Is the Portland Summer Real Estate Market Sizzling or Fizzling?
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Happy 4th of July! Hope you all were able to celebrate with your loved ones like we did and are enjoying the beautiful summer weather and all that the Pacific Northwest has to offer!
If you have been watching the real estate market (or are actively in the market), you have seen what feels like a sudden change from our robust sales of recent years. We started off this year with really low inventory and very strong buyer demand fueled by historically low interest rates. If you were selling your home in the first quarter of this year, you could expect multiple offers a day or two after being on the market and sellers were counting on a final offer price that far exceeded their list price (typically 10-20% over). In addition, buyers were making offers with additional attractive terms such as buying the house as-is and we even began to see some buyers offer to purchase a home without doing a home inspection!
Around Easter of this year, we in the market began to feel a slight shift as many buyers were discouraged or priced out of the marketplace due to the strong demand. This was followed by three consecutive and significant interest rate hikes by the Fed - the largest increase our economy has seen since 1994.
What did this mean for our local real estate market?
Some buyers (especially many first time home buyers), were priced out of the market as the higher interest rate hike took too much buying power away. Some buyers who were planning on making a move up from their current home became cautious, not wanting to sacrifice their existing low interest rate (often in the 2-3% range) and chose not to make a move right now. As with any “sudden” market shift, there is a natural reaction in human behavior that makes people nervous of what is to come and what should they do and therefore, hold off on taking any action.
Where does that leave us in Portland mid 2022?
The surplus of very strong buyer demand is still being absorbed into the market with sellers still getting their homes sold relatively quickly. Now it is reasonable to expect a home that is priced right and in a good neighborhood, to sell within a week or two and often at list price or slightly above.
Terms of offers received are not as favorable as they were at the start of the year, but they are back to being what we expect as customary (repairs negotiated between buyer and seller) and far fewer buyers agreeing to low appraisal concessions.
Our housing inventory is beginning to rise (up to 1.4 months in June) giving buyers more choices and bringing sales prices into a more healthy, balanced marketplace. The crazy rate of appreciation is slowing but home values are not depreciating and that is the good news.
So, the answer is our Portland market isn’t sizzling or fizzling – it is “cooling” from being what many consider to have been over heated in recent years.
