Intro

As home values and mortgage rates reached record highs, home buyers and sellers are refraining from a transaction as it takes 13.5 years to make a profit on a home. Oregon faces a similar predicament to the other local markets as the prices plunged in the majority of the cities and suburbs, with homes awaiting the market for months. Along with Oregon’s long-standing inventory shortage, the residential real estate market is in a stalemate where sellers get undervalued for their houses, and the buyers can’t find their desired house.

4 Highlights of the Oregon Housing Market

1. Homes Sales Dipped Significantly

Oregon’s housing market encountered a 22.3% dip in home sales: September 2022 saw 5,016 home sales, while the number of sold units decreased to 3,897 after one year. As the winter months are approaching, the number of sold units is predicted to drop even more. Houses are sitting more days on the market (average 35 days), which points toward the lukewarm market status, where transactions will decrease steadily until the summer months of 2024.

Since the seclusion and lack of amenities in rural OR towns became overbearing, prospective buyers are leaning more toward downtowns. Yet, the staggering residential property values of OR’s coveted neighborhoods – Bend ($426/sqft, Lake Oswego ($426), and Hillsboro ($310/sqft)-  fueled the slow sales. Boomers are leaving for another state with cost-effective housing, while Gen Zs and millennials are referring from making a purchase.

2. There is an Unprecedented Inventory Shortage

Oregon’s residential property shortage – an inventory that fell short of 87,000 homes – makes homebuyers go through bidding wars and unattainable costs for their dream house. The inventory shortage can rise to 440,000 units in the next 20 years if new construction remains limited and the homeowners keep using their properties as rentals. Oregonians faced the brunt of the low inventory as the supply chain was disrupted, and sellers started to overvalue their properties- resulting in growing interest in rentals or migration instead of purchases. Either way, hiring a good moving company is essential to making your move successful.

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Even though OR revoked the single-family zoning laws in 2021 to increase the number of affordable multi-family housing units, the high construction cost and strict land regulations didn’t help bridge the decade-old inventory gap. Moreover, new sidewalk development guidelines and stormwater drainage plans for Portland significantly increased the budget for the construction companies- making them disinterested in investing in such a location.

3. Oregon Metro Communities Are Doing Better than Rural Towns

Oregon’s annual 0.59% median home price drop and median single-family home price of $517,500 with annual 0.3% growth don’t portray the overall housing market scenario; the local market data points toward either constant growth or contraction, depending on the area (rural/urban). During the pandemic, when conglomerates and schools switched to remote setups, OR rural towns saw a growing demand and price hike of houses in rural, suburban, and small neighborhoods. However, workers are returning to the office, and families are moving back near schools- leading to the multiplying demand for properties at OR downtowns.

The OR metros are doing significantly better than the smaller rural towns around scenic landscapes. Bethany, a neighborhood near the Portland city center, saw a 24.7% YoY median sale price growth, with the median sale price reaching the $973,000 mark in September 2023. At the same time, the rural Rogue River real estate market faced an unprecedented drop, with 27% in all residential property- median single-family home prices dipping to $373,000, significantly lower than the October 2022 peak value of $500K.

4. Both Buyers and Sellers Are Being Cautious

The mortgage rate is going off the charts because of the Fed hikes to curb inflation; the housing market reached a standstill where both buyers and sellers are being cautious. The Oregon residential real estate market is no exception as the sellers are holding onto their houses to churn the maximum benefit of the COVID-19 era 2%-3% mortgage rate. As a result, OR’s residential real estate market saw a 20.2% annual drop in new listings in September 2023.

Similar to the sellers, prospective buyers withheld from home shopping for fear of recession and foreclosure. Oregon ranks in the top 40 with most foreclosures- 1 out of 6712 homes faced foreclosure in the first three months of 2023. Nonetheless, the buyers who proceeded with home transactions grabbed better deals by taking advantage of Oregon’s cold winter months, which historically saw lower buyer traffic. It led to more negotiation prowess for the buyers and the chance of a price cut (99.0% sale-to-list price in September 2023).

Oregon Residential Property Market Predictions for 2024

As the experts predicted that the US mortgage rates will drop in mid-2024 or the fourth quarter, buyers will be more active later. A lower mortgage rate will help the buyers make better financial deals, while sellers will start listing to take advantage of the increased demand. However, Oregon’s greater Portland area is expected to become a buyer’s market as the metro’s population shrunk significantly- 16,000 people left in 2022- creating a balance in house supply and demand.

Oregon’s residential property market mirrors the US housing crisis: looming danger of foreclosures caused by 8% mortgage rates, inventory shortage, and buyer’s aversion towards remote locations. Although the mortgage and inflation rates are expected to curb down soon, the OR’s housing market will take years to recover.