Portland Housing Market Report, Spring 2016
Despite Zillow’s slower growth prediction for 2016, Portland housing market is still really hot. Real estate agents at our office all report multiple offers on their listings and as buyers agent. The average seems to be 10 offers for a decent house and sometimes 20 offers for a highly desirable house priced competitively. Single family homes are the most popular especially on cul-de-sac that are maintained well with nice lawns and kitchen / bathroom upgrades.
So what are potential home buyers thinking this year? Wait out this madness until the price comes down? Wait till their credit score is repaired? Many reasons to wait but should you wait?
When it comes to waiting to repair your credit score, which can take anywhere between 1-3 months, remember that mortgage rates are also going up everyday. Even 15 days of waiting make a difference in mortgage rates difference. Some lenders lock in rates for 45 days after borrower’s loan application whereas the lender I work with lock in rates for 30 days after the application. I have seen the difference in the numbers. So if you have a credit issue and you’re doing your own research and thinking you can wait, I would think again.
So here is the big issue. Is our Portland housing market going to crash? I get asked that question all the time. I certainly don’t want to foreclose all possibilities in my mind that something catastrophic could happen tomorrow. Majority of experts predict that the housing market will cool down in 2017 as the interest rates go up. If the interest rates go up next year, and say the housing prices come down a little if at all, how much will you actually save in monthly payments if at all? How much more rent money will you have wasted? For luxury home buyers and cash buyers, it makes sense to be more careful but for regular median home buyers on a mortgage, the benefit of locking in low mortgage rates now might outweigh the risks.
Realogy announced that based on their expert opinions, our housing market is not going to crash anytime soon. It’s just that the supply is very low, creating a greater demand for each supply. Read this article written by Teo Nicolais, a real estate entrepreneur who teaches at Harvard Extension School. According to the article, a typical real estate cycle’s boom and bust is a result of lack of supply versus eventual hyper supply. We don’t have any hyper supply issues here in Portland. We have the opposite. This is not same as the Great Recession a decade ago that plunged our housing market to dirt. At the time, we had a debt bubble that was out of control. Today, we still have strict lending standards based on income and credit.
At the beginning of 2016, due to stock adjustment, our economy had a bearish start. As a result coupled with oversupply of luxury condos, luxury housing markets took a little hit nationally. But for median family homes, I don’t think there is much to worry. The bigger worry should be the record high rent prices you are paying.