The Portland Bungalow
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01/25/2022
Nearly 2 years into the pandemic, the goal posts have been moved for everyone, including the Portland real estate market. Work from home needs, federal policies and local politics have changed real estate sellers and buyers. Here’s the highlights of our 2022 Portland real estate market forecast.
LOCAL POLITICS
Portland’s reputation is clawing its way back from its precipitous drop during the unrest of 2020. The Urban Land Institute’s annual forecast of commercial investment interest revealed that Portland limped from 66th place to 49th for 2022 American cities. No one seems happy with the local political leaders as the city slowly looks for solutions. Unresolved homelessness and crime are serious issues driving some residents from their neighborhoods. One recent seller near N. Mississippi Ave were concerned for their kids walking to school with homeless camps on their block. They chose to relocate to a safer suburb neighborhood.
Taxes in Multnomah County are also making long time Portland residents consider different communities. With higher property taxes than neighboring counties and new taxes measures on higher earning residents it’s a financial decision too. This has been a contributing factor to fierce buyer demand in Washington and Clackamas Counties the past two years. Commercial lease rates are higher in Beaverton than downtown Portland. Businesses and residents are migrating to the suburbs. One long time resident of SE Portland said that trading his home with higher taxes and more crime for Lake Oswego was a no-brainer.
2022 FORECAST
Interest rates have been at historic lows the past couple years, allowing first time homebuyers more opportunity to get into the real estate market. The summer of 2021 was highly competitive for single family homes because of very low inventory. It was the definition of a sellers market. We are recently seeing a reduction in buyer offers moving into Winter. Not from increasing inventory but more from seasonal disinterest and buyer fatigue. First time home buyers still remain eager in the wings. With Portland rental rates expected to rise by 9% it’s becoming more expensive for families to rent than buy. These new buyers to the market with continued low inventory will remain competitive into mid 2022.
Sellers have been apprehensive to sell and compete to find their new home. According to the RMLS Market Report, Portland had over 2 times more active residential listings in 2019 than in 2021. Many people put their lives on pause during the uncertain pandemic times. As we, hopefully, come to the tail end of this long, somber period we should see many more homes for sale in 2022. It’s our prediction, that the Portland real estate market will still trend positive at a slower clip. More homes coming to market will lower competition and increase the days on the market. Getting your home ready for sale prior to summer months could be the best advice to capture the most of this high market.
CHANGING WINDS
Inflation is the talk in the economic community. The cost of goods is rising faster than normal and there is big pressure on the Federal Reserve to address it. This likely means a tapering of their expansionary policy and eventual higher interest rates over the course of 2022. Lending rates will go up and some buyers may be less encouraged to seek homes. Any adverse effect on the stock and crypto markets will also slow home purchases.
WORK FROM HOME
Renters and homeowners continue to reevaluate their home spaces for both comfort and efficiency when working from home. People have been moving from the urban core to get more space, more efficient 24 hour living. Bay Area and Seattle buyers that work remotely are relocating to Portland for more affordability. Offices and home-gym spaces which used to be looked over are now highly coveted.
CONDO MARKET HEATING UP
The Portland condominium market has appreciated much slower than the single family home market. Downtown condos were in low demand during the stay at home orders. We regularly saw many Pearl District condos sit on the market for over 3 months last year. With restaurants and businesses opening up in the denser neighborhoods of Portland buyers are returning to the condo markets. The Portland Metro median condo sale price rose all of 2021 to around $330,000. Younger buyers are moving into the urban core and taking advantage of the value condo opportunities. We expect to see the condo market heat up this summer.
If you’re looking for understand the real estate market in Portland, contact Josh. He’s a local realtor and economist.
