodating home, often in the suburbs or rural areas with more land, during the coronavirus pandemic’s stay-at-home orders. Another motivation: Low mortgage interest rates.
A 30-year, fixed interest rate is in the 3.05% range as of March 11, according to the Federal Home Loan Mortgage Corporation, known as Freddie Mac. The 30-year, fixed rate hit historic rock-bottom at 2.65% the week of Jan. 7.
The inching up of interest rates won’t significantly slow down demand, say experts.
The Portland Metro area is virtually sold out up to the $1.5 million price point, according to John L. Scott Real Estate. Correctly priced homes up to $1 million, where 94 percent of sales activity occurs, is predominantly at the frenzy stage and the $1- to $3-million range has strong sales activity.
New listings: The 2,474 Portland metro homes introduced to the market in February were a 4.1% drop from the 2,579 new listings in January, according to the latest RMLS report. Last month’s new listings plunged 10.3% compared to February 2020.
Prices: Buyers in February 2020 paid an average of $84,100 or a median of $72,100 less than buyers in February 2021, where the average sale price increased 18.4% from $457,900 to $542,000. In the same comparison, the median sale price has increased 17.7% from $407,000 to $479,100, the RMLS report shows.
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.
Pending sales: In Portland metro, the 2,208 homes with an accepted offer in February decreased 11.5% compared to 2,496 in January, and were a 15% drop from February 2020, according to the report.
Closed sales: In February, 1,978 residential properties in Portland metro changed hands, an increase of 7.1% from the 1,847 that closed in January, the report shows.
Time on the market: The average time Portland metro residential properties were for sale last month before receiving an acceptable offer was 42 days.
— Janet Eastman | 503-294-4072
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