7 Years of a Seller's Market
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Many are wondering if we are in the middle of a housing bubble. The many economic updates and housing classes I have taken over the last few months are all saying the same thing: NO! Here is a list of why the market is going to stay strong in Portland for many years to come (unless sh*t really hits the fan. Have you voted yet?)
Millennials are coming into a strong home buying position (finally) and will be buying and moving up for the next 7 years. While many economists focus on the Boomers, in housing we know that the driving force will be Millennials buying for the 1st, 2nd, or 3rd time, and beginning to become real estate investors. I see this group being a big driver in small development with duplex-fourplexes and multiple ADUs. This community and equity focused group doesn’t want a McMansion, they want financial security.
Buying power is still much higher than house prices are nationwide. This means that buyers are approved for much higher than the average house price in their area. Low interest rates, which the Fed is planning on keeping for several years to come, adds to the affordability of housing.
Portland housing is undervalued but about $110,000. Look at the graph below, the only overvalued housing markets are the usual California suspects: San Jose, San Francisco, Los Angeles, and San Diego. Now, I do have opinions about why this is the case! Salaries in Portland are much lower than other cities, but with remote work this should be less of a factor for buyers.
4. Home Equity is at an all time high. Much of this wealth is being held by Boomers. I see, and hope to see much much more, wealth being passed down to Millennials now in the form of down payment funds and the gift of remodeling! Do not be afraid to ask for this, the only down side of life expectancy being so long is that wealth is not being passed down every 20 years. Even buyers with great jobs, low student debt, and savings of their own can and should use family funds if they exist.
The green lines represent Mortgage Debt, it’s historically low, and keeps trending down!
5. House Prices usually don’t drop in recessions. The Great Recession of 2007-2009 was unique in that a sick mortgage industry caused the recession, but since 1900 house values have not dropped during recessions. This Covid 2020 Recession has been short lived, with a very quick bounce back. No, this does not apply if you are in the service and hospitality fields. Have you voted yet?
So what does this mean for you? It depends on your real estate and life plans! Houses are very affordable in the Portland Metro Area. Money is cheap to borrow, and there may be a large sum of equity in your house, or your family’s homes, that you can tap into to buy your next home. The market will not be slowing down as we are adding buyers consistently, but there are not enough houses. Supply is low, demand is high. If you would like to see how you can sell and/or buy a home please reach out now! I have clients that range from ready to move next week, to on a 5 year plan. But, first you have to make a plan!
Sources:
Corona-Economy and the Housing Market Rebound from First American Title