Projections show Portland metro summer housing market will continue to be hot and competitive
According to Elliot Njus | The Oregonian/OregonLive , the Portland housing market is “fierce” and has been “the most competitive since the housing market began its recovery in 2012, with cash offers, above asking-price bids and rapid-fire negotiations marking desirable properties. New numbers from the Regional Multiple Listing Service this week suggest that won’t let up as the year’s busiest buying season begins.”
RMLS show that there were 2,734 homes sold in April 2015, and 2691 in May. While new houses are being listed all the time, at this pace, we will be out of houses to sell by the end of the summer because new housing is definitely lagging behind demand.
We know that over the last few years there have been approximately 30,000 new residents settling in the Portland metro area every year. It is forecast that this number will increase as we continue to see weather extremes across the country. From my own personal experience, we are seeing a major influx of residents relocating from California. This is being driven by their very high home prices as well as the extreme drought causing a lack of water, even for residential use. Other realtors I have talked with recently are also seeing far more residents relocating here from the east coast after the last two years of extreme winters.
A six month supply of inventory is generally considered a healthy market, while Portland numbers are less than 3 months at this time, and have dropped as low as 1.8 months earlier this year.
So “fierce” market competition is likely to continue throughout the summer and into the fall months as buyers rush to lock in purchases before the Feds raise rates and price many would-be buyers out of the market. As it is, mortgage rates are creeping up. Last year many home owners were able to lock in refinance rates as low as 3.5%, but most lenders are now quoting 4%* and even higher as rates continue to creep up anticipating the Fed announcement.
Another factor driving the market competition is the huge number of cash buyers we are seeing this year. Where the cash is coming from is irrelevant. What is unusual is that cash buyers are not seeing the advantage they had seen in the past where they could offer less and their offers were accepted because they could pay cash.
For sellers, weighing various offers can be complicated. Cash offers foster deal making with less chance of running into a snag, but sometimes the offers are lower. Meanwhile, high bidders — whether paying cash or using a mortgage — sometimes get cold feet and pile on additional demands.
And then, there’s the matter of whether the seller can find a place to move once their house belongs to somebody else.
The market is definitely very complicated for both buyers and sellers right now. But we seem to be seeing prices hitting a plateau finally. Hopefully this will continue as the summer progresses.
*rates for best qualified buyers
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