Portland home prices rise, while inventory plunges
Despite a roller-coaster stock market, lingering pandemic and uncertainty caused by natural and made disasters, the real estate market continues to connect buyers to sellers.
In August, 3,149 residential properties in Portland metro changed hands, according to the latest report by the local listing service RMLS.
"The drama this past month wasn't real estate," says Dustin Miller of Windermere Realty Trust in Lake Oswego. "Somehow real estate still forged ahead for so many who wanted or needed it in the past month."
The low number of homes for sale continues to plague home shoppers and favor sellers. As a result, the median sale price rose to $449,000, a $4,000 or 0.9% increased from July, according to the RMLS.
Inventory of homes for sale last month barely increased, to 1.3 months, compared to July's anemic 1.2 months. Basement-level inventory in a state with the largest housing shortage in the nation is offering buyers the fewest choices in years.
The coronavirus has also significantly reduced the number of homes for sale in the Portland metro area and across the U.S.
The number of new listings of Portland area homes in August (3,885) plummeted 8.3% compared to the previous month (4,236), and when compared to the first eight months of 2020 to the same period in 2019, new listings (27,379) plunged 10.1%, according to the RMLS.
Real estate experts say some homeowners who were considering downsizing to condo living, especially those in the COVID-19-vulnerable age group, over 65, don't want to give up a home with a yard where they can be socially distant and still entertain friends outdoors.
"The communal aspects of condos present a challenge, especially if it's to be owner-occupied,' said Sean Z. Becker of Portland-based Sean Z Becker Real Estate.
Some potential sellers concerned about contracting COVID-19 don't want strangers in their home, either during open houses or private viewings.
The biggest factor of not selling, according to national real estate database analysis, is concern of not finding another home.
"The majority of sellers are also buyers, so even as new listings hit the market, another buyer is also added," said Javier Vivas, director of economic research for realtor.com in a news release. "Adding to the inventory issues, thousands of previously vacant homes, such as second homes and rentals, have been reoccupied by their owners during the pandemic, effectively taking them off the market."
Inventory is calculated by dividing the active residential listings at the end of the month by the number of closed sales and homes proposed and under construction.
The low number of homes for sale and other factors bumped up prices.
The median sale price for a Portland metro home jumped 4.9% to $430,000 when comparing the first eight months in 2020 to 2019, according to the RMLS.
Miller relies on a different calculation and prefers comparing average sale price. He says year-over-year appreciation in Portland metro was 7.79% in July and 10.46% in August.
Buyers who haven't lost their source of income and have acceptable debt-to-income ratios are cashing in on mortgage rates in the historically low 2.9% range, according to the Federal Home Loan Mortgage Corporation, known as Freddie Mac.
In Portland metro, the 3,697 homes with an accepted offer, called pending sales, in August increased 1.1% compared to offers accepted in July 2020 but were a 26.2% jump from the 2,929 offers accepted in August 2019, according to the RMLS.
The number of closed sales (3,149) in August decreased 7.1% from the 3,391 transactions recorded in July 2020 but there was a 8.5% jump from the 2,901 closings in August 2019.
The average time Portland metro residential properties were for sale in August before receiving an acceptable offer held steady compared to July 2020 at 41 days.
Wildfire's impact on home sales
Deadly wildfires rampaged Oregon in early September, taking lives, polluting the air and wrecking property. Thousands of dwellings in the fires' paths were damaged or destroyed.
Terry Rasmussen in John L. Scott Real Estate's Medford office says everyone, especially those in the process of buying or selling a home, has been impacted by Oregon's fires. In his part of southern Oregon, the Almeda fire alone destroyed more than 2,000 residential structures.
"The market was already starved for inventory even before the fire," says Rasmussen. Thousands of people have been displaced; many were living on low or fixed incomes in mobile home parks.
Areas devastated by wildfires in the past saw prices of homes temporarily drop as sites were cleared and rebuilding construction was underway. The cost to rebuild later resulted in higher asking prices, according to real estate experts.
At the same time, home prices and rents rose in unaffected areas as people relocated there.
"I see a lot of pain, but here's what I know about southern Oregon, we will come together," says Rasmussen. "Builders who have competed for years are working together and real estate agents are searching for rentals for people without a home."
Rasmussen's clients represent the range of change:
An out-of-state buyer who doesn't plan to move here for six months agreed to let Rasmussen's office find a short-term tenant.
A couple nearing retirement now have nine family members living in their newly purchased house because their adult children lost their home.
And a couple who closed escrow last Tuesday and moved their possession in lost everything that night in the fire.
Whitney Minnich of John L. Scott's Oregon City office says real estate transactions that were able to continue during the coronavirus pandemic were delayed due to the fires.
Lenders require mortgaged homes to have insurance and many insurance companies placed a moratorium on fire affected areas.
Lenders were also ordering a re-inspection of a property to make sure the home was still standing and some stopped funding federal Freddie Mac loans after the Federal Emergency Management Agency stepped in to help hard-hit Oregon counties.
Homeowners who were undecided about selling may wait, says Minnich, but people who have to sell, will. "We already have an inventory problem and fires only compounded the issue," she says.
Rasmussen, working on the other end of the state, agrees.
"People are desperate for housing," he says. A mobile home in Medford that he listed Aug. 31 for $85,000 went pending four days after the Almeda fire started on Sept. 8 for $25,000 more after a bidding war.
"If you put your house on the market, it will be swallowed up," he says, "unless you ask a ridiculous price."
People who want to rebuild are also facing a scarcity of building supplies that had already skyrocketed in costs. "On top of the cost going up, it takes years to rebuild a couple thousand homes," he says.
Rasmussen and Minnich both fear that the housing lost to fire that was affordable will be lost forever.