Real estate agents spent the past two years scrambling to meet buyers’ demands for homes in the Portland metro. Now 20-year-high mortgage rates are letting them take a deep breath.
Brokers say 2021 was an outlier year for the housing market that shouldn’t be judged as the norm. Now they’re adjusting for downtime as Oregon economists align with other forecasters in predicting a recession in 2023. Earlier seen as auctioneers who could take a bouquet of offers to sellers, brokers are now being coached to focus on drumming up business leads while the deal flow slows.
“We’d present 11 offers to our sellers, and everybody was happy,” said Lincoln Reichen, principal broker with Cascade Hasson Sotheby’s International Realty. “Those days are behind us now, at least for the moment, and I think most of us actually feel pretty good about that.”
Buyers are driving away from house hunts as rates on common 30-year home loans tracked by Freddie Mac jump past 7%, translating to high borrowing costs. In the Portland metro, closed sales fell 38% in October from the same time the year before, according to the Regional Multiple Listing Service, though inventory nudged upward, with almost two and a half months’ worth available.
Inventory had to grow, Reichen said. “We felt like things were getting out of control. Affordability was definitely becoming an issue,” he said. “But that proverbial soft landing, at least in the real estate sector, usually doesn’t happen. It usually is a thud, and that’s what we’ve seen.”
State economists predict Oregon home prices will drop 14% from between the summer of this year and the summer of 2024, with most falloff happening now and slower, smaller declines following. Mortgage rates also may come back down to 5% in 2025, helping to improve affordability, economists say.
The median Portland metro home price rose 4% year-to-year to reach $537,000 in October, though the figure came in just under this September’s $548,000, according to RMLS.
If you’re thinking about buying a home, you’re likely trying to juggle your needs, current mortgage rates, home prices, your schedule, and more to try to decide if you want to jump into the market.
If this sounds like you, here’s one key factor that could help you with your decision: there are more homes for sale today than there were at this time last year. According to Calculated Risk, for the week ending in November 18th, there were 47.7% more homes available for sale than there were at the same time in 2021. And having more options for your home search may be exactly what you need to feel confident about making a move.
Here’s a look at where the increased housing supply is coming from so you can get a better sense of what’s happening in the market today and what it means for you.
What Caused the Growth in Housing Inventory This Year?
The increase we’ve seen in housing supply this year isn’t from the source you think it is. Rather than an influx of recent homeowners listing their houses for sale (known as new listings), the primary reason the supply has grown is because homes are staying on the market a bit longer (known as active listings).
That’s happening because higher mortgage rates and home prices have helped moderate the peak frenzy of buyer demand, which has slowed down the pace of sales. And, as the pace of sales has eased, inventory has grown as a result.
The graph below uses data from realtor.com to show that it’s active listings, not new listings, that have driven the growth we’ve seen over the past few months:
And while overall inventory gains may slow down this winter due to typical housing market seasonality, you still have a chance to capitalize on the current supply.
What This Means for Your Home Search
Regardless of the source, the increase in available housing supply is good for buyers. More homes available for sale means you have more options to choose from as you search for your next home, and you may even have more time to consider them.
So, if you tried to buy a home last year and lost out in a bidding war or just couldn’t find something you liked, this may be the news you’ve been waiting for. If you start your search today, those additional options should make it less difficult to find a home you love, especially as some other buyers pause their search this holiday season.
Just remember, housing supply is still low overall, so it won’t suddenly be easy – it’ll just be less challenging than it was at this time last year. As a recent article from realtor.com says:
“Despite this improvement in the number of homes actively for sale, active listings still lag their pre-pandemic levels.”
The increase in housing supply helps put you in a great position to kick off the new year in your dream home. And who better to help you find it than a trusted, local real estate professional?
If you’re ready to jump into the housing market and see what’s available in your local area, connect with a trusted real estate professional today.
If you put a pause on your home search because you weren’t sure where you’d go once you sold your house, it might be a good time to get back into the market. If you’re willing to work with a trusted agent to consider a newly built home, you may have even more options and incentives than you realize. That may be why the National Association of Home Builders (NAHB) says the share of buyers looking for new construction is increasing:
“According to the quarterly Housing Trends Report, the popularity of new construction homes is continuing to rebound . . .”
Here’s a few reasons more buyers may be drawn to newly built homes.
More Options To Choose from and Potential Builder Incentives
When looking for a home, you can choose between existing homes (those that are already built and previously owned) and newly constructed ones. While the inventory of existing homes has increased this year, it’s still below more typical years like 2019. Currently, according to the National Association of Realtors (NAR), there is a 3.2-month supply at the current sales pace. For reference, a roughly 6-month supply is considered a balanced market, leaving us in a sellers’ market today.
While it’s a smaller segment of the overall inventory of homes for sale, the supply of newly built homes has grown even more. The National Association of Home Builders (NAHB) explains:
“New single-family home inventory remained elevated at a 9.2 months’ supply (of varying stages of construction). A measure near a 6 months’ supply is considered balanced.”
Here’s why this matters for you. While you have more homes to choose from in either category, there’s one extra benefit of newly built homes. Because the inventory of newly built homes has grown so much, builders are motivated to sell their properties before they build more.
Back in the housing crash of 2008, builders were building too many homes, and that oversupply is part of what contributed to the housing bubble bursting. Now, builders don’t want to have a surplus of inventory in their pipeline, and many are offering buyers incentives to help move that inventory along. As Doug Duncan, Chief Economist at Fannie Mae, explains:
“. . . a continual increase in the number of completed homes available for sale is now occurring, with the inventories of such homes now at the highest level since July 2020. . . . This suggests to us that builders may be increasingly willing to offer more aggressive incentives and discounts to maintain sales of completed inventory.”
While specifics will vary by builder and market, some buyers are seeing builders reduce prices and offer incentives. To find out what’s available in your area, lean on a trusted real estate professional.
Lifestyle Benefits of Buying a Newly Built Home
In addition to more supply and the potential for builder incentives, newly built homes have various benefits that may suit your lifestyle. For example, you likely won’t have as many little repairs to tackle, like leaky faucets, shutters to paint, and other odd jobs around the house. That can free up time for you to do other things you’re passionate about.
Another perk of a new home is that nothing in the house is used. It’s brand new and uniquely yours from day one. You’ll have all new appliances, windows, roofing, and more. These things can help lower your energy costs, which can add up to significant savings over time. You may even have the latest and greatest technology features built into your new home.
Builder sums up why some buyers today are turning to newly built homes:
“For some, it’s the lure of something new and modern. For others, it’s the move-in-ready experience. And now there’s another factor to consider when making this decision: technology.”
If any of these benefits appeal to you, it’s time to connect with a trusted real estate advisor to learn more.
If you’re considering a newly built home, working with a real estate agent is mission critical. They’ll be your expert guide on what’s available in your local market and can help you explore your options and the benefits of an all-new home.
Now that the end of 2022 is within sight, you may be wondering what’s going to happen in the housing market next year and what that may mean if you’re thinking about buying a home. Here’s a look at the latest expert insights on both mortgage rates and home prices so you can make your best move possible.
Mortgage Rates Will Continue To Respond to Inflation
There’s no doubt mortgage rates have skyrocketed this year as the market responded to high inflation. The increases we’ve seen were fast and dramatic, and the average 30-year fixed mortgage rate even surpassed 7% at the end of last month. In fact, it’s the first time they’ve risen this high in over 20 years (see graph below):
In their latest quarterly report, Freddie Mac explains just how fast the climb in rates has been:
“Just one year ago, rates were under 3%. This means that while mortgage rates are not as high as they were in the 80’s, they have more than doubled in the past year. Mortgage rates have never doubled in a year before.”
Because we’re in unprecedented territory, it’s hard to say with certainty where mortgage rates will go from here. Projecting the future of mortgage rates is far from an exact science, but experts do agree that, moving forward, mortgage rates will continue to respond to inflation. If inflation stays high, mortgage rates likely will too.
Home Price Changes Will Vary by Market
As buyer demand has eased this year in response to those higher mortgage rates, home prices have moderated in many markets too. In terms of the forecast for next year, expert projections are mixed. The general consensus is home price appreciation will vary by local market, with more significant changes happening in overheated areas. As Mark Fleming, Chief Economist at First American, says:
“House price appreciation has slowed in all 50 markets we track, but the deceleration is generally more dramatic in areas that experienced the strongest peak appreciation rates.”
Basically, some areas may still see slight price growth while others may see slight price declines. It all depends on other factors at play in that local market, like the balance between supply and demand. This may be why experts are divided on their latest national forecasts (see graph below):
If you want to know what’s happening with home prices or mortgage rates, reach out to a trusted real estate professional for the latest on what experts are saying and what that means for your local area.
As you look ahead to the winter season, you’re likely making plans and thinking about what you want to achieve before the year ends. One of those key decision points could be whether or not you want to move this year. If the location or size of your current home no longer meets your needs, finding a house that better suits your lifestyle may be a top priority for you. But with today’s cooling housing market, is it really a good time to sell your house, or should you wait?
If you’re ready to make your decision, here are three reasons you may want to consider selling before the holidays.
Get One Step Ahead of Other Sellers
Typically, in the residential real estate market, homeowners are less likely to list their houses toward the end of the year. That’s because people get busy around the holidays and deprioritize selling their house until the start of the new year when their schedules and social calendars calm down.
Selling now, while other homeowners may hold off until after the holidays, can help your house stand out. Start the process with a real estate professional today so you can get your house on the market and get ahead of your competition.
2. Get in Front of Serious Buyers This Season
Even though housing supply has increased this year as buyer demand has moderated, it’s still low overall. That means there aren’t enough homes on the market today, especially as the millennial generation reaches their peak homebuying years. As Mark Fleming, Chief Economist at First American, says:
“While not the frenzy of 2021, the largest living generation, the Millennials, will continue to age into their prime home-buying years, creating a demographic tailwind for the housing market.”
Serious buyers will still be looking this winter and your house may be exactly what they’re searching for. If you work with an agent to list your house now, you’ll be able to get in front of eager buyers who are hoping to make a move before the year ends.
3. Seize a Great Chance To Move Up
Don’t forget, today’s homeowners have record amounts of equity. According to CoreLogic, the average amount of equity per mortgage holder has climbed to almost $300,000. That’s an all-time high. That means the equity you have in your house right now could cover some, if not all, of a down payment on the home of your dreams.
And as you weigh the reasons to sell before winter, don’t lose sight of why you’re thinking about moving in the first place. Maybe it’s time to buy a house that’s in a better location for you, has the space you and your loved ones have been craving, or simply gives you that sense of home. A trusted real estate advisor can help you determine how much home equity you have and how you can use it to achieve your goal of making a move.
If you’re thinking about selling your house so you can find a home that better suits your needs, don’t delay your plans. Work with a local real estate professional to accomplish your goals before winter.
If you’re thinking about selling your house but wondering if buyers are still out there, know that there are still people who are searching for a home to buy today. And your house may be exactly what they’re looking for.
While the millennial generation has been dubbed the renter generation, that namesake may not be appropriate anymore. Millennials, the largest generation, are actually a significant driving force for buyer demand in the housing market today. Here’s why.
Millennial Homebuying Power
While there’s no denying higher mortgage rates are making it more challenging to afford a home today, many millennials are still eager and able to buy homes – whether it’s their first or they’re moving up. That’s in large part because of the value they place on education.
A recent article from First American says millennials may be the most educated generation in our nation’s history. Because of that, they tend to earn higher wages, and that translates to greater homebuying power. Odeta Kushi, Deputy Chief Economist at First American, explains:
“In 2020, millennials with a bachelor’s degree had a median household income of over $100,000, while those with at least a graduate degree had a median household income of over $120,000. Compare those income levels with the median household income of millennials with just a high school degree (or some college) of $60,000 and the earning power benefits of higher education are undeniable. . . . Millennials’ pursuit of higher education is good news for the housing market. . . because education is the key to unlock both greater earning power and, in turn, homeownership.”
And since wages are one of the key things that factor into affordability when it comes to buying a home, these higher earnings can help millennials achieve their homeownership goals.
Millennials Continue To Be a Driving Force of Demand
A number of studies have looked into how the millennial generation views homeownership and how they’re uniquely positioned to define the housing market moving forward. As the largest generation, the volume of potential millennial homebuyers will have an impact on the market for years to come. As an article in Forbes explains:
“At about 80 million strong, millennials currently make up the largest share of homebuyers (43%) in the U.S., according to a recent National Association of Realtors (NAR) report. Simply due to their numbers and eagerness to become homeowners, this cohort is quite literally shaping the next frontier of the homebuying process. Once known as the ‘rent generation,’ millennials have proven to be savvy buyers who are quite nimble in their quest to own real estate. In fact, I don’t think it’s a stretch to say they are the key to the overall health and stability of the current housing industry.”
If you’re thinking of selling your house but are hesitant because you’re worried that buyer demand has disappeared in the face of higher mortgage rates, know that isn’t the case for everyone. While demand has eased this year, millennials are still looking for homes. As Mark Fleming, Chief Economist at First American, says in an article:
“While not the frenzy of 2021, the largest living generation, the Millennials, will continue to age into their prime home-buying years, creating a demographic tailwind for the housing market.”
Millennials are interested in and well-positioned to achieve their homeownership dreams. If you’re ready to sell your house, know that it may be just what they’re looking for.
With higher mortgage rates, you might be wondering if now’s the best time to buy a home. While the financial aspects are important to consider, there are also powerful non-financial reasons it may make sense to make a move. Here are just a few of the benefits that come with homeownership.
Homeowners Can Make Their Home Truly Their Own
Owning your home gives you a significant sense of accomplishment because it’s a space you can customize to your heart’s desire. That can bring you added happiness.
In fact, a report from the National Association of Realtors (NAR) shows making updates or remodeling your home can help you feel more at ease and comfortable in your living space. NAR measures this with a Joy Score that indicates how much happiness specific home upgrades bring. According to NAR:
“There were numerous interior projects that received a perfect Joy Score of 10: paint entire interior of home, paint one room of home, add a new home office, hardwood flooring refinish, new wood flooring, closet renovation, insulation upgrade, and attic conversion to living area.”
And as a homeowner, unless there are specific homeowner’s association requirements, you typically won’t have to worry about the changes you can and can’t make.
If you rent, you may not have the same freedom. And if you do make changes as a renter, there’s a good chance you’ll need to revert them back at the end of your lease based on your rental agreement. That can add additional costs when you move out.
The Responsibilities of Homeownership Give You a Greater Sense of Achievement
There’s no denying taking care of your home is a large responsibility, but it’s one you’ll take pride in as a homeowner. Freddie Mac explains:
“As the homeowner, you have the freedom to adopt a pet, paint the walls any color you choose, renovate your kitchen, and more. . . . Of course, along with the freedoms of homeownership come responsibilities, such as making your monthly mortgage payments on time and maintaining your home. But as the property owner, you’ll be caring for your own investment.”
You’re not taking care of a living space that belongs to someone else. The space is yours. As an added benefit, you may get a return on investment for any upgrades or repairs you make.
Homeownership Can Lead to Greater Community Engagement
That sense of ownership and your feelings of responsibility can even extend beyond the walls of your home. Your home also gives you a stake in your community. Because the average homeowner stays in their home for longer than just a few years, that can lead to having a stronger connection to your local area. NAR notes how that can benefit you:
“Living in one place for a longer amount of time creates an obvious sense of community pride, which may lead to more investment in said community.”
If you’re looking to put down roots, homeownership can help fuel a sense of connection to the area and those around you.
If you’re planning to buy a home this year, there are incredible benefits waiting for you at the end of your journey, including the ability to customize your home, the sense of achievement homeownership brings, and a greater connection to your community. Connect with a local real estate professional to discuss everything homeownership has to offer.
The housing market is rapidly changing from the peak frenzy it saw over the past two years. That means you probably have questions about what your best move is if you’re thinking of buying or selling this fall.
To help you make a confident decision, lean on the professionals for insights. Here are a few things experts are saying about the fall housing market.
Expert Quotes for Fall Homebuyers
A recent article from realtor.com:
“This fall, a more moderate pace of home selling, more listings to choose from, and softening price growth will provide some breathing room for buyers searching for a home during what is typically the best time to buy a home.”
Michael Lane, VP and General Manager, ShowingTime:
“Buyers will continue to see less competition for homes and have more time to tour homes they like and consider their options.”
Expert Quotes for Fall Sellers
Selma Hepp, Interim Lead of the Office of the Chief Economist, CoreLogic:
“. . . record equity continues to provide fuel for housing demand, particularly if households are relocating to more affordable areas.”
Danielle Hale, Chief Economist, realtor.com:
“For homeowners deciding whether to make a move this year, remember that listing prices – while lower than a few months ago – remain higher than in prior years, so you’re still likely to find opportunities to cash-in on record-high levels of equity, particularly if you’ve owned your home for a longer period of time.”
Mortgage rates, home prices, and the supply of homes for sale are top of mind for buyers and sellers today. And if you want the latest information for your area, partner with a local real estate professional.
Today’s cooling housing market, the rise in mortgage rates, and mounting economic concerns have some people questioning: should I still buy a home this year? While it’s true this year has unique challenges for homebuyers, it’s important to factor the long-term benefits of homeownership into your decision.
Consider this: if you know people who bought a home 5, 10, or even 30 years ago, you’re probably going to have a hard time finding someone who regrets their decision. Why is that? The reason is tied to how you gain equity and wealth as home values grow with time.
The National Association of Realtors (NAR) explains:
“Home equity gains are built up through price appreciation and by paying off the mortgage through principal payments.”
Here’s a look at how just the home price appreciation piece can really add up over the years.
Home Price Growth Over Time
Even though home price appreciation has moderated this year, home values have still increased significantly in recent years. The map below uses data from the Federal Housing Finance Agency (FHFA) to show just how noteworthy those gains have been over the last five years.
If you look at the percent change in home prices, you can see home prices grew on average by almost 64% nationwide over that period.
That means a home’s value can increase substantially in a short time. And if you expand that time frame even more, the benefit of homeownership and the drastic gains you stand to make become even clearer (see map below):
The second map shows, nationwide, home prices appreciated by an average of over 290% over roughly a thirty-year span.
While home price growth varies by state and local area, the nationwide average tells you the typical homeowner who bought a house thirty years ago saw their home almost triple in value over that time. This is why homeowners who bought their homes years ago are still happy with their decision.
Even if home price appreciation eases as the market cools this year, experts say home prices are still expected to appreciate nationally in 2023. That means, in most markets, your home should grow in value over the next year even if the pace is slower than it was during the peak market frenzy when prices skyrocketed.
The alternative to buying a home is renting, and rental prices have been climbing for decades. So why rent and fight annual lease hikes for no long-term financial benefit? Instead, consider buying a home. It’s an investment in your future that could set you up for long-term gains.
Today’s market is at a turning point, making it more essential than ever to work with a real estate professional. Not only will a trusted real estate advisor keep you updated and help you make the best decisions based on current market trends, but they’re also experts in managing the many aspects of selling your house.
Here are five key reasons why working with a real estate professional makes sense today.
1. A Professional Follows the Latest Market Trends
With higher mortgage rates and moderating buyer demand, conditions are changing, and staying on top of the latest market information is crucial when you sell.
Working with an expert real estate advisor helps ensure you can stay updated on what’s happening. They know your local area and follow national trends too. More importantly, they’ll know what this data means for you, and as the market shifts, they’ll be able to help you navigate it and make your best decision.
2. A Professional Helps Maximize Your Pool of Buyers
Your agent’s role in bringing in buyers is important. Real estate professionals have a large variety of tools at their disposal, such as social media followers, agency resources, and the Multiple Listing Service (MLS) to ensure your house is viewed by the most buyers. Investopedia explains why it’s risky to sell on your own without the network an agent provides:
“You don’t have relationships with clients, other agents, or a real estate agency to bring the largest pool of potential buyers to your home. A smaller pool of potential buyers means less demand for your property, which can translate into waiting longer to sell your home and possibly not getting as much money as your house is worth.”
3. A Professional Understands the Fine Print
Today, more disclosures and regulations are mandatory when selling a house. That means the number of legal documents you’ll need to juggle is growing. The National Association of Realtors (NAR) explains it best, saying:
“Selling a home typically requires a variety of forms, reports, disclosures, and other legal and financial documents. . . . Also, there’s a lot of jargon involved in a real estate transaction; you want to work with a professional who can speak the language.”
A real estate professional knows exactly what needs to happen, what all the fine print means, and how to work through it efficiently. They’ll help you review the documents and avoid any costly missteps that could occur if you try to handle them on your own.
4. A Professional Is a Trained Negotiator
If you sell without a professional, you’ll also be solely responsible for all the negotiations. That means you’ll have to coordinate with:
The buyer, who wants the best deal possible
The buyer’s agent, who will use their expertise to advocate for the buyer
The inspection company, which works for the buyer and will almost always find concerns with the house
The appraiser, who assesses the property’s value to protect the lender
In today’s changing market, buyers are regaining some negotiation power as bidding wars ease. Instead of going toe-to-toe with all the above parties alone, lean on an expert. They’ll know what levers to pull, how to address everyone’s concerns, and when you may want to get a second opinion.
5. A Professional Knows How To Set the Right Price for Your House
If you sell your house on your own, you may be more likely to overshoot your asking price. That could mean your house will sit on the market because you priced it too high for where the market is now. Today, pricing a house requires even more expertise to ensure you get it right. NAR explains it like this:
“A great real estate agent will look at your home with an unbiased eye, providing you with the information you need to enhance marketability and maximize price.”
Real estate professionals know the ins and outs of how to price your house accurately and competitively. To do so, they compare your house to recently sold homes in your area and factor in the current condition of your home. These steps are key to making sure it’s set to move quickly while still getting you the highest possible final sale price.