Highlights from this report:
- Oregon currently has the biggest housing shortage of any state in the U.S.
- That’s based on a recent analysis conducted by Freddie Mac.
- Real estate inventory remains tight across the Portland metro area, as well.
- Meanwhile, the metro area’s population continues to grow steadily.
- A recent forecast for the Portland housing market predicted rising home values in 2020.
Portland Housing Market Could Rise in 2020 – 2021
As we’ve reported in the past, the real estate market in Portland, Oregon underwent a cooling period through much of 2018 and 2019. Home prices leveled off across much of the metro area, and even dipped slightly in some places.
But that trend could start to change, as we move further into 2020.
A recent forecast for the Portland housing market predicted that home prices would rise over the coming months. And that’s not surprising, when you consider the current supply-and-demand situation in this market.
We’ll get to those real estate market predictions in a moment. First, let’s look at the tight supply situation in Portland and the rest of Oregon.
Oregon Has the Biggest Supply ‘Deficit’ of any U.S. State
On February 28, the housing and economic research team at Freddie Mac published a new report that examined the real estate supply situation across the country.
They also singled out the states with the biggest shortage, or deficit, of housing inventory. These are states where it’s harder for the typical home buyer to find and purchase a property. Oregon topped the list, in terms of having the lowest level of supply available.
According to a press release that accompanied the report:
“Oregon has the largest housing supply deficit followed by California, Minnesota, Florida, Colorado, and Texas … States with stronger economies like Oregon and California have historically attracted residents seeking opportunities. However, they have much lower supply of housing units compared to their historical averages. The supply shortfall is driving up prices and causing their largest cities to become less affordable.”
Housing inventory within the Portland-area real estate market remains tight as well. According to data from the national realty company Redfin, the Portland area had about a two-month supply of homes for sale at the start of 2020. That’s well below what is considered to be a “balanced” market, and it makes things more competitive for local buyers.
Normally, when you have a supply and demand imbalance like this, home prices tend to rise steadily. And that certainly happened in Portland. The median home value in and around the city rose steadily and sharply from 2012 to 2018.
But then the market began to level off, as home buyers shied away from higher-cost homes and declining affordability. You can see these trends clearly in the chart below, provided by Zillow.
Now, after a period of stagnant home prices, it seems that the Portland real estate market could start rising again. That’s the general outlook offered by the research team at Zillow, in a recent forecast and outlook.
Positive Forecast for Home Prices, Stretching Into 2021
Housing analysts from Zillow recently offered a positive prediction for the Portland real estate market, in terms of house prices. On March 1, the company’s website stated the following:
“The median home value in Portland is $455,753 … values have declined -0.1% over the past year and Zillow predicts they will rise 2.4% within the next year.”
The dip in prices that occurred over the past couple of years might have been the result of affordability issues in the area. As you can see from the chart above, house values in Portland shot up considerably during the five-year span from 2013 to 2018. This led to many would-be buyers being priced out of the market. Slower price growth resulted.
But a growing population in the area continues to put upward pressure on home values, at a time when inventory remains tight. This could account for Zillow’s recent (and positive) forecast for the Portland, Oregon housing market.
Steady Population Growth Boosting Demand for Homes
The Portland metro area has been attracting new residents from all over the country. This increases demand for housing on both the rental and purchase side, boosting prices and rents at the same time.
According to the U.S. Census Bureau, the city’s population grew by nearly 12% from 2010 to 2018. That was nearly double the national growth rate of 6% for that same eight-year period.
Those figures apply to the city of Portland, in particular. The broader metro area (which includes neighboring Vancouver, Washington) has also grown steadily over the past decade. The metropolitan are is now home to well over two million residents.
The Portland metropolitan area currently ranks among the top metros in the country for in-migration, according to one report. A February 2020 news release from the real estate brokerage Redfin stated:
“Portland, Oregon regained a spot in the top 10 list of metro areas with the highest net inflow of Redfin users, coming in at seventh…”
The Redfin report went on to explain that the relatively low median home price in this metro area “makes it an attractive location for inbound residents from other more expensive cities across the west coast such as San Francisco (median price $1.32 million), Seattle ($572,500) and Los Angeles ($649,000).”
Here are five key takeaways from this report:
- Home prices in Portland, Oregon rose sharply from 2013 to 2018, before leveling off in 2019.
- Now, as we move further into 2020, house values in the area seem poised to rise again — albeit at a modest pace.
- As of March 2020, the median price for this real estate market was around $440,000.
- A recent Zillow forecast for the Portland housing market predicted that the median house value would climb by around 2.4% over the next year or so (through March 2021).
- Limited housing inventory and a steadily growing population are making things more competitive for home buyers in the area.
Disclaimer: This article contains real estate forecasts and predictions issued by third parties not associated with the Home Buying Institute. HBI makes no claims or assertions about future housing conditions. Such predictions are the equivalent of an educated guess and should be treated as such.