Portland’s “hot” housing market has been much in the local news over the past few weeks – from KATU’s Your Voice Your Vote program on May 10th, to Oregon Public Radio, OregonLive, Portland Monthly, Portland Tribune, Investigate West and more. Key facts, trends and perspectives in the coverage are distilled in this two-part posting focusing on 4 questions:
- What is a hot market?
- Why is the Portland housing market hot?
- What are the benefits, costs and risks of the market – and for whom?
- What steps are proposed to offset costs and minimize risks?
1. What is a hot market?
Portland’s inventory of homes reached a 10-year low in March according to the Regional Multiple Listing Service. At the sales rate current then, it would have taken just 1.9 months to sell all listed properties, well under half the national average for inventory. In April inventory dropped to 1.8 months.
Competition among buyers for the limited supply of homes has led to multiple offers, quick sales, spikes in the volume of pending and closed sales, and price increases – with the sales price sometimes well above the asking or list price. As of last month, average and median sales prices had increased by more than 22 and 23 percent respectively since 2012.
The trend of low inventory is not new. Inventory has stayed below the threshold for a balanced market (6 months) for over 3 years. But the trend has intensified, as shown in the table. The market is now tilted heavily in favor of sellers. In other words, it’s hot, hot, hot.
|Portland Metro Inventory (in months)|
2. Why is the Portland housing market hot?
In this hot seller’s market, the demand for homes far exceeds the supply. The table below fleshes out key factors that have created the imbalance.
|Factors increasing demand||Factors limiting supply|
– market forces,
– developers seeking buildable land, and
– residents of close-in, established neighborhoods opposed to infill, taller buildings and zoning changes.
New development has been pushed to the suburbs and to the fringes of an ever-expanding Urban Growth Boundary. The result? Portland averages just 6-10 housing units per acre. And it ranks 8th among major West Coast cities in population density – well behind sprawling Los Angeles. In fact, Portland has fewer people per square mile than suburban Aloha, Cornelius, Happy Valley, Beaverton, Gresham, Tigard and Sherwood.
Click here to read Part 2.