Portland housing market posts biggest nationwide gains for 2015
S&P’s Case Shiller’s most recent housing report, (which includes statistics only through November 2015), the Portland housing market has seen the biggest gains in housing prices year over year than any other city in the country.
“Portland prices were the strongest, rising 11.1% compared with a year ago. San Francisco, at 11%, and Denver, at 10.9%, followed. Some 14 cities had stronger yearly price gains in November than in October.
While the composite index is still roughly 12% lower than the peak set in summer 2006, Dallas, Denver and Portland have all touched fresh highs. San Francisco prices have pulled even with the earlier peak.”
(If you bought a house for $300,000 in November 2014, your home is very likely now worth approximately $333,000! That’s nice appreciation in just one year, especially when compared to the national average of only 5.8% price increases over the last year. Only??? A 5.8% home price increase in one year is historically a very high rate.
Will Portland housing prices continue to increase at this same pace in 2016?
Forecasts for the housing markets nationwide are a bit mixed. Low housing inventories, coupled with job growth and low mortgage rates have buyers motivated and have been driving housing value increases for the last few years. But some say that buyers are tired of over-paying for housing and are being much more picky already this year.
In Portland, rapidly rising home prices have been exacerbated by our explosive population growth over the last decade. Technology businesses are moving into Portland with outpost offices here and many new start-ups have their home offices here. This is bringing in higher than average wage earners with money to spend, including on housing. And of course Portland’s reputation has gone from “why would anyone choose to live in Portland where it rains all the time?” to “Portland is a great place to live.” So we keep topping the charts for number of people migrating here from other states around the country and even around the world.
The truth is that while home prices have risen dramatically in Portland, the west coast continues to attract people from around the world for our climate, life style, and all that the west coast has to offer. Portland housing prices are about half the price of homes in cities such as Seattle, San Francisco, Los Angeles, and San Diego.
Upside – rent increases in Portland forecast to slow
Last year we reported that Portland led the nation in rental rate increases. In fact, we were dubbed the toughest rental market in the country. It was not uncommon for renters to receive notices that their rent was being increased by up to $500 a month and more.
Bidding wars for rental properties in some of the “most desirable” neighborhoods became all too common.
Last year we saw average rent increases of 9.7% metro-wide. Zillow predicts that number will drop to 3.8% in 2016. Hopefully they are right. Still, at only 3.8% increases, Portland is forecast to have the 6th highest rate of rent increases nationwide in 2016.
Will the housing market crash again?
There are many would be buyers out there who are calling this housing market a bubble ready to burst at any minute. The truth is that housing values, similar to the stock market, do go up and down, though not nearly as dramatically or as quickly.
Now that lending standards have tightened, there is less likelihood that we’ll see another crash like that of 2007. So if you’re buying, you should be thinking a bit longer term. Most home owners tend to keep their properties an average of seven years before they start thinking about moving up or down sizing. Home ownership, for those who can stay the course, has always been a good investment. You are not just investing. You are also locking in your monthly payments for the long term, and putting away equity for your retirement years.