Oregon has a well-deserved reputation for being beautiful, plush, green, and home to laid back, friendly people. Drive 30 minutes in any direction, and you will find gorgeous natural settings to explore. Even though housing prices are at an all-time high, it is still the most affordable city on the west coast and is considered a great place to raise a family. Portland was the number 2 moved to destination in 2016 and then dropped to the number 7 moved to destination in 2017— still higher than average. From 2013 to 2016, Oregon proper was the number-one moving destination in the United States and is still in the top few. It helps that personal income is rising faster than the national average and unemployment is lower than the national average. So what exactly does the Oregon real estate forecast for 2018 have in store for would-be Oregonians?
Oregon Real Estate Forecast for 2018: current home prices vs affordability
According to Zillow, the median home value in Oregon is currently $320,500. Oregon home values have gone up 7.2% over the past year, and predictions indicate a further rise of 4.4% within the next year. Meanwhile, the current median price of listed homes in the state is $350,000, while that of homes actually sold is $322,100. Median rent in Oregon is $1695.
Central Oregon’s largest city, Bend, is a great example of the tension between home prices and affordability at play in the state. According to Business Oregon, Bend’s current median home price is $404,000, and the median household income is $60,404. Hayden Homes’ Geoff Harris pointed out that someone earning $60,000 a year is still about $140,000 short of being able to afford the median cost of a house. BrundageSmith says there is currently just one house in Bend for sale under $300,000—which is still too expensive for the typical household.
Appreciation in Portland: real estate forecast for Oregon in 2018
2017 has consisted of a whole lot of mixed messages regarding fire vs ice in the Portland real estate market. The Portland market has been very hot in recent years and is now slowing. Nonetheless, the popular city has experienced a 5-7% increase in the last 12 months. In 2018, growth is forecast to slow down to 3-5%. Most of the growth is set to occur in more on-the-rise neighborhoods and other areas with a lower median home value. In more upscale markets, growth will be slower. Affordability vs supply and demand is the main theme at play in Portland, as in the rest of the state.
It’s worth noting that these percentages do not take into account home value appreciation for homes not sold through the MLS. According to S&P Corelogic Case-Shiller, as of November 2017, appreciation for the previous 12 months in Portland Oregon real estate was 7.31%. Zillow put the appreciation value for 2017 appreciation at 6.7% from May to May. And from December to December, 12-month appreciation drops to 0.8%. So it all depends when and how one looks at it. One thing is certain: Portland has been among the top markets in the last few years, as far as appreciation goes. However, the Oregon real estate forecast for 2018 shows Portland will lose its momentum slightly in 2018, as it already started to in 2017. Zillow predicts 4.5% growth for 2018.
One factor very much on Portland’s side (and indeed Oregon’s), are its exceptional neighbors. Seattle’s average home price is $463,800, and San Francisco’s is $893,100, while Portland’s average home price is $370,700. As long as Portland’s average price is significantly less than Washington and California’s major cities, the Oregon real estate market forecast for 2018 and years to come will continue to appear positive, and the state will continue to be a significant draw for those looking to purchase a home.
Portland’s low inventory problem
New home construction in Portland continues to slow, and as a result, Portland’s housing low-inventory problems are worse than much of the rest of the country, which keeps prices moving up. Portlandmaps.com reports that in 2017 there were roughly half the number of new-construction homes added to the Portland real estate market as there were in 2005. Among the biggest challenges going forward will be a lack of buildable land. So if you happen to be a buyer with a west coast heart currently on the market for a home, now would be the time to take advantage of the availability of homes in the region!