Buying a house in Portland Oregon, is Portland in a recession?

So you’re moving to Portland, Oregon, but you’re wondering about the volatility of the housing market. It probably hasn’t escaped you that relocating and buying a house in another city is a pretty major decision–even without the world turning upside down and a consequently pending recession. But, are we in a recession?

What’s the Portland real estate market doing right now?

Is it a good time to buy a house in Portland?

Are there any decent homes for sale in Portland?

Well, we sat down with Noah Blanton, one of the top economists in Portland, Oregon, to discuss all of those questions. He’s the president of renowned title and escrow company, WFG National Title, and he spends most of his days analyzing data on the homes for sale in Portland and the Portland real estate market in general.

We asked Noah some of the toughest questions about what’s happening in the Portland, Oregon, and Vancouver, Washington, real estate markets right now. So let’s jump right in. 

*This information is based on the Portland real estate market throughout the 2020 pandemic. However the information shared it educational on the real estate market overall.

Things to know about the Portland Real Estate Market:

What’s up with the Portland, Oregon Housing Market Right Now?

To know the future, we have to look to the past (pretty sure that’s a quote from some prolific movie like the Lion King or something). And, while these are unheard of times, the last few years, plus previous market adjustments seen in historical world shifts, can give us a pretty good idea of what we’re looking for. 

Let’s start with the $22 trillion dollar question: Is this a little bit of history repeating? Well, the Portland real estate market did a bit worse than the rest of the nation during the 2008 market crash and did a lot better coming out of it. Let’s unravel that. 

When we talk about where we’re at today, a market goes through four phases and Portland is currently in somewhat of a hyper supply.

Right now you have an increasing price appreciation, but the rate of appreciation acceleration begins to come down. For example, say you’re in a car speeding down the freeway at 150 miles an hour and you tap on the brakes; you slow down to 75, but in that moment, it feels like you’re actually going like 3 miles an hour until you readjust. That’s what the Portland market is doing. For the past 5 years, the Portland real estate market has been in the top five in the country.

Today, we’re still traveling at freeway speeds, but we’re not going 150 miles an hour anymore–and that’s ok. It’s going to feel like the Portland real estate market is going at three miles an hour, but we’re actually closer to a more sustainable 75. 

After a period of increasing appreciation in the 12-15% range, the market has calmed down, which is a good thing because that sort of ongoing rise leads to an imbalance in ‘The Force’. You can’t have 15% price appreciation rates forever, that’s unhealthy for the real estate market. Right now, the Portland real estate market has reached a state of equilibrium, which is an encouraging sign. Stability beats volatility every time.

How Was the Portland Real Estate Market in 2019?

At the beginning of 2019, the real estate market in the Portland area was defined by a large inventory of available properties, sort of a hyper supply. So, we had a larger inventory in 2019 than we did in 2018 or 2017 coming into January of 2019. But by August of 2019, the majority of those homes had been snapped up. Portland actually had less housing inventory in August 2019 than it did the prior year.

Really that was one hell of a pendulum swing, and it’s very unusual to see a turnaround that quickly. Part of that turnaround was due to the incredible mortgage rates we saw in 2019 (which at around 3.5% are even better right now than in 2020). By March of 2019, mortgage rates had plunged lower than they had in a decade and by August, they had sunk even lower.

Another reason we saw so many homes “fly off the shelves” was that Information got out about Portland being a hot market. People absorb information way faster than they used to and tend to panic buy homes in fear of missing out. It is true that with an ongoing influx of out-of-state residents, a lower rate of single-family home development, and just straight-up land availability it will become harder to find homes in the more established parts of Portland. What can we say, it’s a popular place to live.

According to Noah Blanton, “We are loss averse creatures. Humans don’t want to lose. And so we perceive that there’s maybe a loss [when everyone else is getting in on the action but you’re not]. I talk about this a lot within presentations I give and the psychological value of a loss is double the psychological value of an equivalent gain.” 

“We are loss averse creatures. Humans don’t want to lose.” – Noah Blanton

High demand drives the inventory down and, consequently, the prices up–and people are moving here all the time. According to the US Census Bureau, on average, Portland gains 82 people every day, or 578 every week, or about 30,000 residents every year. It’s safe to say that many of those residents don’t want the “FOMO” of being the last ones in and not being able to get a good house, in a good area, at a reasonable rate. 

Buying out of fear is not always the best route to take (while sometimes it is). Say you looked at the market last year and saw that 15% price appreciation and decided to buy on the assumption it was a hot market and you’re making a good investment. Such an appreciation rate is not typical of any market–and that includes Portland. Just like a pendulum swing, the faster appreciation goes up the more brutal the descent can be, dragging your investment down with it.

Now that the market has stabilized, you can still see price appreciation, but at a decent rate that also means, it’s still higher than the inflation rate. If you invest now, you may not be making a quick buck at a 15% rate, but rather a steady profit. A stable and positive market means your investment is safe. Even if you decide to sell in a few years’ time, it’s unlikely that you’ll lose money, but rather make a tidy profit on your original investment.

Is This a Good Time to Buy a House in Portland?

You could say that anytime is a good time to buy a home (whether in Portland or anywhere else). We always recommend discussing with an experienced realtor as things can change quickly; plus the decision to buy a house in Portland will be dependent on what your investment goals are.

The market is typically stable, and asking prices for new housing units on the market are not increasing in the way they did in previous years. Because it’s such a cool place to live, buying a home in Portland is almost always a question of supply and demand as opposed to being a hot or cold market. The inventory of available housing units is limited and there’s no telling when prices will start going up again.

The shelter in place order imposed during the Coronavirus pandemic could also have a negative impact on the availability of new houses. Many new building projects were delayed due to social distancing and self-isolation measures. But things picked up in the second half of the year.

If you’re looking to move to Portland anyway, borrowing costs are another reason to buy a house. Borrowing costs, the effective purchasing power of the present and future Portland residents, have been falling for the past 24 months (based on 2020 data). Following the Coronavirus pandemic and the economic slowdown, it was predicted that borrowing costs would remain low.

When is the Best Time to Buy a Home?

We always say that the best time to buy a house is when you need one. If you’re thinking about moving to, or around, Portland, you’ll need a place to live. You can either take your money and pay off your landlord’s mortgage as they passively enjoy the benefits of inventory squeeze, steady appreciation, and inflation. Or you could pay your own mortgage and reap the rewards for yourself.

Learn More: Renting vs Buying a home in Portland

From a housing perspective (particularly if you’re planning on still being in Portland in a few years’ time), sooner than later is the time to invest. The real estate market is like the stock market in that you will see dips, but you should never sell in the dip unless you really need to. Also, in a tight housing market like Portland, it can take some time to find a property that meets all of your needs.

If you’re considering moving to Portland, a great option for you at the moment is taking a look at the westside of the city, where there are tons of construction projects underway. At present, the west side is still in a growing phase, and houses are more affordable than in the eastern part of the city. However, if the east is totally your jam, then look there, or have us look for you.

Why Buying a House in Portland OR is a Good Idea

Portland will continue to grow. The local economy is strong and living conditions are good, which, in part, explains why so many people are choosing to relocate here. Not only are we the proud home of our own tech corridor, Silicon Forest, but we’re also seeing plans for larger companies move to or increase their operations in the Portland and South-West Washington area. Job growth largely determines population growth.

With a current 30,000 people moving here per year, forecasts predict a Portland population increase between 300k and 400k new Portland residents over the next decade. That’s a significant increase compared to the 130k people who relocated to the Portland area over the past decade. And, from an economic perspective, Portland has the capacity to accommodate up to a million new residents.

Is Living in Portland Expensive?

The cost of living is one of the main reasons people are looking to move to Portland. Over the past few years, there’s been an emerging trend of people abandoning large coastal cities where life has become way too expensive and moving inland. For instance, the cost of living in Portland is one third to one-quarter of the cost of living in San Francisco. It makes sense because Portland has all of the things and more that these spots do (and we’re only an hour from one of the most beautiful coastlines you’ll ever see).

Learn More: What is the cost of living in Portland Oregon?

What is Portland going to look like in 5-10 Years?

Long term prospects for Portland Oregon are pretty great. The underlying fundamentals are solid, whether we’re talking about the job creation or quality of life.

From a cost of living to a housing affordability standpoint, Portland is still one the least expensive places to live in the U.S. compared to other large cities. When you look at these elements, Portland beats hotspots like Denver, San Diego, and San Francisco hands-down.

The real estate market in Portland, Oregon is in a stable period, which is good news for prospective buyers. Properties are seeing a slow, sustainable appreciation in value, and the interest rate is blindingly low; making for a solid investment. One thing to keep in mind is that the supply in terms of new homes available is limited. If you find a house that meets your needs, don’t hesitate to purchase it!

To summarize:

• The Portland real estate market has reached a state of equilibrium, which is an encouraging sign. Stability beats volatility every time.
• The real estate market in Portland has stabilized, and you can still see price appreciation on homes, but at a decent rate. If you invest now, you may not be making a quick buck at a 15% rate, but rather a steady profit over the next few years.
• Now is the time to buy a house in Portland OR as it’s population is forecasted to grow significantly over the next decade
• The livable cost of living in Portland OR makes this city great for a long term investment for homeowners

Thinking About Moving to Portland, Oregon?

If you need more advice on moving to Portland, give us a call, shoot us a text, send us an email, or even send a carrier pigeon. However you want to get a hold of us, we’ve got your back when moving to Portland, Oregon.