2019 Portland Real Estate Market in May Rebounded Big Time
Portland’s real estate market came back with a bang in May after a sluggish start in 2019. The market was so hot in May unlike any other months so far in 2019. For detached single family homes, the market was hotter than May 2018 with shorter days on the market this year. Condo markets are still showing a slower market and it brought down the combined market average a little but not by much. The real estate market report from May definitely makes one wonder where the Portland market is headed and why the market turned out to be so hot when the trend has been showing a slowdown.
Portland Housing Market Comparison
Detached Single Family Homes (May 2019)
Median Sold: $475,000
Average Days on the Market: 26
Median Days on the Market: 8
New Listings: 1400
Family Homes (May 2018)
Median Sold: $445,000
Average Days on the Market: 27
Median Days on the Market: 8
New Listings: 1395
May is typically the hottest selling season of any given years. I was really looking forward to see the numbers from May 2019 because if the numbers prove a slow market with prices dropping or staying put, it would have confirmed the housing market slowdown and would have contributed to a slow market forecast for the rest of the year. May median sold home prices hit the new highest record. $475K for detached single homes and $455K for all home types including condos and townhouses. Homes also sold very quickly. More homes went pending in May 2019 than May 2018. I don’t get it. What’s going on with our housing market? Was all the forecast about the market slowing down wrong?
It’s the low mortgage rates.
The answer lies in the plummeting mortgage rates. It gives buyers more buying power and a sense of optimism and urgency to buy while the rates are low. 30 year fixed mortgage rates officially hit below 4.0% as of now. Most quotes hover around 4% these days and that’s lower than it was in 2018. That low rate reminds me of 2017 when the market was so hot in the Portland metro.
Will mortgage rates continue to drop?
It certainly seems to be the trend that the rates keep on dropping so long as the stock market is also dropping. The stock market continuing to drop amid increasing fear of global slowdown from trade wars between the US and China. If the stock market continues to drop into a correction or even a recession, rates will continue to drop. The Portland market is enjoying a very low unemployment rate. It’s unknown whether the overall slowing economy will affect the employment sector and if so how much. For now, it’s a great time to buy if you have a solid job with good credit while the rates are low. I’ve seen 30 year fixed mortgage rates go as low as low 3% in 2016 and it’s safe to assume that is pretty much the very bottom if the rates drop more in the future. It’s also possible that the economy will shake off the current downturn and mortgage rates go up as a result.
Home Bidding War
Unfortunately, when there is a competition to lock in low rates to buy a home, there will be other buyers. Bidding war is still a thing in the Portland market depending on neighborhoods and a home’s price point. Home inventory is still pretty low compared to the demand in the Portland metro area. The amount of inventory even dropped in May from April. Any good home priced competitively will receive multiple offers even now. We’ve seen more multiple offers in May as more home buyers shape up to purchase.
What will the rest of 2019 housing market look like?
My bet is that things will slow down a bit after July but this summer and fall market will be hotter than 2018 because of the current low rates. 2018 fall and winter market experienced a major slowdown and that seems to be because of high mortgage rates at the time when it reached over 5%. So long as the rates stay low around 4% or lower, even our fall housing market will stay hot. This means that homes will continue to appreciate higher than originally expected. 2019 housing market forecast prepared by anyone at the end of 2018 assumed that mortgage rates will continue to climb because it seemed to be the trend at the time. However, because of the unexpected low mortgage rates, the housing market should continue to heat up. The Portland housing market will react very sensitively to rates as time goes on.