Portland Real Estate Market Update - Q1 2021
As 2021 continues to unfold, the Portland real estate market is definitely continuing its upward trend. The demand for new and existing properties from buyers, equipped with the recovering economy and affordable mortgage rates, proves that the local housing industry is still very much thriving.
But with market growth comes some minor obstacles.
There is stiff competition for most properties, with some homebuyers willing to make a cash offer with an added downpayment for the seller to pick them and close the contract. And with record-low housing inventory in Portland, it is harder for everyone to pick a spacious, affordable property—first-time buyers, move-up buyers, and downsizers alike.
Here are three key housing statistics that affect the real estate market in Portland and an analysis of how those stats have changed in Q1 of 2021. (Stats are for all of Portland Metro and include Multnomah, Clackamas, and Washington counties.)
Median Sold Price
Based on the statistics, the median sold price in the first quarter of 2021 has reached $477,000.
To make it easier to understand, the median price serves as a halfway point between the upper and lower prices. Meanwhile, the average price is the total amount of all real estate prices divided by the number of areas in the locality. Median price can be a better indicator of the actual average because it isn't influenced by outliers such as very high- or very low-priced homes.
If we compare it to the fourth quarter of 2020, the median price was $456,000. This is a slight increase of 4.6%.
But when we look back at the first quarter of 2020, there is an obvious gap between the two median prices. The sold price was $415,000, which is an increase of 15%.
The main aspect that has contributed to the rising median price is the low housing inventory in Portland and the large demand for homes coming from homebuyers.
Number of Homes Sold
During the first quarter of 2021, there were a total of 6,637 units sold in Portland. When we compare it to the fourth quarter of 2020, there were 9,133 units that were sold to homebuyers. That is a clear decline of 37.6%.
But in the first quarter of 2020, there were 6,267 units sold, which is an increase of 5.9%. At the time, the real estate market was hindered by the pandemic.
What is the reason behind the increase & decrease of sold homes between Q1 2020, Q4 2020, and Q1 2021?
According to Portland Monthly, Portland's housing inventory has shrunk. And it is still trying to keep up with the housing demand. In short, there simply aren't enough homes for people to buy. Additionally, many people chose not to move during the pandemic, meaning there is pent up demand for housing and homeowners are worried about selling and not being able to find something themselves.
Median Days on Market
When we talk about CDOM (Cumulative Days on the Market), it refers to the number of days a home is on the market, from the first day of a home being listed for sale to the last day when it is sold to the new owner.
In the first quarter of 2021, the CDOM took around six days. The duration is shorter compared to Q4 2020, which took about nine days. To give you some perspective, the CDOM of Q1 2020 was 29 days. To be frank, six days is insane.
Advantages and Disadvantages of These Housing Factors
For homeowners and investors, the first quarter of 2021 has provided enough proof that there is a big opportunity in the Portland real estate market. Especially with homeowners who have homes in the metro city area and suburban neighborhoods, as buyers prefer to live in certain locations where there is easy access to gyms, parks, malls, etc.
The limited availability in the housing inventory heightens the competitive nature of the market to a certain degree. In fact, homeowners can easily increase the asking price for their property. And with the CDOM as short as six days, it is common for the seller to receive several offers from buyers for tens of thousands of dollars above their asking price.
When it comes to investors, Fortune Builders mentions that Portland is a great area to invest in real estate with the right strategies. Because of the limited housing options, local investors can take advantage of this by purchasing a rental property.
While most of these factors (particularly the median price) favor sellers by a large margin, it does put buyers and renters at a disadvantage.
In a related article about Portland's real estate market, BizJournals mentions that some housing developers are trying to find a way to offer alternative options for low-income renters.
Since it's likely that Portland real estate will stay in an upward trend this year, prices will continue to rise which will make it harder for buyers to score a home within their budget.
However, there are some buyers who are more than willing to pay for the rising home prices in Portland. The importance of a spacious home and a change of scenery has caused large numbers of out-of-state buyers to move into secondary markets—of which Portland is one.
Because of COVID-19, most people have worked from home and stayed together with their families. The pandemic has made an impact on everyone’s lives, including their decisions on where they want to live and retire on a long-term basis.
What we can make out from the three key housing factors above is that more and more people truly value the personal space of their homes. Aside from that, the economic downfall of 2020 and remote work setup have made people reconsider moving to areas with affordable housing.
Although there are some obstacles that need to be overcome, Portland real estate will continue to have a strong market this year. The only concern that needs to be addressed is finding the balance between the growing demand and limited supply in the market.
All of the data in this article was gathered from multiple sources and may change over time. It is only used to present and inform about the current real estate market update in Portland as of April 2021.